to think that 100% of MNers probably avoid tax?

[TravellingToad]

Just watching a frustrating debate on TV about a man who has legally taken advantage of a loophole permitted by the government in order to reduce his tax bill. Some people in the debate are on their high horse.

Now it occurs to me that unless you voluntarily hand back your tax allowance (roughly £10,000 per person) you are in no position to squawk about other people avoiding tax.

The £10,000 tax allowance is a legal tax avoidance loophole permitted by the government that means that you can assign £10,000 a year of your income and pay NO tax on it. 99.9% of people i'm sure grab it with open arms.

Anyone here voluntarily pay the tax instead of accepting the avoidance scheme? Anyone of you phone your accountant and say "I don't want to use that loophole thanks please donate the tax to the government instead" No? thought not.

I expect i'm about to get leapt on now with cries of "oh its so different though because he's so rich and I only earn £20k a year" but where do you draw the line? To the homeless person on the street you are rich beyond their wildest dreams, just as gary barlow seems to you. At what point does it become one rule for you and one for anyone richer than you?

Let the slaughter begin!

As I said, the analogy works better with something like medical treatment, you know, things that tax actually pay for.

I have been on holiday with close family members for whom money is tight. Nothing fancy, a week in a cottage in the UK. As I recall I paid more towards the cost of the cottage than them because I knew they couldn't afford it. I'm not saying it was their entitlement to free ride on me, but I was happy to do it because it was the nice thing to do.

Scale it up to the size of a country, replace frivolous things like holidays with essentials like health and education, and it's the same thing. I think the better off in society have a moral duty to help those who are less well off. You can disagree but thankfully most people would agree.

I'm not bitter at all. GB is welcome to his money after he has paid the tax that the law requires.

Guess it depends on your social conscience. Uk is never going to get the better services, schools, free further ed, healthcare improvements etc unless we all pay the tax we should.

As for 'the rich' thinking they shouldn't have to contribute because they won't need the services - well that's a selfish view point. You pay toward services regardless of your personal situation, for example we all pay towards state education, but we don't all have children or children in school.

If a multi millionaire is earning 15 million, there's even less excuse not to pay the tax bill. You are hardly going to be left short are you? You almost certainly will have accessed state provision in your life at some point, so you will have benefitted.

Inheritance tax I'm a bit on the fence with tbh, I'm not sure I agree with situations where people have to sell their home to pay it, but I can't say I know much about it.

I can sympathise with the arguments against inheritance tax. But unfortunately that's the law and in a mature and stable country like the UK we must follow the law.

Beaksnout, your attitude is the wrong way round. Poor people don't feel entitled to live off the earnings of rich people. Put down the Daily Mail and think. Rather, it's rich people who have a moral duty to help poorer people. Subtle difference.

Everyone who's saying that everyone gets a personal allowance of £10k is wrong.

Once you earn over £100k you personal allowance is reduced by £1 for every £2 you earn. Between £100k and £120k a persons marginal tax rate is about 60%.

Doesn't take away from the OP's illogical statements but I'm being pedantic, sorry

And re inheritance tax the main problem is that the nil band has not kept pace with housing inflation.

However I can't actually get too excited about that. People are sitting in houses that are gaining massively in value, they are doing nothing to earn that increase in assets, except maintaining their home. Why do their children get to benefit so massively?

I think there should actually be more taxes on assets and fewer on income. Asset taxes are also harder to avoid (or evade).

I think it's more the unfairness that you can give away as much money as you like to whoever you like tax free during your life, but if you die within 7 years it becomes taxable. Either make all gifts taxable or not?

beaksnout You don't pay that part of tax which goes to schools to pay for your own DCs' education; you pay it to educate the community. That is why even people with no children have to pay.

If you think education is expensive - try ignorance.

I thought it went like this

It specifically says that I cannot do this and the Government will seek to prosecute if I am discovered = Tax Evasion

It does not specifically say that I cannot do this but if you look at the rules sideways and hop about a bit you'll be ok, the Government didn't intend it to be used this way and there's no Government Department set up to administrate it but it stays within a legally arguable interpretation of the letter of the law = Tax Avoidance

It specifically says that I can do this, but the government doesn't have systems in place to administrate this, I must engage an accountant = Tax Planning

It specifically says word for word in legislation that I can do this and government systems are set up to administrate it = Tax Allowance

I am not an accountant. I may be wrong. If so, I am sure I will be corrected, probably several hundred times

I think that looking for ways to avoid paying tax is morally wrong. If you have to scour legislation looking for a way that isn't specifically blocked then it's morally wrong because it was never intended that people didn't pay.

But, it is true that a good number of rich people when faced with that choice - pay the amount of tax due or pay an accountant to find a way that you can pay less tax - will choose to pay the accountant because the accountant costs less than the tax.

The government has the right (obligation actually) to close loopholes. If it chooses not to do so, then it and we have to accept that there will always be people who use them until it is made clearly and very specifically illegal.

Anyone bought chocolate chip biscuits, flapjacks, millionaires shortbread or Jaffa cakes when they could perfectly well have bought a chocolate covered biscuit (whether wholly or partly covered, or decorated in chocolate), cereal bar, chocolate shortbread, or gingerbread man with chocolate decorations?

You filthy tax avoiders, you.
here's why

Can we just deal with a few issues of fact? The tax free allowance is not applied to everyone. For anyone earning over 100k it is removed. by the time the person is earning 105k - they have no allowances at all. This means that someone between 100 and 150 k pays 60% tax on that slice of income - plus NI of course. The rate then decreases to 45% above 150K. A hidden artefact and unintended outcome from our tax code.

Most self employed individuals have extremely complicated tax affairs. The inland revenue will frequently make an estimate of what they expect you to earn over the next 12 months and bill you in advance on the assumption that your WIP and income is all profit. You then retrospectively claim back expenses - like staff salaries. and might get your amount back 6 months after the year end following.

There are also capital gains reliefs, investor reliefs, entrepreneur reliefs - all designed to incentivise people to build and grow businesses.

So take a musician. Advance from a record company? All taxable? or investment income? are royalties income or are they a return on investment on your IP which could be at a different rate? Your own production company? IS that making the return on your IP or are you just being paid in dividends (IR35??) royalties from the US - is US tax paid on them or UK? Which marginal rate?

Recording studio in the bahamas - that amazing album recorded because you got the inspiration in the palm trees? So does the IP create an income stream originating in the bahamas?

On tour for a year? where were you resident for tax purposes? Does EU tax equalisation apply?

They employ quite a large army of professional accountants to sort that mess out - the more successful the bigger the headache and the massively more complex it becomes. Several famous stars have been totally ripped off by their accountants - why do you think the oldsters keep having farewell tours?

What probably happened is that the scheme was an investment scheme and it would generate a reduction in tax liability. his advisors would have said "Gary - its complicated - you may save some tax, it looks a legit investment vehicle if it gets tested you might win - you might not.

AS for other mums netters avoiding tax - most of us would love to pay less tax for the same amount of services. Some of us would like more services and are happy for "that rich bastard" to pay more tax. Some have the hopelessly deluded concept that tax is about fairness and income distribution. It is about paying for the government to do what we expect it to. Politics is about setting that government agenda. ultimately we need to remember that it isn't "government" money - it is ours. Taken under threat of imprisonment if we refuse to pay. Demanding money with menaces if you like. Some of us gladly hand over our shillings knowing that it will be utterly and comprehensively wasted by the government on computer systems that get cancelled, on PFI contracts that bleed the NHS white, on paying for a vast army of civil servants to work out the most complicated tax code in the world. bedtime reading

So anyone who buys children's clothes is a tax avoider then?

like

Voices post is too good not to give it a thumbs up

Tax doesn't have to be taxing my arse.

Kungfu well no, obviously not if they are buying them for children; but yes if you are buying them for yourselves (size 3 feet anyone?) then you can officially class yourself as a filthy tax avoider

Hear hear voiceofnoreason.... I think the majority of people - MN-ers or otherwise - would avoid tax given the opportunity. Everyone with a Cash ISA, for example, has rejected placing it in a regular savings account where the interest attracts tax.

It boils my piss when people talk about tax and other subjects about which they know nothing and massively miss the entire fucking point and over generalise.

But then AIBU wouldn't exist would it?

The Icebreaker scheme was insanely complicated - if it was as simple as buying shares in a shell company in the cayman islands, routing the income through macao and offsetting the dividends as trust expenditure the HMRC would have been over them like a rash in the Tier 1 tribunal. but this needed a judge - it was therefore not a matter of fact but a matter of finely judged opinion. In the opinion of the person that mattered that day - the judge - it was deemed to be invalid. Any other day, any other judge - it may go the other way. I gather they are appealing. You can't appeal on a matter of fact - but on a matter of interpretation, procedure or law. the CoA may see it quite differently.

I just think it's immoral to avoid paying so much tax

Every day we are hot over the head with politicians going on about the country being broke, austerity etc

HMRC hunt fine ordinary punters, use bailiffs to recover measley amounts of money

But apparently it's fine that a major Tory party donor rich man avoids paying his fair share.

What is legal and what us the right thing to do are different things some of the time. Most people in this country have some integrity.

Tax is a legal obligation and the amount due, as explained above, varies when the income sources are complicated. If HMRC demands £100 you pay £100 - no more no less. 'The right thing to do'.... if we're talking about ethical judgements & contributing to society, is give to charity not HMRC.

I would be confident that 100% of MN-ers have not sent HMRC an extra cheque at the end of the year because they feel 'it's the right thing to do'

Ubik1 - but thats the point. He did pay what was due. When the scheme was created - that is what was due. It was judged a long time later that the scheme wasn't correct and he now has to pay more.

I suspect he will appeal (read the above posts about tax code and law) and may win - in which case will you change your view to "rich man pays fair share and donates to political party"? or is it simply because he has more than you that he is not paying his fair share or worse that he dares to donate to a political party with which it is safe to presume you disagree that drives your opinion?

Cogito - only if they are monumentally stupid would they. And i would judge that bearing in mind a fool and their money are soon parted - then they won't have spare cash. The amount of lottery winners going broke or giving all their money to the SNP is a case in point

At the time that the additional tax became due on Child Benefit there were a lot of very lively & creative threads on how those affected could potentially avoid paying the tax due (which was universally condemned as 'not fair'.) I think it's the norm now that extra pension payments and childcare vouchers are a socially acceptable way to divert income. Saw no-one compared to a benefit cheat for that...

I think that jimmy Carr got a rough ride over tax and David Cameron saw fit to comment on that...but is strangely silent on donor Gary Barlow.

The premis of the thread is that we would all avoid paying tax if we could get away with it. I don't agree. Tax avoidance is immoral. And so is benefit fraud. The difference is that joe public is sanctioned, sometimes jailed.

There is an assumption here that 'the little people' just don't get how complex the tax system is and should just STFU and let the big boys and girls get on with screwing the system.

I'm sorry you seem to implying jealousy or political motivations from my post. I'm talking about simple right and wrong.

Gary barlow's money could have been used to help the country that had cared fir him since he was born - educated him, looked after his health, would save his life.

The difference between childcare vouchers and tax avoidance on the Barlow scale is the amount if money involved.

It us not the same thing

Of course it's the same thing. Doesn't matter if it's £10 or £10,000, the principle is the same. ie. employing a legitimate outlet for income in one area in order to bring down the tax bill in another. It's exactly the same morality.

I think most of us would and do take advanatge of whatever allowances or tax saving schemes there are. Provided they are legal.

Someone in GB's situation will have been advised by his financial adviser that this particular scheme was a legal way to reduce his tax bill.

I was offerd something similar to do with films. I didn't take it up, but I know people who have.

These schemes have now been challenged by the governement, so those in the schemes have to pay back. Fair enough. But at the time they took advanatge of them, they were legitimate, no?