To expect tax avoidance to be treated in the same way as benefit fraud

[speedymama]

Does the govt put as much emphasis on clamping down rich folk who avoid paying taxes as they do on targetting benefit fraudsters?

I ask this because of the current advertising campaign against benefit cheats. I personally think it is just as wrong and in some ways more immoral, for those you can pay more tax but don't to get away with it because they can afford to get round all the loopholes.

Just want to add that benefit fraud is wrong too and should be dealt with accordingly. It just appears to me that society treats benefit cheats with more disdain than those who deliberately seek ways of avoiding to pay tax even though they can afford to pay it, e.g. residents of Monte Carlo who enjoy the trappings of being British.

If someone acts illegally wrt tax they are treated pretty harshly. They certainly don't get away wiith it. If they use a legitimate scheme then fair enough, you can't really do much.

I would imagine there isn't much point running an advertising campaign re tax cheats as its so complicated I doubt anyone would just know.

IMHO don't believe they can bothered to look for money they are not getting in than money they are shelling out.
An acquaintance reported her XDH to the tax authoriities for tax evasion (not 'legitimate' avoidance)and they weren't interested. Easier & cheaper to 'clamp down' & get results from a single mum with no tv licence that a confrontation with someone who might put up a fight with lawyers.

Tax avoidance is actually lawful (although obviously many people regard it as morally repugnant). Although the Revenue does look out for tax avoidance schemes and closes down those which sail too close to the wind.

Tax evasion is a different matter.

HMRC does look very much on a cost/benefit basis. Your example of the Monte Carlo resident is probably legal so that is down to Brown changing the rules (and believe me the ruels tighten up all the time!). However with HMRC the issue is the fact that every investigation must be handled as if it is going to court (which ultimately is the way to get the tax owed), whereas for beenfit fraud they can just stop the benefits until the person has proven their entitlement.

Consequently, the poor get treated more harshly than those with money!

Actually it's not true. They have actually employed thousands of tax collectors to clamp down on the middle classes and self employed. This seems much more stringent than the efforts to clamp down on benefit fraud - in my anecdotal experience anyway.

The rich are the ones who do very well out of it, employing specialist advisers to limit their tax liability. Tax avoidance is different from tax evasion.

agree with cloudhopper- the IR are pretty terrier like once they have you in your sights.

I think it is a matter of perspective when you consider tax avoidance vs tax evasion.

And as for money laundering legisltation- it's pretty draconian- and an area where you really are not allowed to make an honest mistake. (no idea whether they would prosecute a reasonable mistake although they certainly have the power to).

but speedymama you can't prosecute something that's legal.

IME a lot of tax lawyers are rabid right-wingers who really take personal umbrage at the State taking any money off rich people at all!

I agree JimJams. I just find it distasteful that some of these schemes are legal.

But you have to know the difference between tax avoidance and tax evasion. Tax avoidance is not illegal, so you cannot liken it to benefit fraud. All businesses use some form of tax avoidance, be it putting through a meal out/a cab fair/a computer through the business account in order to not have to pay tax on it. If your company gives you a Christmas present they are using tax avoidance by putting those items through the business accounts and therefore are not paying tax on them. It?s not illegal, and I don?t really see why it?s immoral.

Tax evasion is another matter as it?s illegal and therefore is prosecutable. You cannot compare the two.

er dinosaur dh is a tax lawyer!

He's more bothered about nice people who will have to sell the house they've been left because they're teachers and can't afford the IHT (or something - I switch off when he starts mentioning actual taxes). And he reads the indie.

Jimjams, was basing this on the ones I have met through work - but obviously I haven't met your DH and I'm sure he's quite quite different!

Actually, my best friend through work is a tax lawyer and her attitude boils down to "pay some tax, you rich bu88er" .

On the IHT point - there was something in the Grauniad this morning claiming that only 6% of estates are subject to inheritance tax - which seemed terribly low given that the threshold is only £285,000 and that would hardly buy you a garden shed in large swathes of the country!

What I find immoral is that the likes of Philip Green pays very little income tax because he can afford to exploit loopholes in the law.

inheritance tax is immoral IMO, from the state's point of view. Why should people have to pay tax on money that has effectively already been earned? of course IT was originally implemented to catch the upper classes, but the levels have never moved in accordance with inflation/property prices, so most of us would now be caught by inheritance tax.

on Philip Green

But does he really pay very little income tax? Or does he pay proportionally less iyswim?

I actually disagree with the 40% tax band altogether. The ?rich? as people put it do pay as much tax as the ?poor? ? why should you have to pay more just because you earn over 35 k a year?

It is getting increasingly difficult to avoid tax nowadays. I work with very wealthy people, most of whom are self made & have worked very hard to earn their money & they are now starting to leave the UK because they find the taxation here so punitive.
I'm not sure what the morality of this is. But I know that Monaco & other tax havens are increasingly going to benefit from their expenditure rather than the UK - which is a very great shame.

Well Dinosaur, what can you say to that? I wonder if anyone has compared how much more income the govt would receive if it clamped down on tax avoider and how much it saves on clamping down on benefit cheats?

I wish I had the answers, speedymama! I don't get the impression that the UK tax regime is particularly punitive.

I don't see how an upper tax band of 40% is punitive (DH & I are both in the upper tax bracket btw).

Jimjams, would you mind asking your DH if it is really correct that only 6% of estates end up being subject to IHT? I would be very interested to know the truth about this. Sounds far too low to me.

If I inherit my parents' house in Ireland (which I hope I do, as the DSs love it) I will be absolutely crippled paying the IHT, but it seems wrong to moan when I would be getting a lovely house (albeit with a rather dodgy septic tank ).