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.

I have 2 friends who have husbands who are black cab drivers - one was moaning last year about their 3 grand tax bill - I told them to shut up as they had an accountant who swindled their husbands tax bills and they also claimed working families tax credits when they earned too much to do so but got away with it because so much of their work is cash in hand or can be hidden - DH's 14 grand tax bill for one month really put it in perspective for them - this was for his bonus month and not a regular thing - but then he oays over 2k a months so it pretty much pissed me off.

Alright it's not a lot and they aren;t very rich but it sticks in my throat a little that thay can do this and get away with it and moan about being broke too!!

I personally think a lot of rich people who begrude paying taxes are just greedy and selfish.

But sm if you clamped down on the likes of Phillip green, he would simply leave the country, and go and live somewhere where he didn?t have to pay tax. No maybe he didn?t pay as much tax as he should have, but out of that amount he would have paid some, and ?some? of 1.2 billion is definitely worth more to the government than none. Also it?s worth noting that while he may not have paid income tax on all that money, he will have paid some capital gains tax, and that is still a tax.

I suppose it depends how far in the upper tax bracket you are. If you are losing pretty much half your income after tax & NI that has to be a discinsentive. Well, it must be, as they are all buggering off to Monaco. So instead of seeing some of their tax, we are seeing none of it.
I don't honestly know what is right or wrong here, but I do know that it seems to be a slightly "cut of your nose to spite your face tax policy", if all the very wealthy bugger off, rather than give half their earnt income to Gordon.

Dino, why is it wrong to moan? Surely your parents worked hard & payed tax & NI all their lives. Why should your family be taxed again because they managed to put enough aside to leave some to you?

SM I think it?s punitive because in so many instances while you are expected to pay the higher tax you are entitled to less. Why should you not be entitled to tax credit for instance just because you earn a higher salary? Yes you earn more money and the argument may be that you do not need that money, but as 40% tax payers you are actually contributing a greater amount of tax to the state, and yet because you are a higher tax payer you do not have the same entitlements as the lower rate payers.

So in the meantime, everybody else continues to pay their IHT and NI and the Monaco residence come and go as they please and still benefit from everthing that Britain has to offer courtesey of the tax payer!

Bugsy2, my dad has worked hard all his life, but the fact that his house in Ireland is worth a lot of money now is actually nothing to do with his hard work and everything to do with booming property prices in the Republic.

I suspect this is the case with many estates that now fall within the IHT bracket.

I think that it is outrageous that the likes of Philip Green can reap the benefits of living in a civilised country, and in his case get a knighthood to boot, and not pay more tax. Sorry, but it really sticks in my craw.

but dinosaur he will have worked hard and paid taxes all his life. if he sold that house he wouldn't be required to pay that level of tax on it, so why should that level of taxation be required purely because he has died?

He would have to pay tax on the capital gain as it's not (from a UK tax point of view anyway) his principal private residence.

Wannabe, I know what you mean about tax credits because DH and I are entitled to none but tbh, it does not bother me. I see it as a safety net for those who actually need it. We don't need it because we cut our cloth accordingly. I suppose you could say those on lower incomes should do the same too but with the cost of living the way it is, I certainly do not begrudge those claiming tax credits .

but there are ways of avoiding that too dino.

I agree with speedymama. Tax credits are for working families who don't earn as much. I absolutely do not begrudge paying tax at 40%.

I might have issues with some of the ways the Govt. chooses to spend my taxes, but that's a different qu.

wannabe, there aren't, really, unless he gives it to me outright now and then survives 7 years, but there are lots of reasons why that wouldn't work for us

Dino - no reason for him to pay UK IHT on it at all. You just fill out a form to change your domicile and that takes all non-UK property outside of UK IHT. Of course there are still the Irish tax issues, and domicle only affects IHT unless he goes non-resident.

Re the number of estates in scope for IHT - yes it is only about 6%. Many fall out a) because they're below the £285,000 (think of the number of penniless pensioners in the country or those paying care home bills); b) the estate is going primarily to the surviving spouse so exempt from IHT, or c) because they have planned appropriately and used up all of their allowances over the years. You only pay IHT through bad or no will planning (so an early unexpected death) or if you are just over the limit (and therefore a lot of the schemes don't make sense for you).

oh that's why dh is concerned about them scrapping IHT (he does lots of (c)) I thought they never would because it must bring in lots of revenue, but if its only 6% I can see why he thinks its a possibility (I do switch off as soon as tax is mentioned).

I think that it is more of a risk under the Tories rather than Labour though. And I suspect that given the number of trusts alreadfy set up (and the number of wills already written with the intent of setting them up) their will still be a bit of work in the area for some time.

Have to say that my will would be much easier to understand if it wasn't written primarily to avoid IHT.

Ladymuck, I think he's had some very bad advice then. He's been told that if you have spent 17 of the last 20 years in the UK, then you are domiciled in the UK for IHT purposes and there is nowt you can do about it!

Can you point me to a source for saying that changing your domicile is as simple as filling out a form? If he were domiciled in Ireland even though still living in England, I think he'd be delighted!

When I was looking for nanny shares I was very shocked at the prevalence of not paying tax properly for the nanny. I dare say there are plenty of other illegal scams used by the better off which don't attract the same opprobium or enforcement effort as benefit fraud.

Domicile is very hard to change.

There was the case of the retiree who went off to Spain and claimed he was non-domiciled in the UK. HMRC got hold of a letter he'd sent to a friend saying that he was really homesick and used this to argue his domicile!

If he is living in the UK, is a British citizen, and has been here for the past 17/20 years it would be really hard to change.

As for tax avoidance - it is much harder to avoid tax as an employee than it is for a self employed person.

I thought it sounded too good to be true!

Ladymuck - are we missing something obvious here?

dassie, he's not a british citizen

Neithers my Mum but she's been here 30 years. My parents have found it very difficult!

Is he married to a British citizen?

Of course there is the old buying a grave trick. not sure if this still works very well because HMRC have cottoned on to it but if your Dad bought a grave plot for himself in Ireland and said he would be living out his days there, it might work!

The tax burden in this country is heavily weighted such that lower earners pay a higher percent of their incomes in tax. This takes into account the direct taxation as VAT, duty on fuel, cigarettes and alcohol etc.

The richest pay the smallest % of all - I think Richard Branson paid 9%, and he is just an example. Far from people leaving this country because of the tax burden, London is now considered something of a tax haven for people who have massive earnings abroad.

Part of the problem is the difficulty of taxing the rich, who will just move money around and pay advisors to help them make the 'best' of the law.

However, the government have realised that their best way of increasing the tax take is to target middle earners and the self employed. Self employment used to be a great way of avoiding tax, but it has really changed in the last 5 years.