to wonder why the government doesn't clamp down on tax avoidance?

[Springbreeze]

So, I've been watching the Panorama programme on the Paradise papers. The superrich and multinationals like Apple are diverting billions of revenues offshore depriving the government of billions of tax which could otherwise be used to pay for public services.

They can do this because of lax tax laws in places like the Isle of Man, Jersey, Bermuda and the Cayman Islands. These are all Crown dependencies and ultimately under the control of the British government. So why doesn't the government do something about it?

If you read about the tax avoidance revealed in the paradise papers, they were legal. You might not like it, but they were legal. One of them (re PGL holidays) was actually taking advantage of a new law passed quite recently which allowed them to funnel off their German profits to the IOM on paper thus avoiding the tax. Legally.

Things like prince charles not declaring financial interests is different, I think he was required to. And looking into controlling interests is a separate issue too. But the tax avoidance is legal!

believeitornot the iom doesn't receive any subsidies from the uk. All services are funded from revenues. There is a vat sharing agreement with the U.K. Where a proportion of vat is given back. It used to be generous then the uk unilaterally reevaluated it and the iom lost about £180 million and is cutting back services.

Paradise papers stuff is legal, sanctioned by uk HRMC.

Some of it isn't but you get that everywhere. The queen etc , all doing legal stuff.

My apologies for not being clearer.

I do not mean the state pension. Nor do I mean public service pensions which are wholly funded from current taxation.

I do mean all individual/workplace pensions with defined contribution, nit defined benefit - ie most of them. That is a huge swathe of the workforce. I do not think there is any political will to reduce the retirement income of current workers, leaving those closest to retirement unable to bridge the gap between expected and actual return.

Investors should know when they take out this sort of pension (even though they may have no other choice) that eventual income is not in any way guaranteed, and is very much dependent on the value of the underpinning funds. governments have to think very carefully about tax policy changes that will reduce the value of workers' pensions.

Relying solely on the state pension might be be reality for some people, but I'm not sure that's an argument in favour of reducing the predicted pension system return for others.

Because the UK tax system is very very complicated and as far as I can tell, like most government bodies, written by people who are underpaid and overworked. They often don’t do a great job making it easy for tax planning to take place. Plus often planning schemes utilise tax breaks that the government has introduced. Often in a way that they hadn’t anticipated - let’s face it trying to get a system that perfectly taxes every single conceivable set up of company and personal affairs is very difficult.

The current approach is to wait and see and close down the loop holes after the event. Usually that means the benefit is only for a year or so (as HMRC are pretty slow moving) but that’s what we get for having the most complex tax system in the world and not enough funding to enforce & plan it.

Well I actually believe that the fact that HMRC is under resourced is absolutely deliberate because they don’t want successful action against all the the tax avoidance schemes

My vague understanding is that the Browns boys tax avoidance scheme has already gone to court with HMRC and was upheld...i think it was Jimmy Carr doing the same thing

@CrabappleCake

Not quite. There is a revenue sharing agreement which has been made more generous in recent years. It enables the Isle of Man to get access to the EU common market and allows them to carry on with their tax free Haven arrangements.

I don't buy the pensions argument - unless you are very rich, the impact of tax havens on your pension will be dwarfed by the impact of lower corporation tax revenues due to British dependencies allowing Apple to pay zero corporation tax. Nor do I buy the 'everyone else is doing it' argument. I don't accept that excuse from my kids, let alone a government.

These are British territories. Why won't the British government impose minimum standards - say corporation tax or at least 15%? Why do we accept higher income tax so that Apple can pay nothing? Why is that transfer of income acceptable?

I think this where the distinction between British territories and being part of the UK. I'm not sure wand IOM but the channel islands technically report to the privy council (I believe) rather than the government in Westminster.

Westminster has no direct say over the channel islands and so negotiates with them (albeit from a position of great strength). Westminster doesn't have a mechanism to impose laws on the channel islands.

Or the isle of man they are a dependency not colony or crown territory they are near enough an independent country only relaying on the uk for military protection

The UK Government has no ability to change the laws in the Crown dependencies. They are all separate legal jurisdictions. Unless you're proposing that we forcibly invade them, overthrow their elected Governments, and do what we like?

Tax avoidance is legal
Tax evasion is illegal

Why would the governament clamp down on a perfectly legal practice? Not to put to fine a point on it, all your pensions are invested in these types of offshore schemes so unless you want to live in absolute penury, be careful what you wish for

One of the biggest problems is that HMRC can't afford to pay for the best tax accountants and experts. Anybody 'good' gets paid a damn sight more in the private sector and HMRC don't have the funds to fight all the legal loopholes that those tax accountants throw at them. So they make deals and those companies end up paying a fraction of what they 'legitimately' owe as HMRC would rather get a bit than nothing after years of wrangling.

This is the very reason I don't declare income from my part time job.

Papaya - what? You don’t declare income from your part time job?

That’s illegal tax evasion, not avoidance.

Its not because I'm avading tax, not evading. I've found a loophole.

The best accountants / legal teams don’t work for the government, they work for Amazon, Starbucks, Vodafone ect who can afford to pay them the big bucks that the Governmne can’t. They will always be one step ahead in terms of legal loopholes that allow their clients to work like this.

Where corporations and the super-wealthy are concerned, governments generally have a choice between a tax take of 5% of billions, or 40% of nothing.

Its not right, I agree but allowing a degree of 'flexibility' in the taxation system results in a better outcome for the Treasury overall.

Who can blame people wanting to avoid tax? We would all avoid it if it were possible. Lets be honest,most of the outrage is because they can do it and we can't.

If a guy gets paid cash in hand we think its dodgy.

Government are quite happy fleecing the proletariat via PAYE and other automated systems because thats what we are all here for.

We are not free, we are simply slaves of UK PLC.

Bottom line, the wealthy and powerful run this country and every other country in the world. The UK relies heavily on financial services for its GDP .

If UK Government and the incompetent HMRC clamped down, some other country would simply give shelter to the wealth and benefit from it so is it to be British colonies/The UK/ The CI/IOM who are to shelter all the cash or some third world dump? Better us than them because some of that wealth inevitably trickles down.

Take for example the recent scandal about over priced new build dumps being bankrolled by taxpaer money to benefit housebuilder profits aka helptoby.

All sold on leaseholds with ever increasing agreements.

Ordinary people enslaved to huge mortgages, subjugated and controlled.

Lease holds

Taxpayers money sent to housebuilders to build slaveboxes for workers.

A big protest saying how unfair it was and people should be able to buy their leasehold. Fair enough..

Meanwhile over on the stolen lands of the duchys of cornwall and lancaster,,well no,you cant buy your lease..why not?

Because you are a mere serf and a tenant upon the rich mans land. A flea on his rump.

The British government has limited power over Jersey, Guernsey or the Isle of Man (the Crown Dependencies) or Bermuda, Gibraltar, the Falklands, the Caymans, and others (the British Overseas Territories). Neither CDs nor BOTs are part of the United Kingdom. We do have some sway over defence and foreign policy; we certainly can't start rewriting their tax laws.

More broadly, no government, of either hue, will ever truly close tax loopholes, because they're too useful an electoral tool. Whether that's making it look like they're being tough on corporations, or making it look like they're removing a tax burden from lower earners by increasing the personal allowance. Political parties like to be able to pull a few levers, rearrange a few controls, without having to destroy the control room entirely.

Furthermore, it's a slippery slope conceptually. Remove tax advantages for - say - big businesses or rich people, and there's just that bit less of a blocker to subsequently removing tax-free pension contributions, or lower VAT on domestic heating fuel, or the tax-free personal allowance up to £11,500. Moral arguments tend to get bulldozered by legal ones.

Because there are some exceptionally clever people out there whose job it is to find loopholes and exploit them. As soon as HMRC closes one, they find another. Also the UK government has no influence over how banking in Switzerland, Mauritius or other places work.