Remember the discussion about tax avoidance being legal on the benefits thread?

[LadyBiscuit]

I was shouted down by a lot of people who said that it was okay because it wasn't actually illegal and benefit fraud cost the UK a lot more. The HMRC estimates it costs us £14bn a year. Kind of puts benefits cheats into perspective a bit doesn't it?

well if ISA is tax avoidance so is having a private or company pension - as both aviod paying tax

I think tax loop holes is what the op means and there is a differnece between finding loop holes in paying tax and using a govermetn incentive to not pay tax

otherwise why would the goverment be keen to stop the tax loopholes and yet promote ISAa nd pensions which also avoid the need to pay tax

The figures vary in the last two weeks between 14 billion and 70 billion in tax avidence thorugh loop hoels such as living ina none tax paying country and signing over a company to your wife to aviod paying £285 million a year in tax

yes BB, you are right about the cheat-evasion thing. to my mind, but what is being questioned here is the unfolding of v. rich people possibly practicing tax evastion by use of accounts abroad. No morethan that.
and as I indicate, we are fools as a country to get worked up about cheats whe nthe stats show that evasion is massively over represented in "missing tax".

I'm leaving senua :o Can't stand the hypocrisy.

Our tax systems are designed to favour the wealthy and help them avoid tax. Or evade it. As far as I can see, that's mere semantics.

To me tax avoidance is where someone is deiberately looking for ways to avoid paying tax that the government did not intend. Not like ISA's which were set up to give a tax break.

But the tax system is set up to tax earners up to £40 much more than anyone else, even when you get to the 50% tax bracket it is only on what is earned above that figure that they pay tax at 50% and only income tax.

You earn up to £40k in this country and you pay your stamsp, once you earn over £40K you only pay 1% stamp on your earning over this amount - hardly fair to take 15% of soemones earning over the threshld when they earn £16k and the perosn earning £100 is only paying 15% ont he first 40 over the threshold and 1% on the next 60k

yes it is gobbidligog thats because it is a really complicated system that needs an overhall and made far more simple - then possibly there owuld be far less loop holes to sell your business to your mistress for tuppence

Ok. 2 examples:

1. You choose t onot help a liitle old lady of a bus though she is struggling. You are NOT evading your responsiblity as an able-bodied person. But you are avoiding it. Moral, and societal difference.

1. Show the accounts of a benefits-dependent person to a tax account and they will withdraw as there is no financial gain. Show them the accounts of a wealthy person/company and they will be gleeful about the prospect of business to "Help" the client pay less tax in all sorts of complex manners.

Tax accounts have their role, to ensure fiduciary responsibilites are being met..BUT..they also advise about how to go one step beyond. THIS is where the initiative about Swiss accounts break with "tradition".

accountants of course, along with lots of other errors...

So the little old lady tells you that she brought you up, feed you and helped put a shirt on your back. the old lady tells you that really you must help her of the bus - but you look the other way and put your fingers in your ears so that you don't hear her, then you sing a happy tune to make doubley sure that you don't hear the message loud and clear

ivy - not sure there on what you are saying. I could guess.

Tax mitigation needs to be distinguished from tax avoidance.
People are perfectly entitled to structure their affairs and transactions in such a way so as to minimise their exposure to tax - the underlying 'holy grail' as far as HMRC are concerned is that transactions generally have to be bona fide commercial and not undertaken solely or with the main purpose of avoiding liability to tax.

One has to remember that HMRC wil be facing job cuts along with other departments. This report though suggest that £14bn is being lost to avoideance/evasion. One could argue they need more HMRC staff to cut that figure and the savings would pay for the cost of employing the staff.

I find that interesting.

Quite, Roobie. It is the avoidance/evasion waters which are horribly muddied.

buts lets face it. It has always been thus in the UK. We as a nation are awfully stupid about who pays what. The real parasites are the tax barristers who cream millions out of the system they were allowed to create.
One only hopes that some sanity will be introduced as a result of all of this.

The OP fails to distinguish between 'immoral' and 'illegal'. If we were to clamp down on immorality (and we'd first have to work out exactly who's morals apply) then there wouldn't be a person in society unaffected.

It may be immoral not to volunteer to pay £100 in tax if £90 is deemed acceptable, but it is not illegal. However it is illegal as well as immoral to get a bill from HMRC for £100 and refuse to pay altogether. Lying in order to claim a benefit to which you are not entitled is exactly the same.

It takes a change in the law to change behaviour. I think that's what we will see in due course.

Jane and Bill are worried about having enough money. Jane is going to return to work after having a baby but it's expensive to find childcare. So one of them could stay home instead. However they decide they will both go back part time and both claim the £6475 single person allowance. This means they don't pay tax on an extra 6475 a year saving £1295 than if only Bill had worked and Jane had stayed home. Are they pernicious tax evaders who should be drummed from these shores or exercising their right under English law lawfully to minimise the tax they pay? I think the latter and just because they might earn instead 100x more doesn't mean the principle changes however green with jealousy those unable to earn large sums might be.

In fact so says the law. Every tax payer is entitled to organise their tax affairs to pay the minimum tax necessary. You can claim pension tax relief. You can deduct business expenses from your income if you are self employed. The cleaner can deduct the cost of her cleaning materials. She can deduct the cost of those who work under her, if there are any, as business expenses etc etc.

As said above the last Government has made tax law very complicated. They could have done what the Tories began so successfully when they brought tax down to 40% and also the lower rate and removed the incentives to avoid taxes of at one time up to 99% on UK income. Simplicity reduces evasion.

Get rid of all the tax breaks, allowances, child credits etc and just have one rate of flat tax at a rate we can afford and then they will find the tax avoidance schemes and plans and industry simply with on the vine.

Yeah, one flat rate of tax must be very attractive to rich people who would be far better off. Not particularly fair, though, is it?

Point is society pours a great deal of scorn on the poor who fiddle benefits but either turns a blind eye to or even praises the rich who cost us far more by fiddling their taxes. (Or making full use of every loophole, if you prefer.)

how does avoidance cost the govt anything? If they are legitimately minimising their tax bill then the state aren't entitled to any of it anyway so have not been cost anything. If they are using illegitimate methods thens it's not avoidance.

" society pours a great deal of scorn on the poor who fiddle benefits but either turns a blind eye to or even praises the rich who cost us far more by fiddling their taxes"

British society has determined that tax evasion is illegal and has the ability to fine & ultimately imprison people who evade tax. That is neither turning a blind eye nor praising.

And what about tax avoidance? What about state-owned banks using taxpayers' money to engage consultants to tell their staff - employed by the public - how to avoid their taxes? What about corporate tax avoidance - Vodafone or Tesco spring to mind?

Read any thread on here about tax avoidance and see how many people comment that it's wise or intelligent or sensible or otherwise praiseworthy to put as much money or effort as you can into avoiding paying your fair share.

Result is significant numbers of the well-off expect people who earn far less than them to pick up the slack. And cost us £14bn a year.

A flat rate of tax remains unfair on the rich which is why the community charge was so fair, everyone paid the same.

If I paid a flat tax of 30% on my invoice and so did someone on £20k a year I still pay a heap more than tehy do and get nothing extra back. I am supporting the poor who should be grateful I work hard so they can and it remains very unfair on me that I pay more than the person on average earnings so yes the flat tax remanis unfair too so we should cap it if we cannot quite stomach a community charge type system so no one pays more than say £50k tax a year and they can retain 100% of what they earn once they pay the £50k say. taht would be more fair and we;d really boost the UK economy in the process so there would be heaps more mnoey for the poor. The poor would be in clover with such a system.

"What about corporate tax avoidance - Vodafone or Tesco spring to mind?"

Companies, like individuals, will always aim to get the best value for money and run their affairs so that they don't incur more costs, including paying more tax, than they have to. They have a duty to maximise their profit back to their shareholders and their customers (us) who expect free banking and cheap groceries etc. If they didn't do this (and this applies to banks, retailers and anyone else) then they would be guilty of poor management.

If you have £5000 to spare right now and the choice of whether to put it in a regular savings account where the interest attracts 20% tax or a cash ISA where the interest is tax-free ... does choosing the first option make you morally superior or just a bit stupid?

There are some legal tax loopholes I'm aware of that require a) extremely high initial investment and b) huge time/effort/cost/expertise to take advantage of. They are not open to anyone but the super rich, in other words. But I think that Osborne is onto them and their time is up.

I would be cross if companies didn't do that. HMRC put its properties into an offshore arrangement which was hugely funny at the time when it came out but a sensible decision for them.

Ah Domininc Lawson in today's Telegraph cross that the Libs have said engaging in lawful tax avoidance is akin to benefit fraud (or indeed tax evasion)... The comments originally were made by Danny Alexander and as DL says this is the same DAS who made his London apart his second home to claim £37k allowance but then told HMRC it was his princpal home. he wants to know if DS thinks "he has the moral authoirty to tell the rest of us that we are no better than crooks if we employ an accountant to minkmise our tax bills"

We minimise our tax bills by having the savings in my name because I am under the threshold for paying tax, so the interest is tax free. That is avoidance. I don't feel immoral by doing that, just sensible.

you may not feel immoral but that doesn't mean it isn't immoral