The problem is when the revenue believe that arrangements are in place solely to avoid tax they DO have to take court action. This is expensive so doesn't happen enough.
Mebbe we need to give the revenue more powers.
I think, once again, we are getting bogged down in the semantics and confusions between tax 'avoidance' and tax 'evasion'.
Quite clearly, it is illegal to set up any scheme by which you can 'evade' tax like in the illegitimate presentation of accounts and quite rightly so, but I cannot see that the big ticket companies have been accused of anything like that.
If, by exploiting loopholes left open by the tax administration system one is able to mitigate one's tax payments then that is fair game. As star says, the more complex you make the system, the more opportunity there is to exploit issues which in reality, are the fault of the legislators - not the tax payer.
If when buying something you shop around and you are offered a discount on the normal RRP, would you refuse it on the basis that you will not be paying as much VAT to the Treasurury?
Of course not. You'll snatch their fucking hand off! So why be so critical of people in business doing the same with their tax affairs?
Bloody hypocritical and, as TH says, the politics of envy is at epidemic proportions in the UK.
So then Ben, on that same basis, HMRC will be setting the amount of VAT to be paid (as opposed to the rate which they do now) on all goods for sale in the UK irrespective of their sale price?
HMRC don't make the law in the same way as the Police don't make law and so one can very well understand why they feel they have some grievances about the way the tax system can be interpreted.
The comment about how it affects the delivery of public services is also subjective. The Government sets the budgetary expectations (now) measured by the OBR. If they make bad decisions about the tax take, then it is the Government's fault, not the tax payers. It is very easy for Government to blame everyone else and they of course often will, but at the end of the day, if they (and this applies to successive Governments stretching back to the Crusades!) make bad law and don't collect enough because they have tried to be too 'cute' the blame lies squarely at THEIR door and public services will doubtless be affected because some bean counter (or a group of them (looks for the collective noun!)) has fucked up big time.
What is a 'fair' tax anyway?
I dont understand the point you are making about VAT.
Sorry Ben.
VAT is paid at a specified rate on virtually all goods sold in the UK. Typically, children's clothing is exempt. This means for consumers that the price you see on the ticket is the price you pay. The VAT element if applicable has already been added (its a legal requirement to show the VAT inclusive price to private consumers).
Now, take a simple example. The VAT rates have changed upwards since I left the UK of course, but hopefully this will give you a basic idea of how it works.
The RRP for an item on sale is £10. At the rate of % the goods are nett and the VAT element is That is the amount passed to the exchequer.
If the item is discounted to, say the netted down price (ie the amount without VAT going to the merchant) will be and the VAT element will be passed to the exchequer.
Therefore, by simple mathematics you have saved but the exchequer has lost
Multiply that by the millions of discounted transactions that take place every year and you can get a better idea of sizing. If the Government use their usual 'basket of goods' methodology for determining the likely VAT tax take, discounting can make a serious hole in their budgetary forecasts.
I hope that helps.
Trev, the reason that the UK Government is offering lower Corporation Tax rates is exactly to do what you suggest, to encourage international brands to set up shop in the UK as opposed to other places in Europe.
The more companies that set up shop here, the more in actual terms will be collected in tax. People in employment paying tax (or if paid below the threshold, no tax) is preferable to the economy than people on ill-afforded benefits.
Incidentally, the very idea of employing more people as opposed to having them on the benefits register is quite Marxist. But, based on the well known Micawber principle, "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." if the annual expenditure on benefits is reduced because fewer people require it, then - theoretically at least - less tax will be needed to pay for it.
So, in some respects, the Chair of the Public Accounts Committee in the House of Commons (Margaret Hodge MP, an ex Labour Minister) is being somewhat disingenuous when she condemns the likes of Starbucks for 'avoiding' paying their taxes in the UK.
Starbucks does make a significant contribution to the overall tax take by the number of staff they employ who pay into the system by their PAYE/NIC contributions and Starbucks directly by the amount of employers NICs they pay.
It is very different from shopping around and it is illegal.
Then we must agree to disagree.
Perhaps you should just take out a private prosecution to test your point. The General Commisioners of Income Tax are presumably incompetent in such matters.
Bon chance.
I really can not see what the fuss is about. If this was JLR then yeah you could moan! I make profit in Canada, Algeria, Dubai and Eire but pay tax here as my company is UK registered.
Yeah Stevie, however when you operate in the UK (regardless of where your company is based) you are liable to corporation tax on any profit.
The machinations of some of these organisation to avoid paying their due is illegal and rightly so in my view.
It is sad that the enforcement of the tax regulations is so prohibitively costly.
This is why I favour an overhaul of the system.
I think a tax regime focused on spending rather than income or profit would work well.
No. The key word is focused.
I think this is where the confusion arises.
Tax avoidance isn't necessarily legitimate.
See HMRC website for details.
