4 ms·

As someone who was under investigation a few years ago by the HMRC who thought I was doing something naughty, which I wasn't, absolutely no flipping way. Tax i

by bananas 12y ago

As someone who was under investigation a few years ago by the HMRC who thought I was doing something naughty, which I wasn't, absolutely no flipping way. Tax is one of the few areas in which you are morally and legally guilty until proven innocent (asset freezes and Jimmy Carr for example).

UVB-76 12y ago
How do you mean? To all intents and purposes Jimmy Carr was "guilty" of participating in a tax avoidance scheme, and admitted wrongdoing.
- ZenPro 12y ago
  In what way is avoiding tax through a legal vehicle guilty of a crime? Do you volunteer extra tax when you don't have to? Tax avoidance/tax efficiency is not tax evasion.
  - matthewmacleod 12y ago
    I'm pretty sure that in the UK, participants in tax avoidance schemes are required to log details of them with HMRC under the DOTAS (Disclosure of Tax Avoidance Schemes) rules. There are a variety of tests which determine whether or not a particular arrangement is disclosable.
    - ZenPro 12y ago
      You do now. You didn't have to then. My father in law is a senior partner in a national accountancy firm. He refers to it is as the Jimmy Carr disclosure.
  - UVB-76 12y ago
    I did not say Jimmy Carr admitted criminal wrongdoing. I am well aware of the distinction between tax avoidance and tax evasion, but in many jurisdictions (including the UK) there is legislation that also renders tax avoidance schemes illegal if the arrangements are sufficiently artificial or abusive. Since the Carr affair, HMRC have implemented the General Anti-Abuse Rule (GAAR). Although it has not, to my knowledge, been tested at a tax tribunal, I am fairly confident the arrangement Carr entered into would be deemed abusive under this new legislation.
    - ZenPro 12y ago
      Previous comment used the term legally guilty. You then referenced Jimmy Carr as an example and used the words guilty inferring legal and moral guilt. He was guilty of neither but he had a public persona to protect and admit wrongdoing where none existed. If subsequent legislation attempts to limit TAS with the "fair admittance" rule of checking the box it has no retrospective bearing on the conduct of Jimmy Carr.
- bananas 12y ago
  Avoiding tax is not illegal. Most business do this even by paying dividends versus salary for example. Evading tax is. He was avoiding tax.
  - james1071 12y ago
    What is your point about Jimmy Carr? He stopped using an avoidance scheme once it was reported in the media-noting to do with the HMRC.
  - swombat 12y ago
    It's more complicated than that. He was using a so-called "Registered Tax-Avoidance Scheme" (TAS for short). TAS's are basically entire schemes built around a loophole in the tax law. Each time the government announces a new Budget, they include a raft of measures to try and plug these holes, but there are companies that specialise in finding these loopholes and helping their clients exploit them (for a fairly sizeable fee). They pay some top lawyers to provide a quote that "yes, damnit, the loophole exists", and then they go on their merry dance to acquire clients to make use of those loopholes. As my accountant explained it to me at the time (before I decided to stay the hell away from those things), the difference between regular tax avoidance and registered tax avoidance schemes is that in the first case, you and your accountant think you're paying a fair amount (and HMRC may disagree), whilst in the second case, you, your accountant, and HMRC all know you're playing dirty. Example: one of the more popular TAS's was to set up an employee benefits trust, with you (the business owner) as the beneficiary. Payments to the trust could be seen as staffing costs, thereby attracting no Corporation Tax on profit. The trust would then loan you the money at zero interest and with no expectation of it ever being repaid, thereby avoiding income tax. Bingo - zero tax! But obviously exploiting a hole in the rules. This has been progressively clamped down on - first by requiring people using TAS's to declare that they are using them (which allows HMRC to target them more effectively), and in the latest Budget, by requiring users of TAS's to pay the tax first as if they weren't using the TAS and then argue with HMRC over whether the TAS is valid. I think overall the TAS thing is on the way out... but it's really worth drawing the line between regular tax avoidance (i.e. reducing your tax using very legit mechanisms like capital allowances, R&D tax credits, dividends/salary splits, etc) vs registered tax avoidance schemes, which are just dirty business. As far as I know, Jimmy Carr was using a registered tax avoidance scheme.

by bananas 12y ago

UVB-76 12y ago

How do you mean? To all intents and purposes Jimmy Carr was "guilty" of participating in a tax avoidance scheme, and admitted wrongdoing.

ZenPro 12y ago
In what way is avoiding tax through a legal vehicle guilty of a crime? Do you volunteer extra tax when you don't have to? Tax avoidance/tax efficiency is not tax evasion.
- matthewmacleod 12y ago
  I'm pretty sure that in the UK, participants in tax avoidance schemes are required to log details of them with HMRC under the DOTAS (Disclosure of Tax Avoidance Schemes) rules. There are a variety of tests which determine whether or not a particular arrangement is disclosable.
  - ZenPro 12y ago
    You do now. You didn't have to then. My father in law is a senior partner in a national accountancy firm. He refers to it is as the Jimmy Carr disclosure.
- UVB-76 12y ago
  I did not say Jimmy Carr admitted criminal wrongdoing. I am well aware of the distinction between tax avoidance and tax evasion, but in many jurisdictions (including the UK) there is legislation that also renders tax avoidance schemes illegal if the arrangements are sufficiently artificial or abusive. Since the Carr affair, HMRC have implemented the General Anti-Abuse Rule (GAAR). Although it has not, to my knowledge, been tested at a tax tribunal, I am fairly confident the arrangement Carr entered into would be deemed abusive under this new legislation.
  - ZenPro 12y ago
    Previous comment used the term legally guilty. You then referenced Jimmy Carr as an example and used the words guilty inferring legal and moral guilt. He was guilty of neither but he had a public persona to protect and admit wrongdoing where none existed. If subsequent legislation attempts to limit TAS with the "fair admittance" rule of checking the box it has no retrospective bearing on the conduct of Jimmy Carr.
bananas 12y ago
Avoiding tax is not illegal. Most business do this even by paying dividends versus salary for example. Evading tax is. He was avoiding tax.
- james1071 12y ago
  What is your point about Jimmy Carr? He stopped using an avoidance scheme once it was reported in the media-noting to do with the HMRC.
- swombat 12y ago
  It's more complicated than that. He was using a so-called "Registered Tax-Avoidance Scheme" (TAS for short). TAS's are basically entire schemes built around a loophole in the tax law. Each time the government announces a new Budget, they include a raft of measures to try and plug these holes, but there are companies that specialise in finding these loopholes and helping their clients exploit them (for a fairly sizeable fee). They pay some top lawyers to provide a quote that "yes, damnit, the loophole exists", and then they go on their merry dance to acquire clients to make use of those loopholes. As my accountant explained it to me at the time (before I decided to stay the hell away from those things), the difference between regular tax avoidance and registered tax avoidance schemes is that in the first case, you and your accountant think you're paying a fair amount (and HMRC may disagree), whilst in the second case, you, your accountant, and HMRC all know you're playing dirty. Example: one of the more popular TAS's was to set up an employee benefits trust, with you (the business owner) as the beneficiary. Payments to the trust could be seen as staffing costs, thereby attracting no Corporation Tax on profit. The trust would then loan you the money at zero interest and with no expectation of it ever being repaid, thereby avoiding income tax. Bingo - zero tax! But obviously exploiting a hole in the rules. This has been progressively clamped down on - first by requiring people using TAS's to declare that they are using them (which allows HMRC to target them more effectively), and in the latest Budget, by requiring users of TAS's to pay the tax first as if they weren't using the TAS and then argue with HMRC over whether the TAS is valid. I think overall the TAS thing is on the way out... but it's really worth drawing the line between regular tax avoidance (i.e. reducing your tax using very legit mechanisms like capital allowances, R&D tax credits, dividends/salary splits, etc) vs registered tax avoidance schemes, which are just dirty business. As far as I know, Jimmy Carr was using a registered tax avoidance scheme.