Tax havens exposed in huge law firm leak

[Stop It]

Originally Posted by Ramrod

Exactly.

So you support legal highs then?

Same sort of thing. Some of these schemes are usually based on schemes that are illegal, only modified to not be caught in current rules. HMRC usually find these schemes and have to then show they actually break the intention of the rules. This is exactly the same MO of those making legal highs, take a (usually illegal) drug, change it chemically a bit, presto, legal.

As heero yuy has said, the only way to have HMRC able to enforce the tax rules as they are intended is to have a system where any new "Tax optimisation" scheme has to be cleared before use. Alas I'm not even sure that's allowed.

As for Osem's comments, I agree. Don't hate the player, hate the game. I cannot blame anyone for taking every measure to protect their money. Nobody likes the taxman, but we need fairness when it comes to paying your dues. if there was a loophole to PAYE not only would many people exploit it, but you'd likely see a harsh clampdown on it too. There's a perception that the richer you are, the softer HMRC seems to be.

The message to the masses (Likely all of us included) is this: "You WILL pay your taxes, be it PAYE or via Self Assessment".

The message to the elite and rich seems to be: "Please pay your taxes, pretty please" and while HMRC are getting tougher, leaks like this show it's way to easy for those with money to make sure they do not contribute their dues to this country as they should. We need a tax system that makes sure ALL have the same tax regime, with clear, and fair tax optimisation schemes that promote investment coming into the country instead of allowing money to escape.

Originally Posted by Stop It

So you support legal highs then?
.

That is not even close to being a valid comparison .Beer ,wine, coffee are all legal highs,Cannabis is getting ever closer to being legal ,the point is that legislation changes and evolves as society changes and evolves .
The biggest problem that HMRC have is that past court cases have set precedents that cannot simply be ignored .The government has spent a lot of time setting up GAAR legislation to counteract these precedents set by courts

such as these judgements

“My Lords, the highest authorities have always recognised that the
subject is entitled so to arrange his affairs as not to attract taxes
imposed by the Crown, so far as he can do so within the law, and that
he may legitimately claim the advantage of any express terms or of
any omissions that he can find in his favour in taxing Acts. In so
doing, he neither comes under liability nor incurs blame.”

“Every man is entitled if he can to order his affairs so that the tax
attracted under the appropriate Act is less than it otherwise would be.
If he succeeds in ordering them so as to secure this result, then,
however unappreciative the Commissioners of Inland Revenue or his
fellow taxpayers may be of his ingenuity, he cannot be compelled to
pay an increased tax.”

“No man in this country is under the smallest obligation, moral or
other, so as to arrange his legal relations to his business or to his
property as to enable the Inland Revenue to put the largest possible
shovel into his stores. The Inland Revenue is not slow – and quite
rightly – to take every advantage which is open to it under the taxing
statutes for the purpose of depleting the taxpayer’s pocket. And the
taxpayer is, in like manner, entitled to be astute to prevent, so far as
he honestly can, the depletion of his means by the Inland Revenue.”

These judgements have been used for over 70 yrs and only recently have the GAAR regulations set them aside

A worthwhile read

[Ignitionnet]

This doesn't look good for Mr Cameron.

David Cameron personally intervened in 2013 to weaken an EU drive to reveal the beneficiaries of trusts, creating a possible loophole that other European nations warned could be exploited by tax evaders.

The disclosure of the prime minister’s resistance to opening up trusts to full scrutiny comes as he faces intense pressure to make clear whether his family stands to benefit from offshore assets linked to his late father.

It may be a 'private' matter for some, though Jimmy Carr didn't get the same luxury of pleading privacy, but not for the Prime Minister, especially given his rhetoric in public. Needs to come clean and, as those who are fine with the government rifling through our private communications are fond of saying, he should have nothing to fear if he's nothing to hide.

The extremely carefully worded statements seem to indicate there is something to hide. This ignoring that his Chancellor gave the appearance of defensiveness when pressed on the matter.

If we were as democratic as we like to think we are the political careers of these two would both be in serious jeopardy.

Trusting these two with tax reform is like trusting the cast of Benefits Street with welfare reform.

In other news bears excrete in woods and the London property market is influenced by laundered cash.

---------- Post added at 10:30 ---------- Previous post was at 10:25 ----------

Originally Posted by martyh

That is not even close to being a valid comparison .Beer ,wine, coffee are all legal highs,Cannabis is getting ever closer to being legal ,the point is that legislation changes and evolves as society changes and evolves .]

It's a perfectly reasonable comparison if you actually make the comparison intended.

The presumption in law is, or at least will be, that all psychoactive substances are banned unless explicitly permitted.

If the government can operate on that premise for those it seems fair to ask why they can't state that all tax 'efficiencies' are illegal unless explicitly stated otherwise and to ask how someone can support the apparent discrepancy in the treatment of the two.

[Stop It]

Originally Posted by martyh

That is not even close to being a valid comparison .Beer ,wine, coffee are all legal highs,Cannabis is getting ever closer to being legal ,the point is that legislation changes and evolves as society changes and evolves .
The biggest problem that HMRC have is that past court cases have set precedents that cannot simply be ignored .The government has spent a lot of time setting up GAAR legislation to counteract these precedents set by courts

such as these judgements

These judgements have been used for over 70 yrs and only recently have the GAAR regulations set them aside

A worthwhile read

Yes it is valid, and I don't understand why you disagree with that? What you wrote doesn't contradict but provide an example of it. If the law is constantly evolving, it is because people are always trying to find ways to go around, rather than break it. Tax law is an especially good example.

I fully support the right of people to optimise their tax affairs in a legal, transparent manner. I cannot support those who invent blatantly illegal schemes that are only "legal" because of a change of a formally illegal scheme to avoid the bit they got caught for last time.

Funnily enough, most of the problems in this leak are money laundering, conflicts of interest and sanctions evasion. None of those things are going to fly and need looking at. The Tax avoiding bits to be fair look like standard and well used methods and while a debate on tax havens is a legitimate one, it is a separate one.

However, while you are indeed right in saying people have the right to manage their tax affairs without meddling, they do not have the right to lie to HMRC. While the likes of Google, the Guardian, Starbucks etc are aggressive tax avoiders, they are also relatively simple to see what they're doing, whether you like the schemes or not is another matter. A millionaire declaring an income of a pittance and paying little tax, while operating a company provided by Mossack Fonseca (And not declaring ownership to HMRC) is getting rather close to tax evasion, especially if it's used to evade CGT.

Originally Posted by Ignitionnet

It's a perfectly reasonable comparison if you actually make the comparison intended.

The presumption in law is, or at least will be, that all psychoactive substances are banned unless explicitly permitted.

If the government can operate on that premise for those it seems fair to ask why they can't state that all tax 'efficiencies' are illegal unless explicitly stated otherwise and to ask how someone can support the apparent discrepancy in the treatment of the two.

No it's not ,we are talking about tax law not matters of health in society .It's ridiculous to suggest that the application of law deciding what will or will not harm society is remotely the same as tax law.

---------- Post added at 11:37 ---------- Previous post was at 11:23 ----------

Originally Posted by Stop It

Yes it is valid, and I don't understand why you disagree with that?

No it's not,i will elaborate.

In reply to my statement of ".You really can't blame people for doing something that was legal"

Hero replied "Exactly"

You then commented "so you approve of legal highs then".

In the context of this thread abiding by tax law is all that matters, morality has no bearing .If it is legal then anybody can avail themselves of the benefits of abiding by the law ,only when it has been determined that a certain scheme is illegal do people have to stop using it .

If we where discussing the pros and cons of drug abuse then your comment would have validity.

[Stop It]

Originally Posted by martyh

No it's not ,we are talking about tax law not matters of health in society .It's ridiculous to suggest that the application of law deciding what will or will not harm society is remotely the same as tax law.

It can be argued that going around tax law costs billions and that directly affects the health of our finances, and because the NHS is paid for by tax, the health of our society as well.

So yes, they are comparable, even with your bizarre bar of comparison. Frankly, I did not consider, nor care for such an arbitrary point. On a legal basis, both ideas, whether to evade tax (Again, not bona-fide, accepted tax avoidance scheme) or to evade drugs laws, the outcome is the same. Exploiting a loop-hole with the knowledge that you're likely going to find it closed is questionable ethically and legally, whether you think the impact of society is. Tax evasion is not a victimless crime.

Originally Posted by martyh

No it's not ,we are talking about tax law not matters of health in society .It's ridiculous to suggest that the application of law deciding what will or will not harm society is remotely the same as tax law.

---------- Post added at 11:37 ---------- Previous post was at 11:23 ----------



No it's not,i will elaborate.

In reply to my statement of ".You really can't blame people for doing something that was legal"

Hero replied "Exactly"

You then commented "so you approve of legal highs then".

In the context of this thread abiding by tax law is all that matters, morality has no bearing .If it is legal then anybody can avail themselves of the benefits of abiding by the law ,only when it has been determined that a certain scheme is illegal do people have to stop using it .

If we where discussing the pros and cons of drug abuse then your comment would have validity.

No, I was making the point that if you support "Legal until proven otherwise", you must support ALL other examples of this, including legal highs etc. It also means that you support the letter, rather than the spirit of the law. While that is a legitimate point of view, and a totally fine one to hold, it is not one I agree with. People wanting to exploit the law will only be encouraged to do so if everyone thought that as long as they can get off on a technicality, then their actions can go unpunished.

As Osem pointed out, there are lawyers who specialise in this for things like drink driving, and I find that reprehensible that you can break the law, and get away with it thanks to a clever lawyer. This is similar. If you can show that you are exploiting a technicality, unintended for tax evasion but not envisaged as such then you're no better than those who evade tax outright.

One of the biggest "things" the Tories correctly pointed out under the Labour Govt, was the amount and length of legislation passed by Labour over their rule of the country. This is because people saw the "letter of the law" as a target of exploitation, rather than the intentions of the law behind it. The pledge to "reduce red tape" was thus pretty much abandoned when the Tories got into power because for each layer of red tape to remove, there was someone ready to jump into the loopholes left. A sad situation to be in but reflects the reality of how our nation is governed. If it's not written down in cast iron, someone will use that, even if it's obviously not intended to be legal.

Originally Posted by Stop It

It can be argued that going around tax law costs billions and that directly affects the health of our finances, and because the NHS is paid for by tax, the health of our society as well.

So yes, they are comparable, even with your bizarre bar of comparison. Frankly, I did not consider, nor care for such an arbitrary point. On a legal basis, both ideas, whether to evade tax (Again, not bona-fide, accepted tax avoidance scheme) or to evade drugs laws, the outcome is the same. Exploiting a loop-hole with the knowledge that you're likely going to find it closed is questionable ethically and legally, whether you think the impact of society is. Tax evasion is not a victimless crime.

Now your just being ridiculous and scrabbling to justify an inane comment and reading the above you are getting confused between avoidance and evasion.You can't evade tax by using loopholes .Evading tax is illegal full stop ,it is not a question of morals or loopholes it is illegal.Avoidance is the legal use of tax laws to reduce one's tax burden

Originally Posted by heero_yuy

I thought that HMRC were moving to a position where a tax haven \ avoidance scheme had to be proved legal BEFORE it could be used?

Continually trying to close the stable door after the horse has bolted is a losers game.

They have - it came into effect late last year.

https://www.gov.uk/government/upload...blishing-3.pdf

[Stop It]

Originally Posted by martyh

Now your just being ridiculous and scrabbling to justify an inane comment and reading the above you are getting confused between avoidance and evasion.You can't evade tax by using loopholes .Evading tax is illegal full stop ,it is not a question of morals or loopholes it is illegal.Avoidance is the legal use of tax laws to reduce one's tax burden

No, and you're deliberately being obtuse.

Creations of schemes that are tax evasion and only count as avoidance because nobody thought of the scheme in question when writing a tax law is still evasion. It just hasn't been found out until someone finds the loophole.

It is the same as the creation of legal highs, one chemical (or in this case, tax scheme) is closed, and you can be assured there will be people writing the next one. it's a game of cat and mouse.

Again, for the umpteenth time. Tax avoidance, that is intended under the law is fine. Creating ways to get around the intention, if not the letter of the law is not. How many times must I say this? Your assertion that you cannot evade tax by using loopholes is ridiculous as we have seen examples time and time again of this occurring. Example: http://www.telegraph.co.uk/finance/p...-loophole.html

Originally Posted by Hugh

They have - it came into effect late last year.

https://www.gov.uk/government/upload...blishing-3.pdf

Oh, that's good then. I thought that would've never got through.

Originally Posted by Stop It

No, I was making the point that if you support "Legal until proven otherwise", you must support ALL other examples of this, including legal highs etc. .

Do you mean support or agree with .We all have to support and abide by laws ,we don't necessarily have to agree with them .Your premise that i must support everything that is legal until proven otherwise is correct ,i don't have to agree with it ,Heero doesn't have to agree with legal highs but he does have to support peoples right to use them .People using loopholes in tax law are free to do so until the hole is closed regardless of who agrees and who does not .It is the basis of our legal system

[Stop It]

Originally Posted by martyh

Do you mean support or agree with .We all have to support and abide by laws ,we don't necessarily have to agree with them .Your premise that i must support everything that is legal until proven otherwise is correct ,i don't have to agree with it ,Heero doesn't have to agree with legal highs but he does have to support peoples right to use them .People using loopholes in tax law are free to do so until the hole is closed regardless of who agrees and who does not .It is the basis of our legal system

As I made clear above, I mean support. In the US Supreme Court there are Constitutional originalists and those who think that it is a framework and thus open to interpretation.

https://en.wikipedia.org/wiki/Living_Constitution

Both views have perfectly valid arguments. I am a supporter of a living framework for our legal system. Many things would've been written into law if they were known about and a legal framework needs to be flexible to adapt to new challenges and more importantly, that people should respect the intention, as well as the letter of the law.

If a bad law is created, the best way to prove it is bad, and thus punish whoever thought it via the democratic process. In the case of Tax law, if certain tax classes are too high, then push for them to be lowered. In a country which running a deficit however, that is certainly up for debate.

[Osem]

Everyone's talking about tax havens and I hear a lot of TV commentators criticising them but how many of them run their affairs as limited companies to avoid tax? All perfectly legal of course but they can wind up earing far more and paying far less tax than ordinary people. Is that more of less morally wrong than having funds offshore and avoiding tax that way?

Here are 10 advantages you should bear in mind when deciding what business structure you should use for your venture;

1. Tax

The main advantage of running your business as a limited company is that you are likely to pay less personal tax than a sole trader.

Company profits are subject to Corporation Tax. Small businesses are taxed at the ‘small profits rate’ which is currently set at 20%. Larger companies currently pay corporation tax at the ‘main rate’ of 21% on profits over £1.5 million. From April 2015, both rates will be 20%.
If you are the director and shareholder of a limited company, you may choose to take a small salary and take most of your income in the form of dividends. By doing this you can minimise the amount of National Insurance Contributions (NICs) you have to pay because dividends are taxed separately, and are not subject to NICs.

As a sole trader, your entire income is subject to NIC rules. Running your business as a limited company could therefore help you to take home more of your earnings.

http://www.bytestart.co.uk/limited-c...dvantages.html

A quick check of the Companies House website will reveal how many wealthy celebrity types run their affairs in this manner.

[heero_yuy]

Originally Posted by Hugh

They have - it came into effect late last year.

https://www.gov.uk/government/upload...blishing-3.pdf

Good news! Thanks for the link Hugh.

---------- Post added at 13:24 ---------- Previous post was at 13:08 ----------

Originally Posted by Osem

A quick check of the Companies House website will reveal how many wealthy celebrity types run their affairs in this manner.

And the not so wealthy. In my sector many one-man-bands like myself run our affairs this way and not just for tax purposes. As a limited company clients, suppliers etc can only sue the company, not myself personally, so long as I have acted in good faith and professionally. Only company assets can be siezed in pursuit of defaulted debt payments.

It is also the case that many larger companies that come to the independant sector prefer to work with a properly constituted limited company that is also VAT registered. I take care of payroll, VAT, dividends, liability insurance and sending out quotes, whilst the client just deals with specifications, contracts / purchase orders and final payment.

There is one other aspect where HMRC really needs to tighten up is where somebody, like a footballer, is only really employed by one employer (The club) and is likely to be in contravention of IR35. They seem to wangle a way round this.

Originally Posted by Stop It

No, and you're deliberately being obtuse.

Creations of schemes that are tax evasion and only count as avoidance because nobody thought of the scheme in question when writing a tax law is still evasion. It just hasn't been found out until someone finds the loophole.
.

Tax schemes usually operate within the letter of the law and are legal ,the only reason they fail is because a tribunal rules that more tax is due because certain criteria have not been met negating the benefits of the scheme .Tax evasion is the deliberate attempt to not pay tax through misrepresentation of facts.You simply cannot say that all schemes are evasion because they are not and 20% of people using such schemes face no penalties at all and even more have the liability reduced on appeal .Tax evasion makes you a criminal ,tax avoidance does not even if more tax is due after the tribunal.

Again, for the umpteenth time. Tax avoidance, that is intended under the law is fine. Creating ways to get around the intention, if not the letter of the law is not. How many times must I say this? Your assertion that you cannot evade tax by using loopholes is ridiculous as we have seen examples time and time again of this occurring

Only in the court of public opinion .

Here's an example of deliberate avoidance .I had a choice a month ago to either buy a new van for work outright or lease one for 3 yrs , I chose leasing because the cost is 100% allowable against tax thus reducing my tax burden ,do you think that is acceptable or do you think i should be forced to take the less tax efficient option of purchasing a van because the country is getting less tax ?

[Osem]

Originally Posted by heero_yuy

Good news! Thanks for the link Hugh.

---------- Post added at 13:24 ---------- Previous post was at 13:08 ----------



And the not so wealthy. In my sector many one-man-bands like myself run our affairs this way and not just for tax purposes. As a limited company clients, suppliers etc can only sue the company, not myself personally, so long as I have acted in good faith and professionally. Only company assets can be siezed in pursuit of defaulted debt payments.

It is also the case that many larger companies that come to the independant sector prefer to work with a properly constituted limited company that is also VAT registered. I take care of payroll, VAT, dividends, liability insurance and sending out quotes, whilst the client just deals with specifications, contracts / purchase orders and final payment.

There is one other aspect where HMRC really needs to tighten up is where somebody, like a footballer, is only really employed by one employer (The club) and is likely to be in contravention of IR35. They seem to wangle a way round this.

That goes without saying of course, they're probably the majority. However, plenty of wealthy and high profile people do it simply as an easy way to avoid large amounts of tax. Think of some of our best known personalities and put their names into the Companies House website then see how many turn up their as directors with partners as secretaries etc. It's certainly not illegal but it is being done in many cases primarily for tax avoidance IMHO and I dare say a lot of major organisations also benefit from engaging their services by that means too - i.e. by not actually being their employer with all that entails.