Another Tax Avoidance scam uncovered

[Osem]

The thing is there's less reason to go to the bother and risk of avoiding/evading tax if what you're paying is less. I may be wrong but seem to recall that higher rate tax cuts during Thatcher's time actually yielded more revenue. Of course there's a big difference between the super rich, rich and just plain well off so we shouldn't lump them all in together. Having said that if the tax system was simpler, there'd be far fewer ways to avoid/evade it and more resources available to chase those who were doing so.

Originally Posted by Damien

I don't see how that would raise enough money without massively hitting the less wealth off.

Not really ,if there was a ceiling of eg 15-17 K before tax was due ,scrap NI's altogether and take 28-30% of income for tax .No loopholes, no schemes,no dodging

---------- Post added at 11:05 ---------- Previous post was at 10:59 ----------

Originally Posted by Osem

The thing is there's less reason to go to the bother and risk of avoiding/evading tax if what you're paying is less. I may be wrong but seem to recall that higher rate tax cuts during Thatcher's time actually yielded more revenue. Of course there's a big difference between the super rich, rich and just plain well off so we shouldn't lump them all in together. Having said that if the tax system was simpler, there'd be far fewer ways to avoid/evade it and more resources available to chase those who were doing so.

Exactly, if someone is going to pay an accountant firm to save a million in tax and work out what tax they have to pay after various schemes have been used it will become cheaper to just pay the tax because there will be no loop holes .Earn a million ,owe £330,000 simple ,HMRC would be a quarter the size ,the government would have a better idea of how much they have to spend and tax receipts would go up .

Originally Posted by martyh

Not really ,if there was a ceiling of eg 15-17 K before tax was due ,scrap NI's altogether and take 28-30% of income for tax .No loopholes, no schemes,no dodging

Would 28% to 30% meet the amount we take in now? It also seems unfair that someone on 20k for example would pay a lot more as a portion of their income than someone else. It's effectively a large tax increase on the less well off and a nice tax cut for the rich. I am not sure how it would avoid dodging since income tax now isn't that hard to understand, people still dodge it. They dodge it because they want to keep more of their money and in some cases plain dishonest. They'll try to do it anyway.

These scheme would still work with a flat rate of income tax. It was an exploitation of Gift Aid. We need to make tax simpler to understand but by talking all sorts of these schemes rather than changing the rate of income tax.

I agree about combining NI and income tax however.

Originally Posted by Damien

The rich could still avoid the tax though. Presumably it would have to be an income tax and thus the rich will use similar loop holes.

No because those loopholes would not exist

Originally Posted by martyh

No because those loopholes would not exist

Why? What other stuff would change because these loopholes often do not involve income tax?

Originally Posted by Damien

Would 28% to 30% meet the amount we take in now? It also seems unfair that someone on 20k for example would pay a lot more as a portion of their income than someone else. It's effectively a large tax increase on the less well off and a nice tax cut for the rich. I am not sure how it would avoid dodging since income tax now isn't that hard to understand, people still dodge it. They dodge it because they want to keep more of their money and in some cases plain dishonest. They'll try to do it anyway.

These scheme would still work with a flat rate of income tax. It was an exploitation of Gift Aid. We need to make tax simpler to understand but by talking all sorts of these schemes rather than changing the rate of income tax.

I agree about combining NI and income tax however.

I can't read the times' story you linked to as it's behind a pay wall ,but if i understand correctly what has been going on, is that people donate the money, claim tax relief on the donation whilst somehow managing to get most of the original donation back through various methods used by the charity .It may prove to be illegal what they are doing* ,if not then this would be stopped by a single tax rate as the tax relief on donations to charities would disappear .

*A lot of tax schemes of which this is one tread a very fine line between legal and illegal costing HMRC millions of £'s a year to investigate if they are illegal or not and usually end up not getting any extra tax because the clever accountants don't work for peanuts at HMRC they work for themselves inventing these schemes earning fortunes and are rarely wrong

Originally Posted by martyh

I can't read the times' story you linked to as it's behind a pay wall ,but if i understand correctly what has been going on, is that people donate the money, claim tax relief on the donation whilst somehow managing to get most of the original donation back through various methods used by the charity .It may prove to be illegal what they are doing* ,if not then this would be stopped by a single tax rate as the tax relief on donations to charities would disappear .

But why would introducing a single tax rate cause tax relief to disappear? It's there to encourage donations to Charity not to address the progressive tax system. Most tax dodges seem to be exploiting various other parts of the tax system, income tax is one of the simpler ones and harder to avoid unless people pay themselves little and give themselves massive bonuses.

Originally Posted by Damien

Why? What other stuff would change because these loopholes often do not involve income tax?

Then we aren't concerned with those because this about tax avoidance and schemes to avoid paying tax .If tax relief on gift aid is removed then people can't use it can they ,if various other reliefs used by the wealthy are removed they can't use them .Starbucks claimed a load of tax relief because they don't own the name "starbucks" through some complicated tax scheme ,so remove the relief and they can't avoid paying the tax .Basically if money is earned in this country by a company or individual then tax at a given rate will be payable ,simple

Originally Posted by heero_yuy

ALL income from whatever source will have to be declaired, be it earnings, interest, dividends, bonuses, rents, et al. And all taxed at the same rate. No reliefs, no ifs, no buts.

exactly .

Originally Posted by heero_yuy

ALL income from whatever source will have to be declaired, be it earnings, interest, dividends, bonuses, rents, et al. And all taxed at the same rate. No reliefs, no ifs, no buts.

So it's not a flat rate of income tax but a flat rate of everything tax? Would we all have to manage it ourselves at the end of the year?

[mertle]

shocked now its surfaced we have not raided it.

As we need to act fast this will be closed down now and any evidence will be shredded. Those guilty be long gone.

I am not shocked fear this much more widespread despicaple way they evading tax.

There is loads unusual charties cropping up I am sure the HMRC have certain charties as suspicious. Why we not checking validity. HAve we even got checks on new charties being set up tomorrow.

You remember the big ballyhoo when osbourne brought out to limit tax relief on donations. How a number charties kicked up royally. Why would someone stop giving if they really care to gift to that charity.

I thought the fears was strange. Those who stopped giving donations I would be very suspicious of there motives to why. Why would stop giving significent money just because you dont get tax relief.

I am starting to think now is time to investigate the charties system. Find out on how money is spent where it sent, to how charties setup up. If we did this it would be stupid anybody to set a scam during the audit. Anybody know if these was one the charties complaining.

I hope to god that those charities we trust and value out there. I hope these not implementing similar ways to give large doners gifts would be reputive immoral.

[Ramrod]

Originally Posted by Damien

I don't see how that would raise enough money without massively hitting the less wealth off.

iirc, that approach raises more tax as everyone feels that thing are fair.
Simplifying tax also would raise more tax as there would be fewer loopholes?

Good idea really.

[Itshim]

My pet one is this, Put everything on to VAT no ifs no buts at a rate that covers I.N. income tax etc. No get outs.That would encourage people to work ,save & Cut the civil service wage bill.

[Osem]

http://www.bbc.co.uk/news/uk-21812596

A tax loophole that allows firms to dodge £100m a year in National Insurance will be closed under a new scheme targeting offshore payroll services...

...Mr Alexander said around 100,000 employees - mostly teachers, nurses and oil and gas workers - were believed to be paid through offshore payroll services set up in tax havens such as Jersey and Guernsey and could be ineligible for statutory sick pay, but completely unaware of that status.

It's not very clear but presumably it relates to this:

http://www.bbc.co.uk/news/uk-politics-17927792

More than 2,000 public-sector workers could be avoiding the full rate of income tax through special contracts, government research has found.

An investigation was ordered after a civil servant was found to be getting paid £182,000 without deductions for tax or National Insurance.