Thread: Are we bothered? Board: Purgatory / Ship of Fools.


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Posted by ExclamationMark (# 14715) on :
 
Reports yesterday (link the investments of the Royal Family to tax avoiding trusts overseas et al.

https://www.msn.com/en-gb/news/uknews/paradise-papers-5-extraordinary-revelations-from-massive-leak/ar-AAutI8q?li=AA59G2&ocid =spartanntp

Should we be concerned? Is this a question where a good example should be set by those in public life? (Note: The Duchy of Lancaster is described as the Queen's private money but it was land etc. gifted to a previous monarch by the state).
 
Posted by mr cheesy (# 3330) on :
 
The monarchy is an anathema. Is it any surprise that the wealthiest pensioner in the country has used her wealth as an investor in predatory companies which prey on the poor and in low tax overseas investments. Of course not.

I doubt that she personally knows anything about these investments, of course. I'm not sure that this changes anything.

More worrying I think personally is that there are active politicians in the House of Lords who have non-dom status and who pay little or no tax in this jurisdiction. And that twitter and facebook are being supported on a bubble of Russian cash. Next to that, what those men in black suits are doing on behalf of Queen Bess pales into insignificance.
 
Posted by BroJames (# 9636) on :
 
There is an argument to be made about the use of the Duchy of Lancaster, and its relation or not to the Civil List payments, but it doesn’t seem quite accurate to describe it as something given to the monarch by the state. At the time it was acquired by the monarch the distinction between monarch and state was far from clear, indeed it is arguable that the state as we understand it didn’t really exist at the time. Also, there seems to have been a very early (15th Century) intention to separate the Duchy from general Crown assets.
 
Posted by Martin60 (# 368) on :
 
Yeaaaahhhh, we're bothered. I expect Her excellent Christian Majesty to maximize noblesse oblige, which I'm sure she thinks she does (and she does better than most of us with our privilege I'm sure) but perhaps here is an area for improvement.
 
Posted by andras (# 2065) on :
 
I'm bothered too; actually, I'm bl**dy furious, though it's only what one would expect of these self-regarding leeches. After all, when Britain had its back to the wall in the Second World War, Mrs. Windsor's father was busily negotiating a deal to avoid having to pay tax, a deal which only ended a couple of decades ago.

Now we are assured that she pays tax 'voluntarily.' Nice work if you can get it!
 
Posted by Anglican't (# 15292) on :
 
Not really overseas, is it? Bermuda's head of state invests money in Bermuda. Cayman Islands' head of state does same.
 
Posted by L'organist (# 17338) on :
 
posted by Exclamation Mark
quote:
Note: The Duchy of Lancaster is described as the Queen's private money but it was land etc. gifted to a previous monarch by the state.
Strictly speaking not true. Some of it is land-holdings forfeited by 2 people (Simon de Montfort and the Earl of Derby) who attempted a coup against Henry III; the rest passed to the crown through various marriages. What we now know as The Duchy of Lancaster is what was gained on marriage by John of Gaunt and his oldest son, Henry Bolingbroke, decided to keep the estate as a separate entity for a male heir of the sovereign. It was later decided (I think by John of Bedford, regent for the infant Henry VI and a brother of Henry IV) that the Duchy should be for the personal use of the sovereign.

As has been pointed out, at the time the Duchy was constituted there was little or no distinction between "the state" and "the crown". In fact in separating "state" possessions from "crown" the English monarchy was centuries ahead of its European counterparts.

The perennial argument about the deal made by George VI on tax is a red-herring since his predecessors hadn't paid tax: the deal came about because of the abdication of Edward VIII (who, incidentally, ripped-off his brother blind when he went off to marry his American) and was necessary since it wasn't entirely clear what the position was in law with 2 people alive who could claim to be king (as a title) for tax purposes.

As for the current news about the Duchy monies and foreign jurisdictions:

1. The Queen is head of state of several of these so-called tax havens: what is so wrong about the monarch holding bank accounts in these places?

2. Before we all get too high and mighty about it, you'll find many pension providers do the same thing - so anyone getting a pension is likely to benefit from this sort of arrangement.

3. On a scale of 1 to 10 this is chicken-feed when compared to the corporate tax evasion of Amazon, Google, etc. Notably, Facebook paid only £2.6million on profits of nearly £60m so how about people start to beat-up Zuckerberg & Co, or organise a boycott of Instagram, WhatsApp, etc?
 
Posted by Sioni Sais (# 5713) on :
 
quote:
Originally posted by L'organist:


The perennial argument about the deal made by George VI on tax is a red-herring since his predecessors hadn't paid tax: the deal came about because of the abdication of Edward VIII (who, incidentally, ripped-off his brother blind when he went off to marry his American) and was necessary since it wasn't entirely clear what the position was in law with 2 people alive who could claim to be king (as a title) for tax purposes.


OTOH, I'm glad Edward VIII went off to marry his American. Had he been king in 1939, the second world war would never have happened, and for all the wrong reasons.
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by L'organist:


1. The Queen is head of state of several of these so-called tax havens: what is so wrong about the monarch holding bank accounts in these places?

If she wants to go and live there, then fine.

Living here, sponging off us and then just using them as a source of untaxed income is a slap in the face.
 
Posted by Karl: Liberal Backslider (# 76) on :
 
quote:
Originally posted by mr cheesy:
quote:
Originally posted by L'organist:


1. The Queen is head of state of several of these so-called tax havens: what is so wrong about the monarch holding bank accounts in these places?

If she wants to go and live there, then fine.

Living here, sponging off us and then just using them as a source of untaxed income is a slap in the face.

Exactly. The way everyone bends over backwards to defend this anachronistic sycophancy based system of inherited privilege and everything it does would be funny if it weren't so tragically and almost completely built into the British psyche.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by L'organist:

2. Before we all get too high and mighty about it, you'll find many pension providers do the same thing - so anyone getting a pension is likely to benefit from this sort of arrangement.

This is not true. The pension providers that the average worker pays into will not directly benefit from this kind of thing, they are unlikely to indirectly benefit either (via buying into funds that do) because of the disclosure requirements.

quote:

3. On a scale of 1 to 10 this is chicken-feed when compared to the corporate tax evasion of Amazon, Google, etc. Notably, Facebook paid only £2.6million on profits of nearly £60m so how about people start to beat-up Zuckerberg & Co, or organise a boycott of Instagram, WhatsApp, etc?

This is also not true. At best the problems are similar in magnitude, the amount that the super-rich have offshore is many times that of the few tech companies you name.

'They are all at it' is an argument trotted out against every attempt at tax reform ever.
 
Posted by M. (# 3291) on :
 
Tell me again what's wrong with organising one's affairs so as not to pay more tax than necessary, quite legally?

M.
 
Posted by no prophet's flag is set so... (# 15560) on :
 
It is the tax laws and regulations which are problems everywhere. The very wealthy may avoid tax entirely legally. But morally and ethically wrong.

The overseas slave trade, indentured labour, colonization were also entirely legal in the past. But wrong.

[ 06. November 2017, 12:26: Message edited by: no prophet's flag is set so... ]
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by M.:
Tell me again what's wrong with organising one's affairs so as not to pay more tax than necessary, quite legally?

For me, the two top problems are:

1. It's not something everyone has the opportunity to benefit from. Most of us can't direct our salaries through somewhere that the amount of tax paid is significantly reduced, only the rich and powerful have this opportunity.

2. By skimping on tax payments that means that the finances necessary to maintain social structures (police, roads, health care, education etc) need to be be met by those who don't get to avoid paying taxes - ie: the rest of us pay more than we otherwise would do. Which is, in my opinion, an example of the rich stealing from the poor.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by M.:
Tell me again what's wrong with organising one's affairs so as not to pay more tax than necessary, quite legally?

There is nothing 'wrong' with it in the abstract. The issue is that these mechanisms are 'unintended' at one level - as Alan points out above they are not available to everyone, and if everyone availed themselves of them then society couldn't function in its present form.

Which is an argument for making all of these things more transparent as a step towards making tax more equitable.
 
Posted by Sioni Sais (# 5713) on :
 
quote:
Originally posted by M.:
Tell me again what's wrong with organising one's affairs so as not to pay more tax than necessary, quite legally?

M.

If you look at the beneficiaries of these loopholes, you will find that a disproportionate number of them are involved in making these laws.
 
Posted by Brenda Clough (# 18061) on :
 
Speaking as an American, if I were you I would be terribly, vividly concerned at Russian meddling in your affairs. At the very minimum, make these financial entanglements very clear. Do not be like us! Be smarter!
 
Posted by M. (# 3291) on :
 
Those are problems with the law rather than the people that take advantage of it, aren't they?

What about, for instance, salary sacrifice or even ISAs? Shouldn't people avail themselves of those?

I suppose what I'm trying to articulate is that I can understand people saying the law is wrong. That then becomes a policy matter or balancing act to decide where the line should be drawn.

But I don't understand the industrial-scale ire - not just the odd person saying 'it shouldn't be allowed' but splashed across the newspapers and tv news - against people doing what the law allows.

M.
 
Posted by lilBuddha (# 14333) on :
 
Much ado about the wrong damn thing.
It isn’t the individuals who use the laws but the laws themselves that are the real problem.
 
Posted by Dark Knight (# 9415) on :
 
You have missed the point.

Sioni said it best.
 
Posted by Alan Cresswell (# 31) on :
 
Clearly, there is an issue with the laws. I suspect a lot of the national ire is misdirected, people are angry that laws exist that legally allow people to take advantage of loop-holes to avoid paying tax that they themselves can't use.

But, I think there is also a problem with the individuals. Ultimately, the company at the centre of this set of revelations (in common with previous examples of the same sort of practice) makes it's money by helping those with a lot of money to invest get the maximum return from that investment without any other consideration. And, reducing the tax paid on that return is simply part of that equation. If the individuals were looking at their vast wealth as an opportunity to help others, while still getting a return on their investment, then I think most people would think differently. A lot of these tax havens are relatively poor countries (though, some are most definitely not), and if HM (for example) wants to help those countries by investing a few million in local banks providing affordable loans to local small businesses then I for one would consider that commendable. But, investing in a bank in a country when all they're doing is playing the global stock markets to get the maximum return is a different moral situation.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by M.:

What about, for instance, salary sacrifice or even ISAs? Shouldn't people avail themselves of those?

Completely different things and therefore a false comparison.

There's a level of intentionality and democratic control over both that there isn't over - say - the "double Irish with a Dutch sandwich".
 
Posted by Bishops Finger (# 5430) on :
 
Perhaps some of these ultra-rich fat cats need to be reminded that there are no pockets in a shroud.

1 Timothy 6:6-8

But godliness with contentment is great gain, for we brought nothing into this world, and it is certain we can carry nothing out. And having food and raiment let us be therewith content.

[Disappointed]

IJ
 
Posted by Martin60 (# 368) on :
 
quote:
Originally posted by M.:
Tell me again what's wrong with organising one's affairs so as not to pay more tax than necessary, quite legally?

M.

The law.
 
Posted by M. (# 3291) on :
 
Bugger, wrote a post and then lost it. Can't be bothered to do it again.

But (pretty unprecedentedly) I agree with lilBuddha, the people taking advantage are the wrong target.

M.
 
Posted by Sioni Sais (# 5713) on :
 
quote:
Originally posted by M.:
Bugger, wrote a post and then lost it. Can't be bothered to do it again.

But (pretty unprecedentedly) I agree with lilBuddha, the people taking advantage are the wrong target.

M.

But as I said, those who benefit most, had a lot to do with making the law.
 
Posted by lilBuddha (# 14333) on :
 
quote:
Originally posted by Sioni Sais:
quote:
Originally posted by M.:
Bugger, wrote a post and then lost it. Can't be bothered to do it again.

But (pretty unprecedentedly) I agree with lilBuddha, the people taking advantage are the wrong target.

M.

But as I said, those who benefit most, had a lot to do with making the law.
And how does this go against what I said? Targeting ire at the Queen, or any other individual who may benefit is an act of frustration that serves nothing,* whether or not they might also be involved in making the laws. Target the system which allows this to happen and change the laws.

*Not entirely true. It serves the people who make those laws because it directs emotion tangentially and voters do not have the stamina, knowledge or fucking anything to really enact change.
 
Posted by Dark Knight (# 9415) on :
 
They are the system.

How are you not getting this?
 
Posted by Alan Cresswell (# 31) on :
 
The individuals concerned have made a decision in how they invest their money, a decision that has moral implications if not legal. They have chosen not to invest their money (or, some of it) in financial institutions in the country where they reside or where they made their money, where that investment would benefit that nation through the generation of business (ie: because those banks etc they invest in employ people, and in turn re-invest often within that country) and taxation. Nor have they chosen to invest in a manner that brings those tax revenues to impoverished countries. That is their decision, made freely and without coercion.

Is that not something that should generate some ire towards those individuals?
 
Posted by lilBuddha (# 14333) on :
 
quote:
Originally posted by Dark Knight:
They are the system.

How are you not getting this?

WE are the system for fuck's sake.

How are you not getting the point that whinging about the queen doesn't fix shit? Whinging about any individual tends to serve as a pressure relief valve which would not be bad except that nothing else is done until the next, "OMG, did you hear? So-and-so is avoiding taxes!" OUTRAGE Outrage outrage outr...snore
Rinse and repeat.
 
Posted by lilBuddha (# 14333) on :
 
quote:
Originally posted by Alan Cresswell:

Is that not something that should generate some ire towards those individuals?

Yes. But the problem is that this is as far as it gets.
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by lilBuddha:
quote:
Originally posted by Dark Knight:
They are the system.

How are you not getting this?

WE are the system for fuck's sake.

Except, in many ways we aren't. We live in biased democracies, and that bias is well and truly in favour of the rich and powerful. The politicians in Parliament (or, Senate etc) are supposed to represent us. But, in practice they are either rich and powerful themselves, or in the pockets of those with the money. It takes a hell of a public reaction to convince them to vote for reform of the law to make tax avoidance illegal, because that will be to the financial disadvantage of either themselves, their family and friends, or the fat cats that fund their election campaigns. With the Panama Papers still relatively fresh in peoples memory, maybe this time there will be enough pressure to force a cosmetic tweak to the law, but I'm not holding my breath (especially as the UK has a nice juicy "sex scandal" to divert our attention from the money).
 
Posted by mr cheesy (# 3330) on :
 
Many people have less than £1000 in savings, so the idea that we're somehow all part of a system that legally allows us to avoid tax is utterly laughable.

Yes, there are British government ISAs and tax-free savings which one can take out. But they're by definition (a) limited as to the amount of saving you can have and (b) the interest rates are so low that often they're not worth having anyway.

One has to have millions and millions to put away offshore for it to even be worth the cost of sending it, never mind the management fees.

The fact is that there are bastards in this country who want all the benefits of living and working here but when the state comes around to pay for things hold out empty pockets, shrug and say "I don't have nuffink, guv."

And there is a whole other group of utter wankers who want to pretend that this behaviour is absolutely fine-and-dandy because our fantastically complicated accountancy system of law has (unsurprisingly) massive loopholes the rich can drive a private jet through.

No it isn't fine-and-dandy. Yes those who take advantage of these schemes - which might be "legal" - deserve the shame that is poured upon them.

If they didn't think it was a shameful thing to be doing, why do you think that they've been hiding it up to now?
 
Posted by Baptist Trainfan (# 15128) on :
 
Couldn't agree more, Alan and Cheesy. Just because something is "legal" doesn't mean it's "right".
 
Posted by lilBuddha (# 14333) on :
 
quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by lilBuddha:
WE are the system for fuck's sake.

Except, in many ways we aren't. We live in biased democracies, and that bias is well and truly in favour of the rich and powerful. The politicians in Parliament (or, Senate etc) are supposed to represent us. But, in practice they are either rich and powerful themselves, or in the pockets of those with the money. It takes a hell of a public reaction to convince them to vote for reform of the law
Not denying any of this. Still, it happens at our sufferance.
Whinging without action is pointless.

quote:
but I'm not holding my breath (especially as the UK has a nice juicy "sex scandal" to divert our attention from the money).

This complaint about the Queen is not different. It is a distraction.
 
Posted by Ian Climacus (# 944) on :
 
quote:
Originally posted by lilBuddha:
Still, it happens at our sufferance.
Whinging without action is pointless.

Sorry for being thick, but what can we do?

Who is going to change the laws? Not the current crop of politicians as Alan said: they're ensconced in it one way or the other.

Any leftist who tried I can see being howled down wih derision and cries of "Envy!" and "Higher taxes for all!"; and your average punter may give in.

Perhaps I'm jaded. Or just over getting my hopes up some party or set of individuals has the guts and the means to make real change. Our form of capitalism is stuffed, the elites [left and right] couldn't give a shit, and this is Evidence A of many. But I'm buggered if I know what the alternative is.
 
Posted by Arethosemyfeet (# 17047) on :
 
There is a distance of a thousand miles or more between taking advantage of tax incentives (like ISAs, pensions, salary sacrifice for childcare vouchers et al) which are specifically set up to be used for that purpose and using them as-intended and, on the other hand, creating complex structures that cost so much money that they're only worth having if you have obscene amounts of money in the first place to avoid paying tax at the appropriate rate for your income. "It's legal" is not a defence for you paying a far lower tax rate than the average earner on PAYE. Nobody pretends it was ok to pay people £1/hour before the national minimum wage came in just because it was legal. [I deleted more emotive comparisons to avoid clouding the issue]
 
Posted by Schroedinger's cat (# 64) on :
 
I am not at all bothered about this. It is a comparatively small amount of money (for the very rich), there is nothing illegal about it. Lets be clear, I would rather she had the money than most politicans.

I am more bothered about politicians who are avoiding tax, while being paid to serve the country. This is in both houses.

I think there are much bigger stories in these papers. I think there are much bigger scandals, which is why some people are, I suspect, trying to focus the attention on Her Majesty.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Schroedinger's cat:
I am not at all bothered about this. It is a comparatively small amount of money (for the very rich), there is nothing illegal about it. Lets be clear, I would rather she had the money than most politicans.

Sorry, that's factually incorrect, in aggregate it's a lot of money.

https://www.forbes.com/sites/frederickallen/2012/07/23/super-rich-hide-21-trillion-offshore-study-says/

quote:

I think there are much bigger scandals, which is why some people are, I suspect, trying to focus the attention on Her Majesty.

The focus on the queen is symbolic, the issue is far more serious. Centrists and those on the right should take this issue more seriously than most, it undermines democracy and society as presently constituted, and brings into disrepute the system they claim to want to variously reform or defend.
 
Posted by Ricardus (# 8757) on :
 
Question: how much is actually lost to the Exchequer through these schemes?

Because if the point of investing in offshore companies in Bermuda is to increase your returns (because the company pays less corporation tax in Bermuda and therefore has lower overheads) - then surely you will end up paying more tax (as an absolute figure if not as a rate) on your income from investment, simply because your income from investment is higher?

So say Ricardus Investments (Bermuda) LLP has an ROI that is 20% better than Ricardus Investments (UK) LLP, because the latter pays corporation tax and the former doesn't. But then my investment income will be 20% higher by investing in the Bermudan version - and so the tax on investment income I pay will be 20% higher as well.

(OK in practice the numbers won't be as neat as that, but ISTM it's not just as simple as offshore investment = no corporation tax = no tax at all.)

[ 06. November 2017, 21:53: Message edited by: Ricardus ]
 
Posted by no prophet's flag is set so... (# 15560) on :
 
The initial estimate of the lost tax per year for Canada is $6 billion with these schemes.

Question: does the queen need all the money and other assets she owns? How much does she do for what she's got? And why do Canadian taxpayers have to pay for royal visits here if they have so much cash and assets?

Question: why did it take a leak to learn about all these extremely rich people with foreign bank accounts? If it is legal, why was it all secret? Because outrage?
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Ricardus:
Question: how much is actually lost to the Exchequer through these schemes?

Because if the point of investing in offshore companies in Bermuda is to increase your returns (because the company pays less corporation tax in Bermuda and therefore has lower overheads) - then surely you will end up paying more tax (as an absolute figure if not as a rate) on your income from investment, simply because your income from investment is higher?

The sort of scheme being shown on Panorama earlier meant that your investment never came to you as income to be taxed. You create a fund in some zero (or very low) tax country, and have all your earnings paid into it. That fund then buys things which you, as an advisor, deem suitable - a nice house, car, boat etc which is then owned by the fund, which grants you exclusive use of it. Or, the fund gives you a loan of cash to spend on what you want (and, a loan isn't classed as income so it isn't taxed), a loan that you never intend to repay.
 
Posted by Dark Knight (# 9415) on :
 
quote:
Originally posted by lilBuddha:
quote:
Originally posted by Dark Knight:
They are the system.

How are you not getting this?

WE are the system for fuck's sake.

How are you not getting the point that whinging about the queen doesn't fix shit? Whinging about any individual tends to serve as a pressure relief valve which would not be bad except that nothing else is done until the next, "OMG, did you hear? So-and-so is avoiding taxes!" OUTRAGE Outrage outrage outr...snore
Rinse and repeat.

Good grief. This is what false consciousness looks like in the twenty-first century.

I would hope I don't have to explain that we are not actually the system here, that the polis has actually been emptied of its efficacy by the powerful, who manipulate the laws to maintain their own position, forcing the rest of us to carry the welfare state and them. Or that "whinging about it" as you put it is actually about waking people like you up to these facts.

But maybe I do.
 
Posted by lilBuddha (# 14333) on :
 
quote:
Originally posted by Dark Knight:
quote:
Originally posted by lilBuddha:
quote:
Originally posted by Dark Knight:
They are the system.

How are you not getting this?

WE are the system for fuck's sake.

How are you not getting the point that whinging about the queen doesn't fix shit? Whinging about any individual tends to serve as a pressure relief valve which would not be bad except that nothing else is done until the next, "OMG, did you hear? So-and-so is avoiding taxes!" OUTRAGE Outrage outrage outr...snore
Rinse and repeat.

Good grief. This is what false consciousness looks like in the twenty-first century.

I would hope I don't have to explain that we are not actually the system here, that the polis has actually been emptied of its efficacy by the powerful, who manipulate the laws to maintain their own position, forcing the rest of us to carry the welfare state and them. Or that "whinging about it" as you put it is actually about waking people like you up to these facts.

But maybe I do.

If you statement is accurate, then it is time for revolution.
However, it is not as dire as you contend. Or shouldn't be. Given that many of the people who are not fatalistic lack the stamina, it might be too late in a practical sense. But it is still technically possible to alter the balance.
 
Posted by Ricardus (# 8757) on :
 
quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by Ricardus:
Question: how much is actually lost to the Exchequer through these schemes?

Because if the point of investing in offshore companies in Bermuda is to increase your returns (because the company pays less corporation tax in Bermuda and therefore has lower overheads) - then surely you will end up paying more tax (as an absolute figure if not as a rate) on your income from investment, simply because your income from investment is higher?

The sort of scheme being shown on Panorama earlier meant that your investment never came to you as income to be taxed. You create a fund in some zero (or very low) tax country, and have all your earnings paid into it. That fund then buys things which you, as an advisor, deem suitable - a nice house, car, boat etc which is then owned by the fund, which grants you exclusive use of it. Or, the fund gives you a loan of cash to spend on what you want (and, a loan isn't classed as income so it isn't taxed), a loan that you never intend to repay.
Most of those things are taxable benefits in kind though.

Of course if they're being given to you by a trust in a secretive offshore domain, then you might not pay tax on them because HMRC never finds out about them, but then we're talking about breaking the law rather than finding loopholes in it.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Ricardus:
Most of those things are taxable benefits in kind though.

So you rent/lease some of them using the loan you took out from the other trust. Private planes are often owned by a leasing company with an offshore owner - with the beneficiaries 'leasing' them. As written up in this article the VAT on these planes can be avoided via other means:

https://www.theguardian.com/news/2017/nov/06/isle-of-man-refunds-super-rich-private-jets-paradise-papers

Usually, people only get caught when they get greedy and they aren't even willing to keep up a pretence of getting an income/return/benefit. Though with section of HMRC dealing with high net worth individuals being cut perhaps this isn't as hard as it once was.

You'll notice that the firms haven't attempted to launch any sort of legal action over theft of data. The businesses are in locations without treaties of this sort with the rest of the world - which is part of what enables them to operate as tax havens.

[ 07. November 2017, 07:24: Message edited by: chris stiles ]
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Ricardus:
Question: how much is actually lost to the Exchequer through these schemes?

Because if the point of investing in offshore companies in Bermuda is to increase your returns (because the company pays less corporation tax in Bermuda and therefore has lower overheads) - then surely you will end up paying more tax (as an absolute figure if not as a rate) on your income from investment, simply because your income from investment is higher?

So say Ricardus Investments (Bermuda) LLP has an ROI that is 20% better than Ricardus Investments (UK) LLP, because the latter pays corporation tax and the former doesn't. But then my investment income will be 20% higher by investing in the Bermudan version - and so the tax on investment income I pay will be 20% higher as well.

The companies are wheels within wheels, one anonymous company owned by another in a different jurisdiction.

If the money is earned in a different jurisdiction, you don't pay tax on it in the UK - and if you're a non-dom you don't pay tax on anything ever.
 
Posted by Barnabas62 (# 9110) on :
 
How about compound interest, otherwise known as usury? There is a substantial moral argument to be made against that, reaching back into biblical principles. Yet in general the world's financial system is based on the application of compound interest to all loans and debts. In an era of very low interest rates, that is a less financially onerous burden than in the past. Unless you happen to be one of those unfortunate souls who has fallen into the hands of the iniquitous short term lenders who charge exhorbitant interest to those who have little option but to use them. These services are advertised, every day, on UK TV, as solutions to short term cash flow problems. I get pretty irate about them.

So far as tax avoidance (as opposed to tax evasion) is concerned, the problem is caused by the tax laws themselves. I avoid paying tax and also recover tax I do pay through payroll giving and gift aided giving. We've got some savings but we're way short of the tax threshold for interest earned.

But my financial prudence is small beer compared with the large scale tax avoidances being reported now. I think we should avoid the politics of envy and go for reform of the tax laws which legitimise such large scale avoidance. And also recognise that it is an international problem. The global financial market is pretty hard to control without international co-operation.
 
Posted by Alan Cresswell (# 31) on :
 
All governments use taxation to encourage behaviour in pursuit of policy aims. Things like ISAs to encourage saving, Gift Aid to encourage charitable giving, conversely something like tobacco duty to discourage smoking. I can't think of anyone who has issue with tax avoidance by quitting smoking. There doesn't appear to be any obvious policy reason, any obvious benefit to the nation, in the sort of tax avoidance schemes revealed recently. At least, benefit to the UK (there would probably be benefit to Bermuda and other nations to have a lot of money in their banks).
 
Posted by andras (# 2065) on :
 
I'm rather bemused by Apple's claim that their new tax arrangements haven't resulted in them paying less tax than they did before.

Surely the real point here is that if they hadn't engaged in these (apparently perfectly legal) manoeuvres, then they'd be paying a whole lot more?

Talk about trying to pull the wool over the public's eyes!
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Barnabas62:

I think we should avoid the politics of envy

Which has been used as a label for every critique of wealth ever.

How about the politics of fairness? The rich owe their continued position to the protections and regulations afforded to them by the state which they refuse to fund.

Ultimately, these are inherently complicated issues, they are made complex by the lack of political will to tackle them:

http://www.independent.co.uk/voices/paradise-papers-tax-evasion-off-shore-can-end-havens-wealth-a8040716.html
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Barnabas62:
How about compound interest, otherwise known as usury? There is a substantial moral argument to be made against that, reaching back into biblical principles. Yet in general the world's financial system is based on the application of compound interest to all loans and debts. In an era of very low interest rates, that is a less financially onerous burden than in the past. Unless you happen to be one of those unfortunate souls who has fallen into the hands of the iniquitous short term lenders who charge exhorbitant interest to those who have little option but to use them. These services are advertised, every day, on UK TV, as solutions to short term cash flow problems. I get pretty irate about them.

Not sure what this has to do with anything. Since medieval times, most Western Christians have usually not considered interest-bearing loans as usury, but only those which charge extortionate interest rates. Islam has a different understanding - although I note that the banks still make money on loans made without interest by charging fees in a different way.

Affordable loans for things like property are a good thing. It is hard to see how to do it without some system of loans or fees.

quote:
So far as tax avoidance (as opposed to tax evasion) is concerned, the problem is caused by the tax laws themselves.
Not really it isn't. There are plenty of things that are legal (or not actually illegal - there is a difference) but are clearly anti-social and immoral.

Changing the tax-code would be an enormous task because it is very complicated. Shaming corporations and individuals who profit from taking their money off-shore is a much simpler activity.

quote:
I avoid paying tax and also recover tax I do pay through payroll giving and gift aided giving. We've got some savings but we're way short of the tax threshold for interest earned.
Nope, you've not "avoided" tax. You've used the systems set up by government to encourage savings and charitable giving.

quote:
But my financial prudence is small beer compared with the large scale tax avoidances being reported now. I think we should avoid the politics of envy and go for reform of the tax laws which legitimise such large scale avoidance. And also recognise that it is an international problem. The global financial market is pretty hard to control without international co-operation.
I'm not envious, I'm pissed.

I'm incredibly annoyed that there are people and corporations who don't pay their way.

I don't want to be them, I just want them to stop getting a free ride off the back of others who are feeling the pain of paying tax like responsible citizens.
 
Posted by Martin60 (# 368) on :
 
Careful. If we carry this to its logical, ethical conclusion it would mean that the source of this institutional corruption in the outlying crown dependencies will not be able to cheat its way to a successful Brexit for the rich to trickle down to the rest of us. The source is the UK establishment. Even the radicalized Labour party is remarkably mute about this staggering inequity, the hundred billion (100,000,000,000) lost to the UK exchequer let alone the ten trillion (10,000,000,000,000) in invisible, worthless wealth worldwide.
 
Posted by Barnabas62 (# 9110) on :
 
If Apple are paying more taxes in regimes which are, shall we say, more amenable to their commercial aims, then from Apple's viewpoint, they may be paying the same taxes, but more effectively.
 
Posted by Martin60 (# 368) on :
 
In so doing they are completely unenlightened in their self interest. The masses are your biggest market.
 
Posted by Barnabas62 (# 9110) on :
 
quote:
Originally posted by mr cheesy:
Shaming corporations and individuals who profit from taking their money off-shore is a much simpler activity.

Sure is. It remains to be seen whether it has any significant impact on tax avoidance practices.

quote:
quote:
By Barnabas62:
I avoid paying tax and also recover tax I do pay through payroll giving and gift aided giving. We've got some savings but we're way short of the tax threshold for interest earned.

Nope, you've not "avoided" tax. You've used the systems set up by government to encourage savings and charitable giving.
Which enable me to avoid paying tax on a part of my income. Does it matter that the avoidance supports what I consider to be good causes? Other people might differ, might consider that the tax I don't pay might be put to better uses. HMRC still ends up with less taxes from my income, because I'd rather that money went somewhere else.
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Barnabas62:
Which enable me to avoid paying tax on a part of my income. Does it matter that the avoidance supports what I consider to be good causes?

Yes. You are using the system in the way it is intended. Others are seeking to use a loophole in order to gain personally from the fact that the complicated system lets those with clever lawyers gain advantage from it.

quote:
Other people might differ, might consider that the tax I don't pay might be put to better uses. HMRC still ends up with less taxes from my income, because I'd rather that money went somewhere else.
I don't understand the point you are making. You're not hiding anything, you're not seeking to gain personally from it. You are simply using the system in the way it is intended to be used.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Barnabas62:
Which enable me to avoid paying tax on a part of my income. Does it matter that the avoidance supports what I consider to be good causes? Other people might differ, might consider that the tax I don't pay might be put to better uses. HMRC still ends up with less taxes from my income, because I'd rather that money went somewhere else.

They are; limited in scope, set up incentivize particular behaviours, relatively simple, explicitly allowed, transparent and ultimately under direct democratic control.

You cannot say anything like this about the tax avoidance schemes outlined in the Paradise Papers. The details on these have often been sparse specifically because those employing them did not want HMRC finding out and therefore legislating against them.
 
Posted by mr cheesy (# 3330) on :
 
It's like this:

Vehicle Excise Duty in the UK is set at different levels for different classes of vehicle - mainly but not exclusively on the emissions.

There are some vehicles with zero duty to pay.

I don't think anyone would describe someone who was driving a low emission car as being a tax evader because the vehicle didn't attract duty.

Of course this is a deliberate tactic used by the government to encourage people to drive low emission cars.

On the other hand, it might be technically possible to register a particular car as being in on vehicle duty class when (for whatever reason) is should be in another.

This might be perfectly legal. It might be that the government has somehow overlooked something that someone has taken advantage of to reduce tax - and isn't telling anyone in the hope that the taxman won't notice.

The two scenarios are not the same. In the first the government has instructed the taxman not to collect tax on certain types of vehicle. In the other, individuals are attempting to get around the law in clever ways to avoid the tax.

In the one the taxman is gesturing to the motorist and saying with a smile "come on then, do this." In the other, the motorist is putting on shades and laughing to himself that he's been able to get one over the taxman.
 
Posted by Martin60 (# 368) on :
 
B62, why is the binomial theorem a sin?
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by chris stiles:
quote:
Originally posted by Barnabas62:
Which enable me to avoid paying tax on a part of my income. Does it matter that the avoidance supports what I consider to be good causes? Other people might differ, might consider that the tax I don't pay might be put to better uses. HMRC still ends up with less taxes from my income, because I'd rather that money went somewhere else.

They are; limited in scope, set up incentivize particular behaviours, relatively simple, explicitly allowed, transparent and ultimately under direct democratic control.

In addition, Gift Aid and similar incentives to give to charity don't leave you financially better off. You'd be better off not giving anything, even though the tax man gets more that way.

In many cases it doesn't even deprive the tax man of much either (eg: if people stopped giving to cancer research charities then the tax man would get more because he's not paying the charity the tax on the gifts ... but, the cancer research needs to be done, and there will be greater demand on other income sources including the tax-funded research councils so the expenditure from the government could go up. Which, of course, governments understand and so at the relatively small cost of Gift Aid they can shift a larger proportion of government funding for medical research and other good causes to private donations. They then repeated the exercise with the stupid-tax aka Lottery).
 
Posted by Barnabas62 (# 9110) on :
 
All tax avoidance is justified in the avoider's eyes in the same way. We want to spend the money in other ways than paying it to the Revenue. If a government says some of those means of avoidance are legitimate, then it is the law which legitimates the avoidance, not my moral sense or yours.

That is why the moral argument should be applied to the tax regulations. And that itself is a moral argument. I prefer tackling underlying causes to public shaming.
 
Posted by Barnabas62 (# 9110) on :
 
quote:
Originally posted by Martin60:
B62, why is the binomial theorem a sin?

Normally I get your abstractions, Martin60, but this time you beat me.
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Barnabas62:
All tax avoidance is justified in the avoider's eyes in the same way. We want to spend the money in other ways than paying it to the Revenue. If a government says some of those means of avoidance are legitimate, then it is the law which legitimates the avoidance, not my moral sense or yours.

Nope, wrong. None of the "tax avoidance" schemes you mention are bad. Clearly have nothing even remotely similar to schemes in the media at the moment.

This is just gaslighting. Two things that are not the same are still not the same however many times you say otherwise.

quote:
That is why the moral argument should be applied to the tax regulations. And that itself is a moral argument. I prefer tackling underlying causes to public shaming.
Well I prefer public shaming. Boycott those corporations who think they can be here and not pay tax, shame those public figures who think that this is a good financial plan for themselves and ban non-doms from any position in parliament.

This works. Reworking the tax system doesn't.
 
Posted by Barnabas62 (# 9110) on :
 
You misunderstand me. I'm not arguing moral equivalence. I'm simply pointing out that neither you nor I are responsible for what is legitimate, when it comes to paying, or not paying taxes.
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Barnabas62:
You misunderstand me. I'm not arguing moral equivalence. I'm simply pointing out that neither you nor I are responsible for what is legitimate, when it comes to paying, or not paying taxes.

No it isn't. The lottery is legal, but in my view deeply immoral.

Nobody is forcing me to play the lottery, to claim gift aid on donations or to have a tax-free savings account.

My use or not of all of those things is a moral choice.
 
Posted by Sipech (# 16870) on :
 
One aspect that seems not to have been mentioned thus far is that of culture. In particular, the culture that surrounds the capitalist mindset. When I was studying for my chartered accountancy, I had to study tax (so much so that I took my exam twice!) which included knowing about a few schemes.

What got my goat was the presumption in the teaching and in the exams that not paying tax was an inherently good thing. So a question might lay out a company's financial affairs and then be phrased as: "Outline a presentation to the directors to advise how they can save tax."

Because there is a culture where returns to the shareholders are sacrosanct, anything which lessens them is assumed to be bad. If you can avoid it, it's deemed to be fair game.

Here, there's a cultural divide between the left and right, where tax avoidance is seen as a moral issue by the left, but the right just don't wear that set of spectacles. Avoiding tax is seen as a professional duty; if someone does it by some elaborate means that exploits loopholes in the law, they are not seen as a moral pariah, they are congratulated for being clever.
 
Posted by Martin60 (# 368) on :
 
quote:
Originally posted by Barnabas62:
quote:
Originally posted by Martin60:
B62, why is the binomial theorem a sin?

Normally I get your abstractions, Martin60, but this time you beat me.
Compound interest.
 
Posted by Eutychus (# 3081) on :
 
Does nobody on this thread ever receive or make payments off the books in cash?
 
Posted by no prophet's flag is set so... (# 15560) on :
 
quote:
Originally posted by Eutychus:
Does nobody on this thread ever receive or make payments off the books in cash?

In cash yes. Off the books no. Illegality aside. I speak as someone in business. It's one of those things where a small little bit of dishonesty can lead to bigger and it taints. As the vendor of a service or product, you may feel it is kind to respond to the person requesting an "under the table" deal to not charge the tax or a real price. But in my experience, I have learned to consider the request and either charge normally on the books, or to give the service for free, no charge, rather than off the books in cash as you say. One is ethical, the other is not.
 
Posted by Barnabas62 (# 9110) on :
 
quote:
Originally posted by Martin60:
quote:
Originally posted by Barnabas62:
quote:
Originally posted by Martin60:
B62, why is the binomial theorem a sin?

Normally I get your abstractions, Martin60, but this time you beat me.
Compound interest.
Here are some traditional arguments, Martin60.

The Catholic Church has never rescinded its arguments against usury.
 
Posted by Eutychus (# 3081) on :
 
I speak as someone in business too. As far as I can recall, I run absolutely everything through my company and pay tax, contributions etc. on it.

But I'd be surprised if none of us has ever made a payment in cash or even received a gift in some shape or form that a tax collector could legitimately decide was taxable and that we have omitted to declare. There needs to be common sense as well as scruples.

Of course companies should pay their fair share of tax. But deciding exactly what "fair" means is not all that straightforward.
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Eutychus:
Does nobody on this thread ever receive or make payments off the books in cash?

I do spend cash. I have assumed that the shop or vendor I am paying books that properly. I can't do otherwise, since it would be somewhat odd to ask to inspect the books of the pub where I've just handed over a £20 note for a few beers.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Eutychus:

Of course companies should pay their fair share of tax. But deciding exactly what "fair" means is not all that straightforward.

... which we can have a debate about as a society. In the absence of this debate, companies don't get to decide to set their own rate of tax.

The level of whataboutery in this thread is something to behold.
 
Posted by Eutychus (# 3081) on :
 
It's not that we can't have it. It's that it's complicated.

Here are the OECD's transfer pricing guidelines - all 612 pages of them.

That's the guidelines to give direction to multinational companies on how to price transactions between their entities in different countries in such a way as to pay fair tax on those transactions.

Perhaps there's a middle ground between that and tabloid headlines, but it sure is hard to find.
 
Posted by ExclamationMark (# 14715) on :
 
It's legal, of course. Yet the rules somehow get moved when it comes to certain people's affairs. I do wonder for example whether Palace staff (e.g Fawcett the fixer) who flogged gifts were prosecuted by HMRC a few years ago for benefit in kind tax evasion.

The big issue for me is why the Queen and Prince Charles (through the Duchies of Lancaster and Cornwall) can't be bothered to invest in their own nation. Are we that bad that even Brenda who's supposed to be whiter than white and above reproach, doesn't back her words with her actions?

On another part of this story: one commentator on radio 4 said it only cost the Uk £10 billion. That's one definition of only ... but not mine.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Eutychus:

Perhaps there's a middle ground between that and tabloid headlines, but it sure is hard to find.

No, I don't think this is one of those things that averages out into the middle somewhere. There are plenty of cases that are fairly cut and dry - some of them have been quoted in this thread, a situation where lots of companies keep billions abroad to avoid tax is not just a failure to understand transfer pricing properly.

I'm also not aware that anyone has posted tabloid related links in this thread.
 
Posted by Ricardus (# 8757) on :
 
quote:
Originally posted by mr cheesy:


If the money is earned in a different jurisdiction, you don't pay tax on it in the UK - and if you're a non-dom you don't pay tax on anything ever.

If you're resident in the UK, then foreign income is taxable. HMRC rules.

I agree non-dom status is a scam.
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Ricardus:
quote:
Originally posted by mr cheesy:


If the money is earned in a different jurisdiction, you don't pay tax on it in the UK - and if you're a non-dom you don't pay tax on anything ever.

If you're resident in the UK, then foreign income is taxable. HMRC rules.

I agree non-dom status is a scam.

Though, if you have also paid tax in that other jurisdiction then there could be tax relief available.
 
Posted by Eutychus (# 3081) on :
 
All I'm saying is that ethical and tax-paying as I believe myself to be, I think it's really difficult to ensure that one's own investments are squeaky clean (whatever that means).

There's a difference between aggressively pursuing minimum-tax options (something I have deliberately sought to avoid doing with my business) and being unaware of all the investment decisions of a mutual investment fund. I have some minor investments because I am basically going to get next to no pension; I've done my best to avoid outright "evil" portfolios such as defence and tobacco, but at the end of the day I have little idea what those funds are doing with my money or where the banks might have parked it*.

In the meantime I'd much rather go after banks' practice of extorting money out of people on very low incomes through overdraft and other charges and selling them useless and expensive financial products, such as dud insurance, which they know they cannot afford.

(*anecdote: I had a Jersey bank account for a while. It was the only way my high street bank would allow me as a non-UK resident to keep a Sterling account for a while. Then they introduced whopping charges and I managed to find a mainland high street bank that would host my account. Yes I have always declared all these accounts to the tax authorities where I'm domiciled).
 
Posted by no prophet's flag is set so... (# 15560) on :
 
I looked up "non-dom" which is opaque UK jargon for non-resident and defined as:"Someone living in the United Kingdom, whose home is not permanent, fixed, or his or her principal residence, or that person's tax status. This status includes those holding British passports. Sometimes referred to as foreign nationals, these individuals pay income tax and capital gains tax only on earnings generated in or money brought into the United Kingdom."

Actually it is entirely reasonable in some circumstances. When a person has ties to another country and is paying tax there, they should never be in double-taxation situations with the UK or any other country. My daugher paid UK tax on UK income and Canadian income tax on Canadian income when she lived in the UK. It is the filthy rich who may figure out how to live in the UK and pretend to pay tax in another jurisdiction, or perhaps scam in other ways. And this is all a scam. The stuff of eating cake.
 
Posted by Ricardus (# 8757) on :
 
[Reply to Alan]

Sure, but if that other jurisdiction is a tax haven then by definition the tax relief will be close to nil.

[ 07. November 2017, 19:06: Message edited by: Ricardus ]
 
Posted by Sipech (# 16870) on :
 
quote:
Originally posted by Ricardus:

I agree non-dom status is a scam.

We're all non-doms somewhere. Most places in fact. I'm domiciled in the UK, which means I have non-dom status everywhere else.

It's where you start off domiciled somewhere and then seek to change it, that's difficult. You have to effectively sever all ties with your home country. There was an case which HMRC brought (and won) against a chap who tried to claim non-dom status but he lost his case because he retained his membership of a private club in London.
 
Posted by Eutychus (# 3081) on :
 
quote:
Originally posted by Ricardus:
I agree non-dom status is a scam.

Best to become a perpetual traveller
[Two face]
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Sipech:
We're all non-doms somewhere. Most places in fact. I'm domiciled in the UK, which means I have non-dom status everywhere else.

The problem is when you clearly are domiciled somewhere for every possible definition or understanding of the word except for tax purposes.
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Ricardus:
[Reply to Alan]

Sure, but if that other jurisdiction is a tax haven then by definition the tax relief will be close to nil.

No I don't think that's right.

As I understand the way it works - you don't get taxed on the same income twice (or at least you're not supposed to).

So if you are living in Spain but earning in England, you might well be earning against the British tax code and paying British tax but not paying any tax in Spain (in fact I'm pretty sure there is a well-developed system in the EU to sort out this problem).

If you are earning in a low-tax jurisdiction you might just tell the taxman "oh this is income I earned in the British Virgin Islands" and they'll not tax it in the UK (because for tax purposes you didn't earn the money in the UK).

It "just so happens" that the tax regime in some of these jurisdictions is lower than it would be in the Spain-UK example - but the principle of only getting taxed once on overseas earnings is exactly the same.
 
Posted by Arethosemyfeet (# 17047) on :
 
quote:
Originally posted by Eutychus:
Does nobody on this thread ever receive or make payments off the books in cash?

Um... no, I don't think so. I would view that, particularly on the scale of paying thousands to builders in cash, as extremely dubious ethically. I am currently trying to renovate a house and it would be simple to evade the double council tax on it being vacant but I choose not to. Likewise I will be paying the VAT due when it comes to the repairs.
 
Posted by Alan Cresswell (# 31) on :
 
Tax relief works, AIUI, when you're a UK resident and declare your income to the HMRC so they can calculate the tax due. If that income has already been taxed then you also declare that, and HMRC effectively subtract what you've already paid elsewhere from the total they calculate on your income. That's certainly how it appeared to work when I was declaring my salary in Japan which was taxed there. If you declare income that hasn't already been taxed, or only at a marginal rate, then HMRC will treat that as UK income and tax it accordingly without a rebate.

The sort of schemes under discussion seem to fall into two categories. One where someone clearly living in the UK claims they aren't, and therefore some or all of their income doesn't fall under HMRC jurisdiction. The other is where people arrange things so that money they gain from their employment and investments gets classed as a loan or something else - and, as such doesn't count towards their tax assessment.
 
Posted by mr cheesy (# 3330) on :
 
I've paid cash for things, I've no idea who puts things properly through the books for tax. I don't really think it is up to me to police other people unless they're being very obvious about their tax-dodging (in which case I wouldn't use them).

In reality there are obviously ways to not declare tax properly and earn cash under the table. I tend to believe that people who try this a lot will get caught in the end.

I've always declared any income I have for tax.
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Arethosemyfeet:
quote:
Originally posted by Eutychus:
Does nobody on this thread ever receive or make payments off the books in cash?

Um... no, I don't think so. I would view that, particularly on the scale of paying thousands to builders in cash, as extremely dubious ethically. I am currently trying to renovate a house and it would be simple to evade the double council tax on it being vacant but I choose not to. Likewise I will be paying the VAT due when it comes to the repairs.
Noting that VAT on renovation of an empty property is charged at a reduced rate of 5% (it's another one of those "tax dodges" to encourage policy - in this case to help get empty houses back up to decent standard so that they can be sold or let to help alleviate the housing crisis).
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Alan Cresswell:
Tax relief works, AIUI, when you're a UK resident and declare your income to the HMRC so they can calculate the tax due. If that income has already been taxed then you also declare that, and HMRC effectively subtract what you've already paid elsewhere from the total they calculate on your income. That's certainly how it appeared to work when I was declaring my salary in Japan which was taxed there. If you declare income that hasn't already been taxed, or only at a marginal rate, then HMRC will treat that as UK income and tax it accordingly without a rebate.

They'll tax income that hasn't been taxed elsewhere, but I'm pretty sure they won't add extra to earning that have only been marginally taxed will they?

There are double-tax agreements with most other jurisdictions including the British overseas tax havens.
 
Posted by Ricardus (# 8757) on :
 
If you're a UK resident, then your income is taxable, regardless of where you earned it. From the first link I posted:
quote:
If you’re UK resident, you’ll normally pay tax on your foreign income. But you may not have to if your permanent home (‘domicile’) is abroad.
If you earned it in a foreign country and that country has a double-taxation agreement with the UK, then, depending on the terms of that agreement, you may be able to get tax relief on the tax that you paid in the other country. But by definition that tax relief is limited to the amount that you did in fact pay.

So if you paid £10 tax in the Cayman Islands on income that attracts £100 tax here, then you will pay £100 here, £10 to the Cayman Islands, and then HMRC will give you £10 back.
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Ricardus:

So if you paid £10 tax in the Cayman Islands on income that attracts £100 tax here, then you will pay £100 here, £10 to the Cayman Islands, and then HMRC will give you £10 back.

Nope. That's not how it works.

You declare that you've earned and paid tax on £100 in the Cayman Islands* and because of the double-taxation rules they don't tax you again on that income.

*assuming there is a relevant agreement

[ 07. November 2017, 20:51: Message edited by: mr cheesy ]
 
Posted by mr cheesy (# 3330) on :
 
OK I don't know now, maybe I'm wrong.
 
Posted by Eutychus (# 3081) on :
 
quote:
Originally posted by Arethosemyfeet:
I am currently trying to renovate a house and it would be simple to evade the double council tax on it being vacant but I choose not to. Likewise I will be paying the VAT due when it comes to the repairs.

That way the repairs will be insured...

I would pay for building works above board too. But I think things would grind to a halt pretty quickly on a day-to-day level if there were no informal economy at all.
 
Posted by Ricardus (# 8757) on :
 
quote:
Originally posted by mr cheesy:
quote:
Originally posted by Ricardus:

So if you paid £10 tax in the Cayman Islands on income that attracts £100 tax here, then you will pay £100 here, £10 to the Cayman Islands, and then HMRC will give you £10 back.

Nope. That's not how it works.

You declare that you've earned and paid tax on £100 in the Cayman Islands* and because of the double-taxation rules they don't tax you again on that income.

*assuming there is a relevant agreement

There is indeed such an agreement.

From section 11:
quote:
Where a resident of a Territory derives profits, income or gains which, in accordance with the provisions of this Arrangement, may be taxed in the other Territory, the first-mentioned Territory shall, subject to any provisions of its law regarding the allowance as a credit against its tax of tax payable in another territory (which shall not affect the general principle hereof), allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in that other Territory. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to the income, profits or gains which may be taxed in that other Territory.

 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by mr cheesy:
quote:
Originally posted by Ricardus:

So if you paid £10 tax in the Cayman Islands on income that attracts £100 tax here, then you will pay £100 here, £10 to the Cayman Islands, and then HMRC will give you £10 back.

Nope. That's not how it works.

You declare that you've earned and paid tax on £100 in the Cayman Islands* and because of the double-taxation rules they don't tax you again on that income.

*assuming there is a relevant agreement

HMRC pages on tax on foreign income
 
Posted by mr cheesy (# 3330) on :
 
This explains how someone living in the UK can get an advantage from earnings in a low tax jurisdiction:

quote:
But there are also ways in which individuals can remain living in a non-tax haven, such as the UK, and still benefit from tax havens.

If an individual keeps their assets in a trust in an offshore tax haven they can legally avoid paying capital gains in the country in which they are resident.

..the income can be paid out by the third parties to the beneficiaries regularly, or sporadically, depending on the decisions made by the third parties.

Once it is received by the beneficiaries, the income is subject to income tax. But while it is in the trust the assets are not subject to capital gains and the income on the investments is not taxed.

The calculations of the economist Gabriel Zucman – analysing discrepancies in countries’ national accounts – suggest that around $7.6 trillion, or 8 per cent of global wealth, is held offshore. That’s up 25 per cent over the past five years. Not all of that money will be held off-shore in order to dodge tax in a morally questionable way. But it’s fair to assume that a large proportion of it is.


 
Posted by simontoad (# 18096) on :
 
lalalalala

not listening not listening

lalalalalala

How about that bastard Bono? And those pricks from Mrs Brown's Boys.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Eutychus:

I've done my best to avoid outright "evil" portfolios such as defence and tobacco, but at the end of the day I have little idea what those funds are doing with my money or where the banks might have parked it*.

Those kinds of funds are unlikely to involve an offshore step - purely because of the amount of transparency involved (which is a huge clue - look at Ben Chu's recommendations on how to go after tax havens, transparency is a big part of it).

quote:

In the meantime I'd much rather go after banks' practice of extorting money out of people on very low incomes through overdraft and other charges and selling them useless and expensive financial products, such as dud insurance, which they know they cannot afford.

It is possible to do both. It's also possible that with the increased revenue to the government, those on low incomes could have their benefits properly bolstered so they that aren't such desperate targets in the first place.
 
Posted by Barnabas62 (# 9110) on :
 
simontoad

You should be!

mr cheesy, your links do tend to confirm that some measure of international co-operation would be required to prevent the rich from using tax havens for tax avoidance purposes. I'm not surprised the US abandoned unilateral action either. Bound to be both counter-productive and legally challengeable.

I can see the attractions of shaming, but I'm pretty sure that doesn't work either, unless lawbreaking is involved. This stuff will be out of the news cycle before too long, meanwhile, heads will be kept down, a few public concessions made. Then it will be business as usual.

Realistically, going for modest reforms may look pretty ineffective, but it may produce some benefit. Controlling the global financial market and the various opportunities it provides is going to be very difficult. Moral outrage doesn't strike me as much of a control mechanism.
 
Posted by Brenda Clough (# 18061) on :
 
From the Atlantic, suggestions for a fix. They point out that complete solutions are probably not possible, but some things could be done.
 
Posted by Dark Knight (# 9415) on :
 
Good link, Brenda, even if it does leave me feeling a bit hopeless.

A well informed and critically educated demos is the only way to hold the rich accountable and bring anything like genuine equality into societies. The powerful interests know this.

Hence they cooperate in the neoliberalisation of the universities, transforming them from centres of independent critical education to factories training "job ready" candidates (when the economy changes every few nanoseconds, how anyone is supposed to be job ready today is a mystery), and carrying out commercialised research for the highest bidder.

They encourage the idiotic ideology that critiquing their moral failure to adequately contribute to the societies they benefit most from is nothing more than "the politics of envy."

As illustrated by the film "I Daniel Blake" (and continues to happen before our eyes in the ongoing travesty of robodebt in Australia), governments serving elite interests punish and demonise those who require the social safety nets because of the austerity economics which would not be necessary if the rich stopped leaning on the rest of us and did their fair share.

They serve us a shit sandwich, then blame us for its contents. First against the wall, I say. Liz included.
 
Posted by simontoad (# 18096) on :
 
I'm downing a large whiskey and taking out my Rule Britannia song book. Shit! I think I threw my Union Jack one side Australian flag the other in the bin.

Look, I'm as socialist as the next Lenninist. I'm all for levelling things out AND I'm a bit of a militarist. Not like that lily-livered Corbyn who wants to get rid of Trident and wouldn't even send the British Army against the French. I even work a socialist job and I pay my Union dues sort of when they fall due. I'm all for gutting private enterprise, and letting the kulaks off the leash. Ok, not quite a Lenninist, more of a populist menshevik. OK OK, not a communinist at all - small scale capitalist heroing the kulaks but not allowing large accumulations of capital in private hands.

But leave the Queen and the Royal Family out of it, after we have nationalised their assets and put them on a salary. They have done an awful lot for this country and its about time this country gave something back.

Bottom line: The rich are rorting their tax. SNORE! They use tax havens and tax shelters. MY BRAIN HURTS! Wake me when something interesting happens.
 
Posted by Dark Knight (# 9415) on :
 
quote:
Originally posted by simontoad:

But leave the Queen and the Royal Family out of it, after we have nationalised their assets and put them on a salary. They have done an awful lot for this country and its about time this country gave something back.

Utter unsubstantiated horseshit.

And, as everyone knows, what is asserted as unsubstantiated horseshit can be dismissed as unsubstantiated horseshit.
 
Posted by simontoad (# 18096) on :
 
Oh come on! She is the inspiration for the Commonwealth! How many medals would we not have if the Queen had not suggested the Commonwealth Games?
 
Posted by Arethosemyfeet (# 17047) on :
 
quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by Arethosemyfeet:
quote:
Originally posted by Eutychus:
Does nobody on this thread ever receive or make payments off the books in cash?

Um... no, I don't think so. I would view that, particularly on the scale of paying thousands to builders in cash, as extremely dubious ethically. I am currently trying to renovate a house and it would be simple to evade the double council tax on it being vacant but I choose not to. Likewise I will be paying the VAT due when it comes to the repairs.
Noting that VAT on renovation of an empty property is charged at a reduced rate of 5% (it's another one of those "tax dodges" to encourage policy - in this case to help get empty houses back up to decent standard so that they can be sold or let to help alleviate the housing crisis).
Has to be empty for 2 years (true in this case) but yes, 5% vs the zero rate on new build. It seems a travesty to me that it would be cheaper to knock down the 19th century stone cottage and build new than to renovate but that's very much a tangent.
 
Posted by L'organist (# 17338) on :
 
The simplest way to prevent tax avoidance and/or evasion is to have a tax code that is simple and transparent.

There have been mutterings about the complexity of the UK tax code (and about anomalies such as the Isle of Man, Channel Islands, etc) for as long as I can remember. And for as long as I can remember there have been people saying that if the whole thing was (a) easier to understand, and (b) had fewer differences between its treatment of the employed and self-employed then the temptation to evade/ avoid would be taken away for all but those with something to hide who would be easier to spot.

Meanwhile the Labour Party and others seem to have gone quiet on wealthy so-called Non-Doms and the sweetheart deals they make with the Inland Revenue: I'm thinking people like the Fayed family, Lady Green, etc, who despite living in the UK for decades (or in Lady Green's case being born here) somehow get away with claiming they're non-domiciled, regardless of the fact their children go to school here, etc, etc, etc.
 
Posted by Sipech (# 16870) on :
 
quote:
Originally posted by L'organist:
The simplest way to prevent tax avoidance and/or evasion is to have a tax code that is simple and transparent.

There have been mutterings about the complexity of the UK tax code (and about anomalies such as the Isle of Man, Channel Islands, etc) for as long as I can remember. [snip]

There has to be a payoff between simplicity and closing loopholes. Some of the complexities that arise in the UK tax system have done so because of past tax avoidance.

An example would be the capital gains tax (CGT) on shares. If I've got 10,000 shares, bought in 5 tranches at 5 different prices and then sell 2,000 of them, which 2,000 have I sold? The slightly bizarre answer is that I am deemed to have sold the shares that I might buy in the next few days. i.e. shares I might not yet own.

While this may seem counter-intuitive, it's because of the nature of short-selling. If I try to offload a load of shares at £10.00, that pushes the share price down (say to £9.95). If I then buy 2,000 shares at £9.95, I've effectively made a gain of 5p per share. So the CGT rule is there to make sure that my £100 gain is taxed.

This is just one example. The general rule of thumb is that the simpler the rule, the simpler the setup you need to dodge the tax.
 
Posted by sharkshooter (# 1589) on :
 
Most international tax treaties prevent double taxation, but generally allow both the source country and the residence country to tax the income. The source country gets to tax first (usually a withholding tax), then the residence country taxes, giving relief (through a tax credit or a deduction) for the tax paid in the source country. In essence, you pay the higher of the two tax rates because the relief in the country of residence will not be in excess of the tax paid in the source country.

The mechanism by which this happens depends on the terms of the treaty between the two countries and the nature of the income.

Now, if there is no treaty, both countries can tax at will.

In case you think it is only the right-wing people who take advantage of tax havens, consider that the list of former Canadian prime ministers in the latest leak was 1 Conservative and 2 Liberals.
 
Posted by ExclamationMark (# 14715) on :
 
It seems that Bono has now entered the lists.

Can I suggest that anyone like him, Brian and Brenda who feels guilty about the investment may wish to make a donation to charity equivalent to the amount of tax payable, were the investments to be in the UK? Photo copies of the cheques please!

By these shall all men know you are my disciples
 
Posted by sharkshooter (# 1589) on :
 
quote:
Originally posted by L'organist:
The simplest way to prevent tax avoidance and/or evasion is to have a tax code that is simple and transparent.
...

Tax codes used to be simple, but in a world of complex transactions and structures, a simple tax code lends itself to tax avoidance.

If you simply said "income is taxable at 25%", for example, the most obvious problem would be what is income. Other issues would include where and when is it taxable, and who is liable for the tax.

And that's just the start.
 
Posted by Barnabas62 (# 9110) on :
 
quote:
Originally posted by ExclamationMark:
It seems that Bono has now entered the lists.

Can I suggest that anyone like him, Brian and Brenda who feels guilty about the investment may wish to make a donation to charity equivalent to the amount of tax payable, were the investments to be in the UK? Photo copies of the cheques please!

By these shall all men know you are my disciples

Source re Bono.

There may be others, of course.
 
Posted by Bishops Finger (# 5430) on :
 
I rather warm to ExclamationMark's suggestion re charitable giving.

However, I'm not holding my breath, waiting to see who'll be the first to offer...

...but what a bit of Good News it would be, if someone did, no?

IJ
 
Posted by Martin60 (# 368) on :
 
quote:
Originally posted by Barnabas62:
quote:
Originally posted by Martin60:
quote:
Originally posted by Barnabas62:
quote:
Originally posted by Martin60:
B62, why is the binomial theorem a sin?

Normally I get your abstractions, Martin60, but this time you beat me.
Compound interest.
Here are some traditional arguments, Martin60.

The Catholic Church has never rescinded its arguments against usury.

I don't understand theistic, textist arguments. All I know is that debt for the necessities of life is a great evil.
 
Posted by Barnabas62 (# 9110) on :
 
quote:
Originally posted by Martin60:
All I know is that debt for the necessities of life is a great evil.

I think that is the Catholic position, Martin60.

From the article

quote:
The sin rests on the fact that sometimes the creditor desires more than he has given…, but any gain which exceeds the amount he gave is illicit and usurious.
There is a recognition that usury involves exploiting someone who is already vulnerable through debt. That still seems to me to be a valid moral argument. A Samaritan finds an injured man by the roadside and says, "Oh good, he'll be prepared to pay a lot to me if I rescue him from this dangerous place". Doesn't work, does it?
 
Posted by Martin60 (# 368) on :
 
What's that got to do with business finance? Financing nonessential but rational, large purchases? Property, vehicles?
 
Posted by Barnabas62 (# 9110) on :
 
quote:
Originally posted by Martin60:
What's that got to do with business finance? Financing nonessential but rational, large purchases? Property, vehicles?

Not a lot. I think there is a moral and practical need for potential borrowers to shop around, be aware of budget consequences. Voluntarily getting into debt you cannot replay, for non-essential purchases, is pretty feckless.

Conversely, I think there is a moral and practical obligation on lenders to check out ability to pay.

Curiously, I was talking about these issues a couple of days ago, with some friends in a retirement club. When we grew up, money was more concrete,a matter of notes and coins. If mum ran out of money at the end of the week, we lived on what was left or went without. Getting into debt was a sin. When poverty came through the door, love flew out of the window.

Today, money is more abstract, and the more cashless the society becomes, the more abstract money becomes. Crossing the line into debt is much easier than it was 60 years ago.

The biblical stories and principles do belong to an age when money was more concrete. I think we have to take that into account.
 
Posted by Martin60 (# 368) on :
 
Aye, we come from the same cultural background. This is the best of all possible worlds, so how are lenders being impractical? And how can they be moved to be as moral as gambling mongers?
 
Posted by Barnabas62 (# 9110) on :
 
The categorical imperative went missing as well, Martin60.
 
Posted by simontoad (# 18096) on :
 
quote:
Originally posted by ExclamationMark:
It seems that Bono has now entered the lists.

Sound the horns! Unfurl the Banners! Gentlemen, lower you lances. CHARGE!
 
Posted by Leorning Cniht (# 17564) on :
 
quote:
Originally posted by Arethosemyfeet:
It seems a travesty to me that it would be cheaper to knock down the 19th century stone cottage and build new than to renovate but that's very much a tangent.

Lots of things are cheaper to destroy and rebuild than to repair. You can make a large stack of new things on a production line for probably less effort than it would take to hand-craft one thing in situ. That is the nature of mass production.
 
Posted by Martin60 (# 368) on :
 
quote:
Originally posted by Barnabas62:
The categorical imperative went missing as well, Martin60.

What, do as you would be done by? It never caught on in the privileged. And we're all privileged ...
 
Posted by Sioni Sais (# 5713) on :
 
quote:
Originally posted by Leorning Cniht:
quote:
Originally posted by Arethosemyfeet:
It seems a travesty to me that it would be cheaper to knock down the 19th century stone cottage and build new than to renovate but that's very much a tangent.

Lots of things are cheaper to destroy and rebuild than to repair. You can make a large stack of new things on a production line for probably less effort than it would take to hand-craft one thing in situ. That is the nature of mass production.
And there's another factor to consider: the big house building firms deliberately depress the rate at which houses are built so as to maximise prices and therefore rate of return and therefore profit. It doesn't matter how many homes the government wants to have built, if Wimpey, Barrett, etc don't want to see more than 175,000 built in a year then there won't be.
 
Posted by Martin60 (# 368) on :
 
Then nationalize them.
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Martin60:
Then nationalize them.

I'd prefer to "regionalize" them. Housing is a national problem, but the particular form of that problem will vary in different parts of the country. Therefore, the solutions will differ across the country. Which makes the appropriate authority to build houses local government, or a regional government if it can be shown that the housing needs across a larger region are similar and an economy in scale can be achieved.

But, we already have that. Local councils building council houses. Except previous Tory and Tory-lite governments have progressively demolished their ability to do that - through right to buy which sold off their housing stock, restrictions on budgets they can spend on replacing that stock (which often then gets bought quickly and cheaply under right to buy, so that private landlords can benefit from extortionate rents, even any effective planning control to direct private developers to build the housing needed in the area.

The result has been to land those private developers with effectively a blank cheque to build whatever will make the most profit, wherever it is cheapest to build. Private developers holding local authorities to ransom, "we want to build 1000 homes on this cheap green-field site, grant us permission or we'll let another council have the benefit of that council tax revenue". Massive developments of houses, of the wrong type (almost never social housing), in the wrong place (no access to public transport), without any supporting facilities that are expensive to build with little profit (schools, GP surgeries, local shops).
 


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