Shouldn't be too difficult for HMRC to investigate this Loan loophole.

Q - So Jimmy why did you need this £3mill loan in 2010 - 11.

A - Because I didn't have any cash all my earnings had gone to this offshore company and they loaned it back to me.

Q - So when are you going to repay it? and at what % rate?

A - Im not, its my money why would I repay it?

I think that's the thing. Clearly reading about 'Jimmy's Scheme' I started to wonder A) how it works and B) how I can only pay 1% tax (although, I'm sure for the sake of a good story this isn't 100% true!).

Eric's argument is an interesting one, the moral vs legal debate will go on for ages I guess. It's also interesting how you say that buying cheaper goods is tax avoidance. When I started I was thinking how do you reduce you PAYE / NI / Income tax bill, but that point is a interesting one as well.

I think when people use purchasing examples as tax avoidance the whole argument is spurious. Buying cheaper goods to avoid tax (presuming they are in the same 20% VAT class or whatever) is only a short step from saying not buying a product is tax avoidance. Therefore the brand new Bugatti Veyron I didn't buy (even if you don't have the money) is tax avoidance. Makes no sense.

This is a discussion on EARNED INCOME. I.e the money does exist, it has been paid to him and he hasn't paid the correct/full/moral whatever (word you want) tax on it. It is avoidance of the worst kind.

Still Jimmy likes the fact that people can get easily to his gigs on public transport, on the roads, there are street lights outside the theatres etc etc etc

Perhaps they have done so, and have come up with a different answer to you? The function of high marginal rates of tax in a progressive system with high spending on social protection is not the funding of public services, it's the redistribution of wealth. Some people consider that a perfectly legitimate and moral function of taxation, others consider it little better than theft.

I'm sure that the individuals we are talking about will more than pay their own way in terms of consumption of public services, even if only via indirect taxes, so the moral issue is one of them declining to share their wealth with those less well off than themselves.

I'm not saying that your moral view is right or wrong, just that it isn't the only one.

Unfair or flawed?

I would say the system is perfectly fair - the more you earn the more tax you pay. What is flawed is the fact that high-earning individuals can pay 3rd parties to negotiate their way through the loopholes which exist in the tax system.

It remains to be seen what and will be done about it all by HMRC, but when politicians start using the phrase "morally wrong" it gives a good indication that they are struggling to eradicate the issue; pandering to people's conscience is unlikely to gain very much. Hey-ho, c'mon 'ol chap, we're British don't you know, muck' in now, won't you 'ol bean.

Hmmm...

Lets be honest here; those people who are prepared to forego any notion of contribution to the UK by avoiding as much tax as possible are unlikely to do much more than laugh at their morals being questioned by a politician. Jimmy Carr apologised purely because he wants his next tour to be a sell out, not a flop.

Eric, you're not really addressing the real issue though are you. You can never sort out this problem of tax havens and foreign registered companies employing British people or British people being directors of foreign registered companies and movement of capital across juristications, because if you tried you'd effectively place illegal limitations of trade on companies and bring the whoel world economy to a stand still.

You can't force other sovereign nations to adopt laws that don't suit them, you can't stop tourism in the economy, free movement of capital, it's what makes the world economy tick. It doesn't matter if it's teh IOM, Jersey, Switzerland, Monacoe or the Bahamas.

I understand you want to build some sort of soviet style Britain where the state takes everyones money and goves them back food and heating stamps, but you're in a very small minority.

Most of us want the freedom to do what we want with our hard earned away from state interference, even if we have no money we uphold the ideal.

Can you actually frame me a workable legislation that is fair and could stop people off shoring earnings?

So my not paying tax on savings isn't moral tax avoidance then? Using your theory people should pay the correct amount of tax on savings. The money exists but by choosing to have an offset mortgage you avoid paying tax on whatever amount you choose to offset. Buy a £1m house and you could avoid paying HMRC tax on £900,000.

The salary thing is spurrious too IMHO. The rules are set out by HMRC. I'm not saying all accountants are equal as they are not but people like Eric exist to ensure that companies do not pay more than what is legally due to HMRC. How one accountant interprets that varies but ultimately your argument doesn't make sense in a system that is so unfair it's not funny. There is no such thing as correct/moral/full so is a pointless exercise.

When I was a permie I opted into the smart pension scheme. I don't know if they're all the same but it worked by lowering everyone's salary (on paper) so that less NI was payable. Part of this saving was then channeled into our pensions so everyone was a winner. Those that chose not to opt in paid more NI and also received less pension contribution.

That is tax avoidance too. I did the same job as a colleague and earnt the same salary (on paper) but was better off. Not massively but fair/moral/correct/full doesn't come into it. The company saved thousands in employer's NI as a result and was 100% legal. It was simply a smart way of the company keeping hold of more money.

Ok Jimmy's situatiion is different but it happens everywhere at various levels.

What is your definition of "state interference"?

Do you admit that there are certain things that only the state can do and that these things need to be funded somehow?

If you look at how the Soviet system was funded, you will realise that there was no formal taxation structure that we would recognise. The state controlled everything so there was no need for tax. In my opinion, taxation is part and parcel of a free and entrepeneurial society.

Of course it is not perfect and of course there are plenty of things governments spend mnoney on that we individually may never use or may not even agree with. But that's the price we have to pay (literally) for having a society that functions - even if it functions in a half-assed fashion at times.

Fair enough! I did always wonder what would happen if he claimed more in expenses than his photography 'business' turned over. I know companies will make a loss, but I never thought that his plan would be safest if questioned.

Just don't sign any bloody contracts.


Yours,
Mr McCoist.