Charity is a tax avoidance scheme?
Charity is a tax avoidance scheme?
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anonymous-user

Original Poster:

84 months

Thursday 31st January 2013
quotequote all
Anyone else seen this before:

One of Britain’s biggest charities is a front for tax avoidance, The Times can reveal.
Wealthy donors used the Cup Trust to avoid £46 million in tax in an extensive abuse of Gift Aid incentives designed to encourage charitable donations.
The registered charity raised £176 million between 2010 and 2011. In 2010 it attracted more donations than the Royal Society for the Protection of Birds, the British Heart Foundation or the Salvation Army.


sumo69

2,164 posts

250 months

Thursday 31st January 2013
quotequote all
HMRC are all over these funded tax relief schemes where the relief sought bears no likeness to the amount the claimant has actually risked/donated of his own.

Whilst it may work in terms of the law as stated, You can be assured that any relief would come under very close scrutiny and challenge - it may cost you a fortune in interest and penalties as well as repaying the tax "saved".

David

Steffan

10,362 posts

258 months

Thursday 31st January 2013
quotequote all
sumo69 said:
HMRC are all over these funded tax relief schemes where the relief sought bears no likeness to the amount the claimant has actually risked/donated of his own.

Whilst it may work in terms of the law as stated, You can be assured that any relief would come under very close scrutiny and challenge - it may cost you a fortune in interest and penalties as well as repaying the tax "saved".

David
It is certainly true that there is much Sabre rattling at the IR concerning supposed illegal tax avoidance through charities. I doubt it is actually illegal. We must remember that the government declined to act against this abuse after charity objections. If it were already illegal why was there need to act?

There are also currently 41,000 separate tax avoidance schemes notified to the Revenue none of which are currently being pursued by the Revenue. By choice.

Sabre rattling and pontificating upon the immoral corruption that this supposedly represents is about as much as the Revenue and Government can manage. I seriously doubt that either of them can actually formulate a policy and create the complex legislation necessary to prevent such schemes from proliferating. If they could, they would. There would by now be 41,000 less schemes.

Waffle and cant is easy. Effective tax administration is not.

anonymous-user

Original Poster:

84 months

Thursday 31st January 2013
quotequote all
The charity's own website doesn't provide a lot of collateral to help fend off any enquiries from the authorities does it?

http://thecuptrust.com/

Steffan

10,362 posts

258 months

Thursday 31st January 2013
quotequote all
JPJPJP said:
The charity's own website doesn't provide a lot of collateral to help fend off any enquiries from the authorities does it?

http://thecuptrust.com/
JPJPJP I do not think that there is anything illegal in this approach. Hence the lack of concern in publication. Just as Starbucks were acting entirely legally in their tax avoidance so to IMO are this lot in theirs. That is why they are so open in their approach. They think it is perfectly legal. I suspect they are correct.

If it is already illegal, why was there a suggestion by the Chancellor that the law should be changed? Subsequently scotched? I detest the approach om moral and personal grounds. But I do not think it is illegal.


qureshia

4,771 posts

236 months

Thursday 31st January 2013
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I guess this only works because investment in gilts is not subject to CGT ??


jeff m2

2,060 posts

181 months

Thursday 31st January 2013
quotequote all
No doubt I gonna take some stick here but....
If the tax rates were not so high this would not work.

Charities would need alt funding, some probably coming from Income tax.
Also money escaping tax increases disposable income and benefits some sectors of the economy.

I assume we all agree that when money is not taxed it is not lost, it is still in circulation.
IMO that money is often put to better use by a wealthy individual than given to the Gov to hand out in benefits.


mrmr96

13,736 posts

234 months

Thursday 31st January 2013
quotequote all
qureshia said:
I guess this only works because investment in gilts is not subject to CGT ??
I was wondering the same.

Eric Mc

125,768 posts

295 months

Thursday 31st January 2013
quotequote all
jeff m2 said:
No doubt I gonna take some stick here but....
If the tax rates were not so high this would not work.

Charities would need alt funding, some probably coming from Income tax.
Also money escaping tax increases disposable income and benefits some sectors of the economy.

I assume we all agree that when money is not taxed it is not lost, it is still in circulation.
IMO that money is often put to better use by a wealthy individual than given to the Gov to hand out in benefits.
Schemes like this would exist if the tax rate was 1%.

A number of accountants were recently jailed over a charity based tax avoidance scheme - which was deemed to be illegal and tantamount to fraud.

Steffan

10,362 posts

258 months

Thursday 31st January 2013
quotequote all
qureshia said:
I guess this only works because investment in gilts is not subject to CGT ??
It works because it is a clever (but appalling morally) use of charity law. That is why I think it is lawful. But detestable morally.

The government drew back from changing the charity law because they realised that by doing so they would destroy many of the reliefs available to charities/ Tax avoidance is very difficult to eradicate. The government;s answer is to pretend to shame it out of existence.

They cannot and therefore Tax avoidance is growing steadily in the UK and will continue to grow. Up to individuals whether they become involved. Sad;y but factually taxpayers will be the poorer if they do not.

jeff m2

2,060 posts

181 months

Friday 1st February 2013
quotequote all
Eric Mc said:
jeff m2 said:
No doubt I gonna take some stick here but....
If the tax rates were not so high this would not work.

Charities would need alt funding, some probably coming from Income tax.
Also money escaping tax increases disposable income and benefits some sectors of the economy.

I assume we all agree that when money is not taxed it is not lost, it is still in circulation.
IMO that money is often put to better use by a wealthy individual than given to the Gov to hand out in benefits.
Schemes like this would exist if the tax rate was 1%.
Of course there will ALWAYS be some, but fewer would partake if the rate was lower.

I find the public acceptance of higher taxation quite worrying.

qureshia

4,771 posts

236 months

Friday 1st February 2013
quotequote all
This involves the purchase of gilts at full mkt. value, subsequent sale at massively below mkt. value and then the sale again at full mkt. value, all for the avoidance of tax.

Genuinely question is this legal, or still  to be decided on ???

Eric Mc

125,768 posts

295 months

Friday 1st February 2013
quotequote all
jeff m2 said:
Eric Mc said:
jeff m2 said:
No doubt I gonna take some stick here but....
If the tax rates were not so high this would not work.

Charities would need alt funding, some probably coming from Income tax.
Also money escaping tax increases disposable income and benefits some sectors of the economy.

I assume we all agree that when money is not taxed it is not lost, it is still in circulation.
IMO that money is often put to better use by a wealthy individual than given to the Gov to hand out in benefits.
Schemes like this would exist if the tax rate was 1%.
Of course there will ALWAYS be some, but fewer would partake if the rate was lower.
No evidence for that with this scheme at all.

Sometimes a nation has to make sacrifices for it to be rescued. Sometimes those sacrifices could be one's life. I think willingness to pay a bit more to get us out of a massive hole is not too much to ask.

anonymous-user

Original Poster:

84 months

Friday 1st February 2013
quotequote all
Any scheme that legally makes a mockery of the ludicrously complex tax code to which we are subjected is, imo, marvellous.

Individuals can use their own moral compass to decide whether they wish to participate in legal schemes, just as they can decide how fast to drive on the motorway.

That very few of these schemes have yet to be tested in the courts is quite telling isn't it?

qureshia

4,771 posts

236 months

Friday 1st February 2013
quotequote all
JPJPJP said:
?.......
Individuals can use their own moral compass to decide whether they wish to participate in legal schemes, just as they can decide how fast to drive on the ......
I struggle with this dilemma personally (having paid out the best part of 45% of my gross salary for the last couple of years)

The way I see those that take advantage of these schemes is that they benfit twice .

They personally save tax and they also benfit from the fact the majority chose not to follow their example (and therefore enjoy living in a stable, reasonable well governed country with good defence and public services) if the majority followed this example we would end up with Greece or perhaps worse still.

Taking your example of motorway driving, perhaps it would be better to say they are like those drivers that charge down the outside lane when all the signs are indicating it is closed ahead (nothing illegal etc) however due to their behaviour they benefit by jumping the queue but equally due to their behaviour all the others that follow the polite way (and move across early) wait longer.....(pick up more of the burden)


anonymous-user

Original Poster:

84 months

Friday 1st February 2013
quotequote all
qureshia said:
I struggle with this dilemma personally (having paid out the best part of 45% of my gross salary for the last couple of years)

The way I see those that take advantage of these schemes is that they benfit twice .

They personally save tax and they also benfit from the fact the majority chose not to follow their example (and therefore enjoy living in a stable, reasonable well governed country with good defence and public services) if the majority followed this example we would end up with Greece or perhaps worse still.

Taking your example of motorway driving, perhaps it would be better to say they are like those drivers that charge down the outside lane when all the signs are indicating it is closed ahead (nothing illegal etc) however due to their behaviour they benefit by jumping the queue but equally due to their behaviour all the others that follow the polite way (and move across early) wait longer.....(pick up more of the burden)
I could stretch that analogy further and say that they make that outside lane manouvere in a car that isn't registered to them and maybe they are sat in the back, rather than driving... That captures the anonymity of the tax avoider. The girl you are sitting next to right now could be up to her eyes in avoidance schemes and you wouldn't know.

On another note, the Commons Select Committee appearance by the Head Of Tax from the Big 4 isn't attracting them much favourable press this morning.

Eric Mc

125,768 posts

295 months

Friday 1st February 2013
quotequote all
How come the actual charity only gets £500 but the Gift Aid tax refund on that donation reaches around £300,000?

jeff m2

2,060 posts

181 months

Friday 1st February 2013
quotequote all
Eric Mc said:
jeff m2 said:
Eric Mc said:
jeff m2 said:
No doubt I gonna take some stick here but....
If the tax rates were not so high this would not work.

Charities would need alt funding, some probably coming from Income tax.
Also money escaping tax increases disposable income and benefits some sectors of the economy.

I assume we all agree that when money is not taxed it is not lost, it is still in circulation.
IMO that money is often put to better use by a wealthy individual than given to the Gov to hand out in benefits.
Schemes like this would exist if the tax rate was 1%.
Of course there will ALWAYS be some, but fewer would partake if the rate was lower.
No evidence for that with this scheme at all.

Sometimes a nation has to make sacrifices for it to be rescued. Sometimes those sacrifices could be one's life. I think willingness to pay a bit more to get us out of a massive hole is not too much to ask.
I do see your point.


raptor600

1,356 posts

176 months

Friday 1st February 2013
quotequote all
Eric Mc said:
How come the actual charity only gets £500 but the Gift Aid tax refund on that donation reaches around £300,000?
Because the Cup Trust is a charity - and the 'investor' is donating £1m to them.

raptor600

1,356 posts

176 months

Friday 1st February 2013
quotequote all
mrmr96 said:
qureshia said:
I guess this only works because investment in gilts is not subject to CGT ??
I was wondering the same.
Correct. Certain gilts are not subject to CGT.