Tax avoiders to be deliberately bankrupted.....?..
Discussion
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hstewie said:
hstewie said: I thought half the issue was that the law is so vague on what is legal or illegal that it basically comes down to a "taste test" vs. "you have done X and Y which is against law X"?
Tax is not only about raising income for the Treasury.It is often political or socio-economic in its motives. At times, governments introduce tax rules and tax breaks to encourage certain types of behaviour in society or in order to entice businesses to invest in certain areas.
The problem for governments is that, as soon as some sort of tax saving inducement is introduced, clever accountants will devise schemes to exploit these tax rules. What might have seemed to the relevant government department like a very good idea at the time will not look so great when the tax rules are being used to artificially generate tax refunds for individuals.
This is especially so when the expected beneficial effect of the tax rule envisaged by the original legislation fails to materialise.
At that point the tax rule will probably be cancelled and those who over exploited the scheme may find themselves subject to investigation and attempts by HMRC to recover the lost tax.
turbobloke said:
Derek Smith said:
They took a risk; it didn't pay off.
In some ways I do sympathise with them. They no doubt took advice and believed the 'Nah, perfectly legal loophole'. A moment's greed and it will cost them.
A moment of not wanting to pay more tax than due may involve greed or it may not, it depends on the person surely. We can safely assume that millions of people pay no more tax than is due, and they don't want to pay a penny more either, are they greedy? Presumably the difference is that they aren't perceived as "rich" and therefore not really worthy of a bashing.In some ways I do sympathise with them. They no doubt took advice and believed the 'Nah, perfectly legal loophole'. A moment's greed and it will cost them.
As posted a moment ago, if a scheme turns out to be something else then back tax is due and presumably with interest, and rightly so.
However, as to whether it will 'cost them' depends on what they did with the tax in the interim. They'll have to pay the tax due of course, but that's not quite the same thing as 'costing them' which appears to imply that they will be worse off. Your phraseology sounds a bit like you hope it will cost them - a touch of revenge mentality perhaps? If that wasn't your point, then disregard my remarks.
I employ an accountant. They are more than willing to explain any matters that are obscure and confusing me. My intent is not to pay a penny more than I am obliged to, which is anyone's right. I wouldn't dream of restricting anyone's ability to limit their outgoings. However, this scheme looked iffy to me the moment that it broke. I was not in the discussions with those who tried it, but were they told that it was strictly legit?
You suggest that the word 'cost them' means I hope for revenge. I wouldn't want to restrict anyone's right to comment and give their thoughts. The phrase comes from reading yesterday's Times. It would appear that 780 people are involved, 700 of whom face bankruptcy, according to the author of the article. I doubt that but it is clear that there is the possibility - it is no more than that at the moment as there have been no demands - that the charges and penalties with be high. In other words it has cost them. It's an accurate and unemotive descriptor. Revenge is a weird conclusion after I said that I had sympathy with them to an extent, something which is not the norm for posters on this thread.
The word greed is apposite; an excessive desire for more, in this case money. They have/had lots of money and they chose something which, even to an untrained eye, looked marginal legally. When it looks too good to be true, it probably is. We had the same process with Lloyds Names, although that was entirely legal; it looked too good to be true and, guess what? It was. Some of those who sued Lloyds suggested that they were told there were no risks. One of those affected was a boyhood sporting hero of mine. I sympathised with his plight, but it was his own choice.
HMRC have had the ability to makes decisions on the legality of a process for years. Even I knew that. Looking back over the years, this is just another step forward.
The title of the thread is what I would call emotive. Where is the intent? HMRC should look after my money. I pay 'em enough to.
Alpinestars said:
loafer123 said:
As others have said, these schemes were created with the pure intention of reducing tax, not the purpose the relevant legislation was created for, namely encouraging film investment.
As such, reclamation of tax relief which should not have been claimed in the first place is perfectly appropriate.
I'd agree if that was the position. But I think it's a bit more complex. See above. As such, reclamation of tax relief which should not have been claimed in the first place is perfectly appropriate.
loafer123 said:
I have read what's above and I know some people who used to arrange these schemes for a living. It was always a convoluted tax dodge, the difference being is that the rules are now that the HMRC looks at the intention and not just compliance with the letter of the regulation/law.
Whether something is a trade or not is not defined in statute. It's taken its meaning from Case Law. Case Law is all about purposive interpretation, ie, intention and not the drafting per se. It's been the same for tax law for a while now. Nothing new from HMRC. It's the Courts that decide. MarshPhantom said:
Why don't people get punished more for avoiding tax? Seems pay what you owe eventually and everyone is happy.
It's a bit like stealing something and not getting into troublè if you give it back.
Surely you can't still be struggling with the difference between tax avoidance and evasion?It's a bit like stealing something and not getting into troublè if you give it back.
Alpinestars said:
loafer123 said:
I have read what's above and I know some people who used to arrange these schemes for a living. It was always a convoluted tax dodge, the difference being is that the rules are now that the HMRC looks at the intention and not just compliance with the letter of the regulation/law.
Whether something is a trade or not is not defined in statute. It's taken its meaning from Case Law. Case Law is all about purposive interpretation, ie, intention and not the drafting per se. It's been the same for tax law for a while now. Nothing new from HMRC. It's the Courts that decide. https://www.gov.uk/government/publications/tax-avo...
Sylvaforever said:
MarshPhantom said:
Why don't people get punished more for avoiding tax? Seems pay what you owe eventually and everyone is happy.
It's a bit like stealing something and not getting into troublè if you give it back.
I wonder if you have ever held down a full time job? It's a bit like stealing something and not getting into troublè if you give it back.
One that excludes sitting in an office, in front of a computer, producing insubstancial b
ks that in the real world is actually worthless, whilst being paid either directly or laterally from the public purse???k are you on about? Seems like a reasonable question.Never been unemployed. Never worked in an office. Never produced insubstantial b
ks for a living. Never been paid from the public purse.HTH, f
kwit.loafer123 said:
The General Anti Avoidance Rule was brought in in 2014.
https://www.gov.uk/government/publications/tax-avo...
The GAAR is irrelevant to this case. It's not retrospective law. https://www.gov.uk/government/publications/tax-avo...
The case was decided wholly on the basis of Case Law, with no GAAR element to it.
Aaronson QC who acted for the investors, interesting lead the GAAR program for HMRC. It would have been very ironic had GAAR been the decider in this case.
And to continue the irony, Barclays were involved in one of the first cases to establish that purposive reading applies to tax cases.
MarshPhantom said:
What the fk are you on about? Seems like a reasonable question.
Never been unemployed. Never worked in an office. Never produced insubstantial bks for a living. Never been paid from the public purse.
HTH, fkwit.
Seemingly you've never been able to understand the difference between tax evasion and avoidance either...k are you on about? Seems like a reasonable question.Never been unemployed. Never worked in an office. Never produced insubstantial b
ks for a living. Never been paid from the public purse.HTH, f
kwit.Alpinestars said:
MarshPhantom said:
Why don't people get punished more for avoiding tax? Seems pay what you owe eventually and everyone is happy.
It's a bit like stealing something and not getting into troublè if you give it back.
Courts have the power to imprison for life. It's a bit like stealing something and not getting into troublè if you give it back.
Marsh Phantom does seem to have some misunderstanding as to how the law differs in tax avoidance cases compared to tax evasion.
Tax "avoiders" by and large will not receive any sort of criminal punishment because they have avoided tax. In most cases where an avoidance scheme has been found not to succeed, the "punishment" is the repayment of any tax saved incorrectly - plus penalties plus interest.
As long as the tax was unpaid due to avoidance, there will be no criminal sanctions.
Tax evasion is an entirely different matter and can lead to prison.
If a tax avoidance scheme is closed down by HMRC, that does not automatically mean that it was really tax evasion.
Tax "avoiders" by and large will not receive any sort of criminal punishment because they have avoided tax. In most cases where an avoidance scheme has been found not to succeed, the "punishment" is the repayment of any tax saved incorrectly - plus penalties plus interest.
As long as the tax was unpaid due to avoidance, there will be no criminal sanctions.
Tax evasion is an entirely different matter and can lead to prison.
If a tax avoidance scheme is closed down by HMRC, that does not automatically mean that it was really tax evasion.
Anyone remember TESSAs? They were replaced by ISAs. The fact that TESSAs were no longer available did not make those who had originally invested in TESSAs suddenly criminals.
The problem is when what was SOLD as a legal tax avoidance scheme -
a) is deemed not to a valid scheme
b) is also deemed to have actually been tax evasion
A court case where both a and b combine is quite rare.
The problem is when what was SOLD as a legal tax avoidance scheme -
a) is deemed not to a valid scheme
b) is also deemed to have actually been tax evasion
A court case where both a and b combine is quite rare.
Eric Mc said:
The problem is when what was SOLD as a legal tax avoidance scheme -
a) is deemed not to a valid scheme
b) is also deemed to have actually been tax evasion
A court case where both a and b combine is quite rare.
Yes this sums it up quite neatly.a) is deemed not to a valid scheme
b) is also deemed to have actually been tax evasion
A court case where both a and b combine is quite rare.
I have a couple of friends caught up in this - they're not greedy scumbags so frequently portrayed in the media (and on here occasionally). They were successful in business, paid their taxes and were advised by professional advisors about legal ways to minimise further taxation. Something many people do with pensions and ISA's etc.
Family homes are now being sold to pay the HMRC.
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