veggiesosage:Turns out that they estimate £42 billion tax goes missing each year, £15bn of which is legal tax avoidance.
Then that would be £26 bn per year
I forget who said it (maybe Lord Justice Wolf - it was a high court ruling anyway) but one of my favourite quotes about tax goes something like
No man is under any obligation to structure his affairs so that he pays one iota more tax than he needs to.
Basically the law says how much tax you have to pay. Pay it and you're good. Don't and you deserve to be called a tax cheat.
As a case in point, the government a long time ago removed the upper limit on employER's NI. This led a lot of people to set up limited companies which suited the government just fine because they are taxed differently and they could collect VAT. It suited them because they hired a lot of these companies for their own work and could get rid of them without severance pay. It suited them because once you are a director of a limited company it's very hard to ever claim income support/whatever and if you are "on the bench" you don't count as unemployed for their headline figures. It meant that if a person running a limited company defaulted on their tax it was their company not the ultimate hirer who was responsible. Pretty soon in many industries you couldn't get freelance work without running a limited company.
Then the government decided they wanted more money. So they drafted what has been described as the worst piece of tax legislation ever (though they have had a few more goes to top it) and ruled that small companies under certain ill defined conditions could not pay their employees holiday pay, sick pay, adequate expenses to run a business or training expenses. That all their turnover less 5% expenses (and even that was a climb down) was personal profit for the MD. Then they branded everybody who didn't stump up the extra cash a "tax cheat". They made sure that the legislation was so complicated and the penalties so severe that many people paid tax they didn't owe out of fear.
Amongst the most hilarious rules is that to determine your tax status you have to look at all contracts up and down the chain. Some of these (especially those issued by government departments) are commercial confidence. So a person has to guess their status from information they are prohibited from viewing. Get in wrong (and the IR get to see all the contracts) and the penalties and fines are several hundred percent of the tax. I'm not too up on poker but I think that's similar to high stakes Texas Hold Em. With the added benefit you could actually go to prison if they disagree with you.
And yes, I ran a very successful IT company. And yes we were targeted for investigation using borderline legal methods. (My favourite was the initial meeting with the IR where I was denied access to my accountant or legal advice and which was supposed to be a standard records check. When I said that I would have to check before handing over some irrelevant information that was in commercial confidence with my client the investigator looked me right in the eye and said "you wouldn't believe how fast I could get a court order". I thought I was on the set of a bad 80s police drama. I had to feign a coughing fit to cover my laughter - then I realised they were serious.)
Several months (I think it was 18 but I'm trying to forget) and a HUGE accountant's bill later they finally agreed that we didn't owe them an extra £50 - £250K in tax (nobody ever knew what the amount was - it was far in excess of turnover...) "as long as all the affidavits are true...".
So yeah, they are probably counting me as part of that £15bn.
On a lighter note....I saw an estimate of how many tax forms the IR (or HMRC now) get wrong. An internal audit discovered that when you ask the tax office to work out the tax for you on a personal assessment form they occasionally get it wrong. The figure I saw was between 30 and 40% of the time.......reasons quoted included that the forms were "too complex".
Kidography. It's like photography. But more fun.