A tax law so bad even Ritchie’s agin it

Taxpayers will be treated as “guilty until proven innocent” as HM Revenue & Customs gets the power to force them to pay up front if officials suspect them of tax avoidance.

Under plans announced in the Queen’s Speech, people using tax avoidance schemes will be made to make “accelerated payments” as part of plans to raise around £2 billion.

Treasury figures suggest that 65,000 people could be affected by the new powers. HMRC could raise a more than £2bn in all.

The most controversial aspect of the new plans is for the new rules to apply to a “legacy stock” of pre-existing cases, where people invested money in contentious schemes several years ago.

You’ve really got to be going some to come up with a tax law so appallingly bad and restrictive that even the Murphmonster opposes it.

Or at least he did when it was first floated.

And what the hell is it about this “innocent until proven guilty” thing that our current rulers find so difficult to understand?

All makes the process the punishment, doesn’t it?

15 comments on “A tax law so bad even Ritchie’s agin it

  1. “Or at least he did when it was first floated.”

    Expect him to change his mind today then. Previous example on HMRC taking from bank accounts:

    20 March 2014
    HMRC cannot have an unfettered right to take taxpayer money
    “Very often I am concerned at taxpayer abuse but it would be quite wrong to think a tax authority could not abuse its powers. Appropriate checks and balances must always be in place, and in this situation it is not clear that HMRC will be subject to them and that worries me”

    12 May 2014
    “this issue is a storm in a teacup. People refusing to pay their tax is not a victimless crime: we all have to pay if others don’t and there is no doubt many refuse to do so, and that imposes considerable cost (including legal fees) on society”

  2. Regardless of the rights and wrongs of this, I ask a single question: ‘guilty’ of what exactly? I thought avoidance was a civil matter.

  3. @ Ironman

    “I ask a single question: ‘guilty’ of what exactly? I thought avoidance was a civil matter.”

    I think it’s suggesting “treated” as guilty until proven innocent – ie in that money will simply be extracted from the account?

    “Regardless of the rights and wrongs of this”.

    There is no right – it is just plain wrong; very, very wrong..:)

  4. He’ll be agin’ because he has a skeleton lurking in his closet somewhere which could mean him falling foul of this law. He sure as hell isn’t opposing it on principle.

  5. And what the hell is it about this “innocent until proven guilty” thing that our current rulers find so difficult to understand?

    It’s not just our elected shower, though, it’s people at the Home Office and HRMC etc wanting to make their lives easier (this sort of thing has been going on since Tony Blair at least) – it doesn’t matter to them if a few old traditions are abolished.

  6. How soon before PBYE (pay before you earn) – all citizens have to pay a sum in tax at the start of the year, and if you happen to earn less then you can claim it back, perhaps, eventually.

  7. Rob,
    We already have that, it’s called “payment on account”.

    It affects some 3.5 million individuals each year. Ordinary employees on PAYE aren’t affected, but anyone who has to fill in a self-assessment one year can end up having to make a payment on account the next year.

    Companies also have to make payments on account for various taxes, too boring to go into detail.

  8. I don’t believe this is going to happen (and I have a dog in this particular fight – so have a reason to really hope it doesn’t).

    I think its a softener for what they really want, which is the previously proposed “give us all your income and we’ll let you have back what we think you’re entitled to” statute / instrument. Can’t (be arsed to) find any links to previous discussions about this – I’ll have a look later.

  9. There was a suggestion that the new Real Time Information system for PAYE shouldn’t be in the current form, of “tell us what you’re paying employees before you pay it”, but should be in the form “send us the gross pay and the payslips, and we’ll pay your staff what we think is the proper net amount and keep the change”.

  10. Noel

    Fuck me you ARE good!

    I note the 3 gates test, through one of which the arrangment must pass. Thing is, I don’t think getting your earnings from the JRF, which you insist is a grant for no services at all and therefore not taxable dammit, fits through any of these gates. Neither would declaring that income not to be VATable, or declaring your office to be spare bedroom and not su ject to business rates.
    So, once free from the threat of the measure, Ritchie is in favour of it.

    Hard luck Justin, Richard Murphy wins; you lose; Ritchie feels free once more to condemn you my friend.

  11. @Ironman

    He’s quite easy to read really! I think it’s just his hypocrisy that annoys me. For example, apparently the rich are evil as they can save an average of £18K a year. When I pointed out he easily does the same, it’s ok as “I am 56”. So no green pension then Richard? I’m guessing he’s a Equitable Life victim, hence his hate of pensions!

  12. There has been something of a thin end of the wedge with regards to tax avoidance schemes. Personally I always understood avoidance to be legal and evasion to be illegal. HMRC have gone on to convince the tax tribunals that intentionally reducing your tax bill (as opposed to lying about your income which is clearly evasion) is no longer legal – there must be some other motivation for your tax arrangements.

    However, the examples of tax avoidance schemes that have got into the papers have so far tended to sound like proper tax evasion to me. They have usually involved investors creating artificial losses by lending money to others, and where it comes unstuck is that the ‘other’ is actually themselves via an array of intermediary companies. These people don’t want to fully offshore their tax affairs but don’t want to pay UK income tax either, and they want to be able to treat the money as cash rather than tie it up in more legitimate investments. They should be prosecuted for evasion and the definition of tax avoidance put back to what it was.

    Pellinor,

    I remember the plan for HMRC to handle gross wages for us. Sounded like a disaster but perhaps was more of a negotiating tactic – suggesting something silly in order to make RTI look reasonable?

  13. Gareth – possibly. Would have been nicer if they’d just tried to sell RTI on its own merits, though.

    If they’d ditch the “on or before” reporting in favour of month-end, it wouldn’t be too bad.

    Oh, and please can someone get the DWP to talk to someone who knows about accounts when looking at self-employed income for Universal Credit? Now THAT makes RTI look reasonable…

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