Skip to content

Poor Nick Shaxson

Doesn\’t really quite get it:

Banks are supposed to withhold taxes first on the initial capital, then on interest, capital gains and capital income owned by their UK taxpayer clients. Now, a Swiss bank would rarely hold John Smith\’s account in the name of \”John Smith\” but in the name of, say, ABC Liechtenstein foundation or XYZ discretionary trust. Swiss sources indicate that some private banks don\’t hold a single account in an individual\’s name.

But said foundations and discretionary trusts aren\’t actually liable for tax. Therefore no tax is being avoided or evaded.

No tax is actually due.

So whining that the Swiss tax deal won\’t tax these entities which are not taxable is a little silly really, isn\’t it?

Had to be called that, didn\’t it?

A former inmate cook who made the last meals for prisoners at the Huntsville unit, where Texas executions are carried out, wrote a cookbook several years ago after he was released. Among his recipes were Gallows Gravy, Rice Rigor Mortis and Old Sparky\’s Genuine Convict Chili, a nod to the electric chair that once served as the execution method. The book was called Meals To Die For.

Betfair charges

What?

Betfair initially deducted 20pc of gross profits from successful punters gambling in more than 250 betting markets. In July, such charges were raised to 40pc to 60pc for customers who have won more than £250,000.

Mr Sayaniya alleges he has bet in less than 250 markets and made a £24,000 profit. However, he claims that on September 5 his account was suspended \”under investigation of Premium Charge avoidance\”. On September 20 he received an email from Betfair\’s \”pricing team\” stating his account shared a similar betting strategy with four others, all of which would be taken into consideration for the charges. Betfair deducted all £52,352.85 in his account.

So if you happen to win then they charge you extra fees? Up to 60% of what you\’ve won?

What?

A comment from Ritchie

Here:

And Vince’s Spad, recruited after the election is a libertarian fundamentalist

Poor judgement by Vince

But that Spad would feel at home with you

Two of a type

Well, no, not really. Vince\’s SpAd is an economist (so he\’s up on both of us) who has worked in the City (ditto).

You know, someone who knows what he\’s talking about?

Another mind gargler from Ritchie

Look, please, shouldn\’t an accountant actually be able to understand the qualifications that people put on statistics?

Here\’s his post:

Well, the detail shows why. I searched their report for a key word. It was offshore. It comes up once, on page 45 where they say by way of introduction:

By matching data supplied by third parties to HMRC records, it has been possible to produce an estimate of the tax gap relating to income and capital gains of individuals taxed through PAYE but who do not receive SA returns. The income covered would not have been earned from employment and therefore the associated tax liability was not recovered under the PAYE system. As these individuals did not receive SA returns, the income and gains were also not reported through this means and thus additional liability was due.

This is the way in which they estimate the total impact of the hidden economy – of which offshore is, by definition, a part.

So you then turn to table 8.8 to see how much they think they lose to offshore and there’s the number in all its glory:

Offshore bank interest – estimated tax gap – £3 million

Now the UK has just claimed it has signed a deal with Switzerland – just one, albeit significant tax haven – which they claim will recover £5 billion of tax. And then there was the £3bn they claimed they’d get in Liechtenstein. And that’s before we build in the Crown Dependencies and Cayman, the BVI and so on and on and on.

But in the tax gap report they say the total loss from offshore is £3 million a year.

Who are they kidding?

This data is so obviously wrong it takes seconds to realise the deficiencies and gross under estimates in it. But they put it out as if it’s authoritative and then dismiss criticism of it as if it is absurd they could be wrong. And yet they glaringly obviously are.

No wonder I stick by my estimate of the tax gap. And so should everyone else.

Have you spotted it yet?

Yes, well done. Ritchie is mixing and matching there with the best of them.

HMRC, in reaching it\’s £3 million number, is looking at a very specific (and small) number of taxpayers. Those who earn the bulk of their income through the PAYE system but who also have other income. And, to restrict the number even further, those who are not known to have said external income and so who never get sent the Self Assessment forms to fill in.

Ritchie is trying to compare that number, a number which relates to a very small number of people earning not much money in aggregate (because, obviously, those who have large not PAYE incomes are more likely to be picked up by the various monitoring systems, meaning that we are by definition talking about the small fry here) to all offshore, all interest earned offshore.

And after that feat of misunderstanding the basic stats he\’s discussing we should all therefore agree with his estimation of the tax gap?

Timmy elsewhere

At City AM.

About the Tobin Tax and how banks won\’t pay it, consumers will.

As to calling it the Robin Hood Tax, perhaps we should remind them of the original Robin of Loxley. He made his bones resisting those collecting unjustly levied taxes, not imposing them.

They took out the line about Boris having provided plenty of lamp posts. So that\’s twice an editor has stopped me from urging mass murder: quite possibly two wise decisions there.

 

Cretins Ahoy!

Clyde Loakes, a councillor at Waltham Forest, said the verdict was disappointing.

He said rubbish would continue to be dumped on street corners if businesses did not ensure that their waste was transferred to a licensed contractor.

He said: “Last year we handed out 1,650 fixed penalty notices and carried out almost 100 successful prosecutions for waste offences and this one judgment, while unhelpful, will not deter us from pursuing this type of irresponsible behaviour.”

Now what did this fool do? He and his bureaucratic mates spent £15,000 on prosecuting a company. Said company had given a man a few cardboard boxes, one of which was later found flytipped.

Thus they prosecuted the company for not making sure that their waste went to an approved waste disposal operative.

More importantly, they were striving mightily to make sure that no one could ever reuse material: which is quite insane when you think of it. Material must be \”disposed of\” not, reused by another person.

Take it to the extreme: you may not sell your used car, it must go for disposal by an approved and licensed disposer of cars.

Cretins, but then that\’s bureaucracy for you, people being stupid in offices.

Cuadrilla Resources

This is really momentous news:

Cuadrilla Resources believes there are 200 trillion cubic feet of \”shale\” gas in the Bowland basin, which could result in a Lancashire gas boom creating 5,600 jobs at peak production.

Yeah, yeah, unconfirmed, they might be causing earthquakes with their drilling, Chris Huhne has seen Gasland and thinks everyones\’ taps will blow up.

However, the killer fact is this:

Executive director Dennis Carlton said initial results show a basin five to 10 times thicker than America\’s Marcellus shale.

That is, in technical terms, what is known as a fuck of a lot of gas.

One very back of the envelope calculation states that this one field, only Lancashire, could supply the entire UK\’s gas demand for 30 years. Yes, at peak winter demand.

Things that I am responsible for

This might surprise some. But Cleggy\’s announcement that paternity/maternity leave will be transferable, shareable.

Umm, that\’s my fault, sorry.

Me banging on for years about how maternity leave itself leads to at least a part of the gender pay gap got as reader here thinking about how that ill-effect could be ameliorated.

If young men were as likely to take paternity leave as young women were to take maternity (obviously, we\’re talking about the months and months, not the 10 days for the stitches to heal) then that influence upon hte gender pay gap would, at least in part, go away, wouldn\’t it?

And that reader suggested such at Lib Dem conference and well, so, as I say, sorry, it all started here.

All we need now is for such paternity leave to be called \”Worstall Leave\” and the Knighthood\’s in the bag, eh?

On the economic understanding of President Obama

Ouch:

So for 200 year rapid productivity growth didn’t cause any serious unemployment problems in America, but now, right after NGDP collapses, we are to believe it is producing mass unemployment, even though recent productivity gains have been rather low.  I’m at a loss for words.  We elected a Luddite as President of the United States.

As as been pointed out, it\’s not what you don\’t know that is so that\’s dangerous, it\’s what you know that ain\’t so.

This applies more generally than just to American Presidents.

Timmy elsewhere

At El Reg.

About the difference between arbitrage and speculation.

It reads a bit oddly as now that charges have been laid in a case that I cannot mention I have to leave out any reference to that case I cannot mention. So there has to be a little bit of reading between the lines to work out why the piece has been published at all.

Still the core of that case not mentioned is that it\’s the nightmare of finance: arbitrage is risk free, arbitrage requires large budgets to work. Arbitrage desks have vastly higher budgets than risk taking speculative desks. Because there\’s no risk, see?

And then the nightmare: someone supposedly doing arbitrage decides to go and do speculation with that budget designed for arbitrage not speculation.

On the popularity of British food in Berlin

Well, yes:

\”Every time we are interviewed by a German journalist they always say that British food has a terrible reputation, but that\’s usually because they once went on a school exchange and were served beans on toast every night,\” she said. \”Jim always says, well, no one exactly says \’I\’m going out for a German tonight\’, either.\”

Wasn\’t there a TV show which made exactly this joke? Indian/Pakistani immigrants going off for \”An English\” on a Saturday night?

And I do believe that lots of people do eat \”a German\”….Hamburgers and Frankfurters anyone?

Fascinating business tidbit

Traditionally, kids entertainment groups have made just 10% of their income from broadcast commissions, with the balance generated by DVD and merchandise sales. Many companies have been squeezed by the global decline in DVD sales, while increasingly broadcasters expect to pay nothing for children\’s television shows commissioned from outside rights holders.

While Entertainment One has turned in a sparkling performance in recent years, it too has had to make concessions to broadcasters. In order to secure Peppa Pig its slot on the Nick Jr channel in the US, it is thought to have paid all production costs and agreed to share income from merchandising.

\”If you can\’t broadcast these things on television then you can\’t sell any merchandise, so you do have to get the product aired,\” says analyst Ian Berry at Cenkos, broker to Entertainment One. \”But the potential royalty income from merchandise is almost 100% margin.\”

OK, so we all know that the TV shows lead to pester power for the Peppa Pig lunch box, the Peppa Pig waterproof nappy (no child would be seen dead at the beach without it) and the Peppa Pig doll, poster, DVD.

But it\’s a fascinating little detail of capitalism the way the money moves around, isn\’t it? The TV stations aren\’t paying the people who make the programs any more. In fact, the people who own the rights to sell the lunch boxes are in fact paying the TV stations (that\’s the \”sharing of merchandising revenues\”) to show the programs.

The scarce resource here isn\’t in fact the character or the TV program. The scarce resource is the audience and thus the money flows to whoever it is who has access to that audience, that is, the TV station.

Tee Hee

David Rose added. \”I hold a doctorate in Cambridge in Climate Change and Sinking Islands Studies so I know what I\’m talking about. And if you don\’t believe me, ask my friend Johann Hari who taught me everything I know about the primacy of emotional truth over actual truth. I\’m pleased to say that this is a view of the world shared by my colleagues at Times Comprehensive Atlas Of The World. They understand that maps based on accurately recorded geographical features belong in the Victorian age of child chimney sweeps. What we need now is maps that change the world, transforming into something which it isn\’t actually yet but might be one day if we don\’t act NOW!\”

I think more of this should be done. David Rose as our main reporter on matters climate change.

Full Tilt

Does our Mr. Gillies know more about this?

Full Tilt is alleged to have credited players\’ accounts with $390m (£248m) it did not have, according to a lawsuit filed in New York on Tuesday by the US government.

Full Tilt\’s founder, Raymond Bitar, and other board members are also accused of paying themselves $440m from funds belonging to players between 2007 and April 2011.

\”Full Tilt was not a legitimate poker company, but a global Ponzi scheme,\” said US attorney Preet Bharara.

Mr Bitar is already one of 11 defendants named in an April indictment by US authorities seeking $3bn in penalties and alleging crimes including illegal gambling, money laundering and bank fraud.

Absolute Poker and PokerStars, which is based in the Isle of Man, were also among the companies named in the April indictment.

It seems a little confusing to say the least.

On the one side there\’s been the long battle by the US authorities to close all of these companies down. So is this just anouther stage in that?

Or have they really been naughty boys and been playing silly buggers with client monies?

Umm, Richard?

Are you absolutely certain you\’ve got this right?

Oh dear, who are you kidding Mr Ozouf?

Jersey Finance say that in December 2010 there was over £366 billion held in Jersey of which more than £160 billion was in cash and at least £30 billion of that was for EU depositors.

Let’s apply a rate of 2.5% to this cash (which is low for the balances in question) and generate a return of £750 million. Tax was withheld at 27.5% on average during the year. So tax withholding applied to £14.5 million of the interest paid and the rest avoided the tax charge.

So, applying tax to less than 2% of deposits counts as full cooperation does it Mr Ozouf? And opposing all measures that might extend the scope – or even opting for full information exchange like the Isle of Man and Guernsey also counts as full cooperation does it?

Please pull the other one. No one believes you, and the evidence as to why is clear for all to see. We can all see why you think this process is working well – because it’s very obvious it’s hardly really working at all whilst giving you an essential fig leaf of respectability.

And then you wonder why people are sickened at the continuing abuse you promote. Well, you shouldn’t be: the world can spot a sham when it sees one and your press release and all that lies behind it is just that.

So, if you\’re an EU resident with a bank account in Jersey you\’ve got two things you can do.

1) Say you don\’t want them to tell your tax residency about the interest you\’re earning. In which case they scrape off that special rate that Ritchie is talking about.

2) Say, yes, please do tell my place of tax residency about the interest I\’m earning. So you can pay me the interest whole and I\’ll obviously have to declare it on my tax return: because you\’ve already told them about it.

Now as far as I\’m aware, there aren\’t any other options. Not as an individual: my Jersey account certainly doesn\’t allow any other options.

So, what Ritchie is pointing at is that almost everyone is having their interest income declared to their place of tax residency. That is, that almost everyone isn\’t avoiding tax by having a bank account in Jersey.

However, he\’s taking this evidence of very little to none tax evasion as evidence of large amounts of tax evasion.

Why?