More Ritchie

Yes, we\’ve again got absurd estimations from the nation\’s favourite retired accountant.

The  second claim is that the forthcoming deal with Switzerland on withholding tax will raise up to £6 billion for HM Revenue and Customs over the next four years.  But in this case the question is why is the capital that underpins these tax evaded funds being ignored?   If the withholding tax is to be at 35%  over £4 billion of income must be involved each year to generate £1.5 million for HMRC.  That implies that HMRC  think there are more than £100 billion  of illicitly held funds in Switzerland  and yet they are doing nothing to recover the tax that should’ve been paid on those funds in the first place.

How much are we talking about when it comes to the amount potentially recoverable?  Let’s assume that tax should have been paid at 40%.  Lets assume a 50% penalty,  and that is generous.  And then let us go back and charge interest over a period of up to 20 years  and it is very easy to imagine that the sum collectable should have been at least £100 billion.   But HM Revenue and Customs has settled for £ 6 billion over the next four years.

Sigh.

He\’s not differentiating between income being paid to current residents of the UK and capital owned by current residents of the UK.

Just for the sake or argument, let\’s agree that the calculations in the first para are correct. People resident and domiciled in the UK are indeed holding £100 billion in Swiss banks.

Does this lead to the next step, that that £100 billion should have been taxed in the UK when it was first earnt and that thus there\’s £100 billion that HMRC could get?

Erm, no, it doesn\’t in fact.

A number of possible scenarios:

1) People who are resident in the UK make a bit of money, pay tax on having made it (or maybe they sell a house not subject to CGT, whatever) and decide that they\’d like to get themselves a bit of that Swiss banking. So they send it off to the Gnomes and yes, they\’re being very naughty in not paying tax on the interest but there is no tax liability at all on the capital sum.

2) This blog\’s man in the oil industry. He\’s paid into Switzerland. In the fullness of time he might well come back to live in the UK (erm, maybe not actually, Russian wife, house in Thailand, but, you never know). He would then need to pay UK tax on the interest he earns on his money in Switzerland but there\’s absolutely no suggestion at all that his capital sum will ever be subject to UK taxation.

3) An analogy of my mate around the corner (we\’ll assume he\’s UK, not Portugal based for this). He sold up in Oz to come back to the UK. His money from Oz is, having paid Oz tax, in Switzerland. Interest paid should pay UK tax: but not the capital.

And we can go on building such obvious cases where while current interest being paid should be taxed in the UK, no tax liability exists, whether we talk about tax compliance, avoidance, evasion or planning, on the capital sum.

Now how much of this is going on and how much of that £100 billion really is straight out evasion, who knows?

But expect to see that Ritchie number, £100 billion, spread around the media. Despite the fact that it\’s entire bollocks.

8 thoughts on “More Ritchie”

  1. “over £4 billion of income must be involved each year to generate £1.5 million for HMRC.”

    I’m sick to death of that fuckwit slipping between “million” and “billion” and “deficit” and “debt” as if these things are unimportant details.

  2. Whilst fully agreeing that HMRC should go after tax fraud (and hammer it), I can’t help feeling that this guy has a chip on his shoulder the size of an elephant.

    He really doesn’t like people who have more than him and can only assume that they have done illegal stuff to accrue and maintain their ‘fortune’.

    Ally that to a sort of terminal sloppiness mixing concepts, types of taxable person and activity and gross envy and that’s what you get.

    As an accountant, did he really roll over and let HMRC people tickle his whatnots or did he stand up for his client when his interpretation of tax law didn’t coincide with their’s. I don’t know in England, but in Spain, the tax people are quite fond of reaching facile conclusions and then throwing out a demand for more ‘doobers’. You then demonstrate they have their knickers in a twist (if you can) and they back off. Sometimes things ain’t that clear and the rules don’t cover all the cases, or the cases could fit a couple of different rules.

    Regarding other scenarios which don’t fit his facile generalisation, I reckon we could come up with hundreds. All exceptions which prove the rule, of course….

  3. I went on Dick’s blog yesterday and left a comment that was neither right wing, defamatory, contain swearing or anything else for that matter however, it didn’t make it past the censorship. I simply stated some facts and one of them even agreed with a comment that Dick Turnip (my name for him!) left! I know he is now deleting anything that disagrees with his views but I’m still half tempted to fill his comments sectin up everyday just so he has to go through them all and delete them!!!

  4. Commented at the House of Mirth on his numeracy problem & within 4 minutes it was deleted. He sitting there with his finger on the button?

    Seriously, reading through some of his recent output & noting the continual errors, like the one above, can’t help but wonder if we’re bystanders at the nervous breakdown of Rambo of Chartered Accountancy.

    For the sake of his wife & family I sincerely hope so.

  5. Swiss German- Well a Basel banker wanting to explain something to a chiild would sigh and say “LOHWS-a-mal”.

    I’m worried he may have underestimated the millions of tax deficit/debt owing. Because the money may have been invested in US treasuries at the height of the GFC (not my field but I think the return was zero or even negative), meaning that the money owed is infinitely large.

  6. Maybe he and Paul Krugman should get together and form an economics consultancy, calling it something like “Derangement Economics, Inc”. I am sure there’d be a market for it.

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