Ritchie points us to this article:
Britain\’s largest companies are in dispute with HM Revenue & Customs over paying £25bn worth of tax, according to the latest official figures.
The money, if collected, would go a long way to helping the government\’s parlous financial state and is, for example, roughly equivalent to the size of a year\’s cuts to public spending.
The Murph tells us that this means:
The first is that it supports the claim that I have long made that tax avoidance by large UK multinational companies amounts to at least £12 billion a year.
Oh, does it?
But ultimately, and this is my obvious second reaction to this news, the issue is that this loss,
Our Retired Accountant From Wandsworth seems to have missed this point in the original piece:
HMRC said that the latest figures are \”a snapshot as at 31 March\” and added that around half of the sums are eventually paid. It said the figure of £25.5bn \”is not tax owed or unpaid – it is a tool which helps LBS managers to better direct resources in order to produce the best results.\”
It\’s not tax owed, it\’s not a loss of tax revenue, it\’s not tax unpaid. It\’s tax that we don\’t know yet is owed, unpaid or not due. You know, this rule of law thing? Even, as someone once said, this tax compliance thing?
Tax compliance is different from tax avoidance and tax evasion because it is defined (admittedly by me) as seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes. The significant difference between tax avoidance and tax compliance is the intent of the taxpayer. A tax avoider seeks to pay less than the tax due as required by the spirit of the law. A tax compliant tax payer seeks to pay the tax due (but no more).
Tax compliance is not opening one\’s wallet to HMRC and saying \”Help yourself\”. It is, as the man says \”seeking to pay the right amount of tax (but no more) in the right place at the right time .\”
And sometimes the law is unclear on exactly what this is which is what we have tax lawyers for. Plus tax disputes, tax courts, appeal mechanisms and, well, we\’re back to that rule of law thing again aren\’t we?