Julian Richer funds Tax Watch. Julian Richer sold his business, Richer Sounds, for vast piles of money and paid not a bean in capital gains tax. Entirely, wholly and absolutely legally. The company was sold to an employee trust, public policy has been to encourage such actions by making the receipts from having done so free of those taxes. Those who follow the law to the jot and tittle should not be put in fear of the law now, should they?
I disagree. Some tax planning has, as its purpose, tax reduction i.e. tax avoidance. (Mine, for instance.)
But some tax planning plans for an increase of the tax burden. I infer that from the opinions of those people who opine in the Guardian that – for example – pension rises shouldn’t be paid to rich people like them. I take them at their word, so they presumably plan their tax affairs to arrange that more of their income is directed into the Treasury’s coffers by way of compensation.
They must do that, mustn’t they? I mean, they aren’t just hypocritical virtue-signallers, are they?
I gave up Twitter after a long argument with people over the 45% tax rate reduction. They all claimed to be paying it and that those who pay it would be giving it up as they wanted to pay more tax.
I, rightly, said “why not just pay more as you say you will and I will keep mine”
Universal response was “Ah but it won’t make a difference if only I do it” and “The state will only waste my contribution”
So if it will be wasted what makes them think MY compelled contribution won’t be wasted as well? I reckon my wife and I pay well over £200k a year in tax. I get to fund diversity and net zero advisors, refugees in hotels, benefits for single parents and pensions. Only one of those is worthwhile.
Remember Andrew Again, your contributions to pensions goes to people like me. You might want to reconsider the worthwhileness.
Andrew Again “I reckon my wife and I pay well over £200k a year in tax.”
Crivens! You need to speak to a decent tax advisor.
I recently repeated this to an accountant at H&R Block. She was impressed. Thanks Tim!
Was your gain from that getting your taxes done for free or a leg over? Inquiring minds demand to know…..
Taxes are mostly PAYE so there is little we can do. Pension annual allowance used where possible. ISA allowance used. Not much else one can do. We pay into stakeholder pension for the children to get some tax back that way. Kids have up to 45 years to wait until they get that though, if they are allowed to keep it.
It is getting silly now. Singapore *top* rate tax is 22% so even if food is 50% more expensive you’ve got lots more at the next of the day. Even in France we would probably pay less as we have 3 children.
UK is a high tax, low wage, low productivity economy where those in charge keep telling themselves they are doing a good job.
It gets worse.
Singapore tax return = maybe three web pages with half a dozen boxes filled out after the prior year closes. Overseas dividend income = tax free,
UK HMRC requires tons of info and from 2024 is ‘making tax digital’ so you need software and must file a return quarterly or you’ll be in trouble. Uk requires you to read the tax treaties and work out yourself what rates etc you need to apply to your $14 in quarterly dividends from ex-employers bonus shares you can’t legally sell.
We know people who are moving abroad or just stopping work early due to tax. I would too but my firm is UK only, dislikes the tax risk of me working elsewhere. I’m at ‘peak earnings’ and only have maybe 5 years left before I physically can’t do this anymore. Yet HMRC are going to take >50% of what we earn and spend.
I am starting to hate this country. I hear Portugal or Bermuda is nice.
@Tim
None of the above, just a tone of modest respect over the phone, but it’s the small victories.
Was asking them questions about starting an LLC in New York, as tax season is a few months away.
Ah well, next time, eh?
Are the physical stresses due to guilt, or remorse?
Going to have to disagree with you on this one, Tim. You’ll be shocked, I know.
Lord Nolan, in CIR v Willoughby, defined avoidance thus:
Which side of this line a scheme falls doesn’t in itself determine whether it works (i.e. whether or not it’s legal). On this, I suspect, we agree. However, it is a very useful definition, which is relevant for public policy purposes and to the administrative duties of HMRC.
When HMRC risk assesses a scheme/arrangement, its officers will make a judgement (assuming it’s not in the evasion territory) on whether it meets (essentially) this definition of avoidance. This will inform whether HMRC should:
1) investigate further to establish whether it works (i.e. whether it indeed actually is “Entirely, wholly and absolutely legal”*); and
2) advise the Government to close loopholes that are being (more than possibly entirely, wholly and absolutely legally) exploited.
I would go so far as to say that this distinction, being used in this way, is essential to functioning democracy. We vote for representatives partly on the basis of their promises to impose tax by reference to particular economic circumstances. When this link is allowed to be circumvented, democractic accountability is undermined. The electorate has a right to know that people aren’t actually being taxed in the way that was promised.
Yes, there are those – generally on the left – who deliberately conflate avoidance with evasion for political ends, which is wrong from a legal perspective, and I also disagree with those who argue that avoidance and those who engage in it are necessarily immoral. (Conversely, I think there are circumstances in which a government can act immorally in allowing avoidance, particularly where this involves giving the electorate a false impression of how the tax system works.) However, I think those (generally) on the right who conflate avoidance with e.g. putting £20k in an ISA are equally disingenuous. This is intended to imply that “there’s nothing to see here”, which, for the reasons I’ve outlined, I think is wrong.
* – I also smile wryly at the over-simplification of the “avoidance is perfectly legal” chat. That’s true if the scheme works, but it’s interesting how many entirely, wholly and absolutely legal schemes feature documentation, the details of which are critical to determining the legality of the schemes, that’s held in jursidictions from which a disadvantaged tax authority can’t obtain it and that the users of those schemes are rarely inclined to voluntarily provide it. The assumption that all schemes described as “avoidance” (or even, by some, mitigation) work is nonsense.
(For the avoidance of doubt, I see nothing here to suggest that what Richer did was tax avoidance under the Willoughby definition, nor am I arguing that a change in prosecution policy is required, although maybe if the Telegraph article wasn’t behind a paywall it could persuade me that one is!!)
You’re not even engaging with my actual argument. Which is that “tax avoidance doesn’t exist, only attempts at tax avoidance do. When examined all attempts at avoidance collapse down to compliance or evasion.” As I say, you’ve not touched on that at all. Only pointed out that avoidance might have a useful meaning concerning what to examine.