Today is the last day of the committee stage of this year’s Finance Bill. Details of all stages may be found here.
I confess I look forward to it being over. I have been on the Committee since 23 April, making a sincere attempt to scrutinise every clause and promote my constituents’ interests. I spoke frequently, often criticising measures for one reason or another. I have certainly learned a great deal of the detail about the state of our country’s legislative machine and executive.
For example, it appears tax complexity breeds avoidance schemes which breeds further complexity and even actions which tend to undermine the rule of law. The driving force is the welfare state’s voracious appetite for funds. It makes me wonder, not for the first time, if the institutions which underpin liberty and justice and therefore prosperity can survive if people will not restrain their conduct according to some higher principles.
I have also learned that the public care very little for the bread and butter business of legislating. The only clause which has attracted significant public interest has been New Clause 1, which would repeal retrospective action to close an obviously abusive and wrong tax avoidance scheme. In researching it, I have found what a vile and corrupting business politics can be when high principle meets the messy and unpleasant reality of people’s conduct.
I look forward to moving the clause later today.
Tags: Avoidance, Finance Bill, Justice, Liberty, Parliament, Rule of Law, Sophistry, Tax
I guess that whatever the consequences the public sector will continue to demand more and more of the domestic product however, I fail to see why they make it so complicated.
Whatever the perceptions, almost all taxes are paid by producers and passed on to the consmer through the price of the product, in much the same way as wages, salaries and raw material costs are.
Why then have a tax that is so difficult to collect and so easy to avoid as Corporation Tax?
VAT is not easy to avoid other than through fraud so why on earth not just have a turnover tax and be done with it. After all that is what VAT really is and it is levied on companies whether they make a profit or not.
Spending serious amounts of time chasing ones pwn tail really is not the most efficient use of resources.
Can you repeat in English? 🙂
Does this mean you are for or against the repeal of the retrospective aspect of S58?
Does this mean you are happy to see 3,000 wealthy individuals get away with paying tax at 3.5% over many years?
I read it as: Steve is against tax complexity because it makes people (citizens and HMRC, I guess) behave badly and that Steve is also against retrospective laws in principle.
A state that can pass retrospective laws would be a pretty uncertain and scary place to live or do business.
How do you only pay 3.5% tax, surely one has to pay tax in order to pay NI in order to build up a state pension entitlement.
I’d be more worried about all the people who simply lie on their tax returns. We should be mostly chasing evaders. Avoidance should be tackled by changing the law in sensible and measured ways.
“How do you only pay 3.5% tax, surely one has to pay tax in order to pay NI in order to build up a state pension entitlement.”
The average amount of tax these people paid was 3.5%, some got away with less than 0.1%
How did they get away with paying this amount? I suggest you contact the scheme provider for details. However, after reading some of these individuals blog entries then they expect to be entitled to a full state pension at retirement (and the rest).
“A state that can pass retrospective laws would be a pretty uncertain and scary place to live or do business.”
I think most people, including myself, would agree with that. However in exceptional circumstances, such as the blatant abuse above, i think most people, including myself, would support retrospection once the details of how little these individuals are contributing.
If your earnings fall into the top 5% then that’s a pretty good definition for you right there. Especially when the remaining 95% are paying a much greater percentage of tax.
I know IT contractors who used the scheme who earned between £100,000 and £200,000 a year. GPs can earn more and property developers run into the millions.
Can you answer Rachel please ? I too would like to know the answer to the question. Wealthy IT contractors used an illegal scheme, which used a tax loophole, to work in UK, got paid in UK, transferred their earnings to Isle of Man and paid 3.5% to the scheme providers and paid 0 tax to UK. They then went on to use all the public services for years despite paying no tax.
Such individuals should be jailed and all the tax avoided made to be paid back with interest. It should serve as an example of how HMRC can deal with people who earn in excess of 200K and decide to pay no tax.
My speech, which contains my developed view, is here:
I didn’t realize that the 3.5% was a payment to the scheme.
So in reality, they paid NO tax whatsoever for 7 years to the UK, even though they lived in the UK, worked in the UK and took advantage of all sorts of public services provided by the UK?
Speechless … just speechless.
I agree with you Fiona, these people should serve time behind bars. I’d say they’ve got off lightly with penalites and interest.
On another note, my husband worked alongside some of these people and earned a similar income. He took IR35 on the chin and ended up paying a painful amount of tax and NI (approaching 60%). He made a choice not to join such a ridiculously immoral scheme even though his colleagues were able to undercut him by a factor of 50%.
“Wealthy IT contractors used an illegal scheme”
I think you may have your facts mixed up. People used a scheme which was known to HMRC for many years and had been specifically allowed under legislation in 1987 (see Hansard). Those same people were and are more than happy for their claims to be tested in court on the law as it stood before 2008, i.e. when they were in the scheme.
You seem morally outraged. Perhaps you are right to be so. In this country we have a way of enforcing morality, it’s called the law. What is being argued for here is the rule of law.
Repeal the retrospective legislation and give them their day in court. It’s one mark of a civilized society.
The members of NoToRetroTax lived in the UK, worked in the UK and benefitted from the UK’s Public services.
The rest of us who don’t earn anywhere near the kind of income that IT contractors, Doctors and property developers earn have been subsidizing you for years.
Of course i’m outraged.
Yes, we have the law. Unfortunately you chose to bend and abuse it to such an aggressive degree that you made a complete and utter mockery of it. The result is exactly the same as tax evasion, even though in the faintest of letters it may not have been (Although this is dubious).
You’ve had your day in court. And you lost.
You seem to have a great deal of opinions around this subject, at a guess you are not an uninterested observer? An uninformed one, maybe.
The law was not bent. The law was clear. Check Hansard.
The legal standing of the scheme has not been tested in court. The ability of a government to enact retrospective legislation has. Again, check the legal record.
You clearly have an axe to grind. Please, grind away. Just consider the number of people’s lives who will be ruined by this inequitable legislation and the precedent that it sets and the effect that precedent may have on our society.
Rob, you have to do better than that to convince me that HMRC/law actually allows a 200K earning IT contractor working in UK to use a scheme and pay 0 tax. It is actually laughable that you think that just because HMRC did not actually question the scheme provider, that it was a legal scheme.
Fact is, you lot got caught cheating and having exhausted all channels available to fight your case ( including in the court ), you have resorted to lobbying MPs and politicians. The MP’s have obviously been spun some story of how you will go bankrupt which just points to the fact that having paid 0 tax on your high earnings you went ahead and led a lavish life style without putting aside any money in case you are asked to pay back the taxes you illegally avoided.
Not only that, you are using your wives and children to contact MPs ? Sob sob…
Firstly, I’ll ignore the strawmen you’ve built without any knowledge of my situation.
If the scheme was, as you claim, illegal, there’s no need for the retrospective legislation so I struggle to see why you should be opposing its repeal. The repeal of something that has already been used as a stick with which to beat British business by foreign legislatures and which is offensive to the rule of law.
To be judged on the legislation that existed at the time is all that is being asked.
How many times, THIS HAS NOTHING TO DO WITH MORALS. NOBODY CARES ABOUT MORALS. IT WAS LEGAL.
This is about the principle of retrospection and not the money (I could easily afford it if push came to shove). Believe me, this is the thin end of the wedge, next they’ll be after your ISA contributions. Then who’ll be crying ?
Do you really think £200,000,000 means anything to the government? It’s a drop in the ocean when you consider the debt mountain. This is NOT about money, it is about control. Don’t let them fool you with talk of principles etc …
infact I was so disgusted with this whole immoral retrospective debacle (Which is clearly a blatant abuse of human rights) I left the UK a while ago and I’ve got to say I’ve not looked back once. If your husband is daft enough to pay 60% tax to the exchequer then more fool him, is he the type of person who enjoys wasting money on stuff like foreign aid, overpaid teachers and the black hole that is the NHS? I for one have never been happy with the way government spends taxes.
My heart bleeds for you expat.
Previously on the NoToRetroTax website :
“Alistair Cliff Renshaw, Chair of the No To Retro Tax campaign, said: “Not only is retrospective taxation morally wrong”
It amuses me how the NoToRetroTax campaign likes to complain that their case has nothing to do with morals, it’s all about the letter of the law isn’t it?
In which case, I find it difficult to see how you can complain when, as previously pointed out by Rob, a judge has already ruled that the use of retrospection in your case is infact L.E.G.A.L.
You live by the sword, you die by the sword.
Rachel, if you think we all deserve to be locked up, then lets be tried under criminal law… for retrospection is not allowed under criminal law.
Oh… and for the record, I am not a millionaire. I live in a 3 bed terrace in a not so great outer suburb of London.
Maybe those of us who do pay taxes should pay lots of money to a clever lawyer to bend and abuse the law in order to ensure what you have done is criminal. Ok, may not be morally acceptable, but it would be legal wouldn’t it? Just a thought.
You may not be a millionaire, I never claimed you all were (even though it’s been claimed most of you fall into the top 5%). However, tonight when you get home to your 3 bedroom house in London, just remember that taxes paid for the roads and lighting outside your house, the police force and firemen who work to keep your neighbourhood safe, the schools and hospitals in your area which I’m sure you’ve made use of in some capacity or other.
You haven’t paid for any of that. We have.
It’s all very simple Rob. The sematics of avoidance / evasion, the fact you might not all be millionaires, the fact that some of you may become bankrupt because you didn’t have the foresight to keep hold of the taxes you didn’t pay, the fact you received professional advice and are too stupid to see something that is clearly too good to be true are all red-herrings and pseudo-justification. The crux of the matter is, and I’ll repeat :
You lived in the UK.
You worked in the UK.
You made use of public services in the UK.
You paid no tax in the UK.
We have been subsidizing your lifestyle.
“Maybe those of us who do pay taxes should pay lots of money to a clever lawyer to bend and abuse the law in order to ensure what you have done is criminal.”
Isn’t that roughly what HMRC did do? They were advised their case would likely fail in court, decided it would be better not to do that and used every trick in the book (plus wrote some new ones) to get retrospective “clarification”.
Rachel still didn’t answer my statement, so I’ll put it out again…
Let’s take this to the criminal courts because under criminal law, retrospection is NOT allowed.
Therefore, we would actually be treated better than we are now!
I feel some balance is required here.
Whilst it is true that many, if not most of us could probably afford to pay the money back there ARE some of us who face bankruptcy through no fault of their own (These people were reassured by professional advisors that the scheme we were entering into was completely legit and that HMRC were ok with it).
I fall somewhere in the middle. I was lucky enough to retire early. If I do end up having to pay back the tax PLUS the penalties PLUS the interest (which is the big one)) I will probably have to work well into my 60s and as someone with arthritis the prospect doesn’t exactly fill me with joy.
You may think that paying a small amount of tax of income is “morally” wrong, but isn’t that what we all do? Through ISAs and SIPPs and by not choosing to buy certain goods (thereby avoiding VAT).
And I’ll leave you with this thought : Maybe the government will decide to reduce the speed limit to 60mph and decide to retrospectively charge everybody who drove at 70mph between 2001 and 2013. As someone else has mentioned, retrospection is a VERY slippery slope.
I find it my duty to issue a rebuttal to all your hypothetical situations that you and NTRT seem so intent on spreading around to prove a point.
Firstly the speed limit analogy that is constantly peddled around. This is a legal speed limit that all citizens in this country legally use. It isnt an “exclusive” speed limit that some criminal scheme provider based in isle of Man has peddled. If the legal speed limit is 70 mph and through a scheme provider you and your colleagues managed to drive around in your Ferrari’s at 100mph, “legally”, then any retrospective change in law to prosecute you would be correct.
Secondly, ISA’s which is also a pet analogy of NTRT it seems. Legally you are allowed a certain sum of money to be put in ISA to gain tax free interest. Its a set limit per year. But if a criminal scheme provider based in Isle of Man allowed you and your colleagues to stash your 100K cash in an ISA every year where as the rest of the country had to make do with just a palty 5K something, then, retrospective legislation to catch you and claw back the taxes is right.
Stop with all the legal stuff which isnt correct, you lot lost in court. You have been caught and now you are trying to find any possible way to avoid prosecution.
Total rubbish Fiona.
We are only doing what Google and Amazon and the rest have been doing for years.
Why should it just be the big boys with friends in high places who are allowed to LEGALLY manage their affairs like this?
Yours and Rachel’s comments are just typical do-gooder leftist jealousy i’ve been accustomed too because you didn’t have the brains or the money to find a good accountant to manage your tax affairs efficiently.
[* final remark moderated *]
Fiona and Rachel – I think it’s time you came out and identified yourself as the HMRC stooges you really are.