Tax evaders cost country more than benefits

[speedbirdone]

Yes they can come after you, in theory. In practical terms what tends to happen is the bit of the tax framework that caused the avoidance to be possible is tightened up, preventing that avoidance measure being used any more.

 

It works like this:

1. A tax adviser/accountant dreams up a tax avoidance scheme

2. They put it into operation

3. Within days of putting it into operation that have to register it with HMRC compliance

4. They get a registration number for the scheme

5. They can use that number to give some confidence to the scheme users that it is a registered scheme

6. At some point HMRC will assess the scheme

7. HMRC might deem it to be not in the spirit of the law or maybe even against the law. In either of those cases they will initiate action to prevent the scheme being used again. At that point HMRC may chase scheme users for back payments of tax avoided (or evaded if the scheme was illegal)

 

A registration number is not proof that the scheme is legal. There will be a lot of people using these kind of schemes in good faith and who will get a nasty shock at some point.

 

Contractors at work have called these "save now, pay later" schemes.

 

 

I was thinking more along the lines of tax avoidance schemes that are currently legal with the tax office knowing that there are totally legal, not some flash accountant dreaming up something in the hope that it might turn into a legal avoidance method.

 

There must be plenty if legitimate tax avoidance methods out there that the taxman hasnt shown any intrest in tightening up on and not just ones dreamed up by a tax accountant.

 

Its this spirit of the law i find odd, your either allowed to do it or your not.

[I1L2T3]

yet think its ok for the rich to avoid paying tax

 

No I don't think that.

[I1L2T3]

I was thinking more along the lines of tax avoidance schemes that are currently legal with the tax office knowing that there are totally legal, not some flash accountant dreaming up something in the hope that it might turn into a legal avoidance method.

 

There must be plenty if legitimate tax avoidance methods out there that the taxman hasnt shown any intrest in tightening up on and not just ones dreamed up by a tax accountant.

 

Its this spirit of the law i find odd, your either allowed to do it your not.

 

Well, anything that is legal and being used in the way intended is probably set up that way because it provides commercial or economic benefits.

 

As for the spirit of the law in the link I posted earlier the HMRC position was that for the scheme "The arrangements had no genuine commercial purpose". I guess if a genuine commercial purpose could have been demonstrated then the avoidance scheme would have been allowed to continue. So there was nothing illegal happening but the arrangement ran counter to the way the law was intended to work, presumably because it was causing a net loss.

 

There just isn't a valid argument that because it is legal it must be ok in this area because HMRC can deem legal schemes not to be ok and stop their use.

[ricgem2002]

Well, anything that is legal and being used in the way intended is probably set up that way because it provides commercial or economic benefits.

 

As for the spirit of the law in the link I posted earlier the HMRC position was that for the scheme "The arrangements had no genuine commercial purpose". I guess if a genuine commercial purpose could have been demonstrated then the avoidance scheme would have been allowed to continue. So there was nothing illegal happening but the arrangement ran counter to the way the law was intended to work, presumably because it was causing a net loss.

 

There just isn't a valid argument that because it is legal it must be ok in this area because HMRC can deem legal schemes not to be ok and stop their use.

or could it be that the little people jumped on the bandwagon to save a few quid and the rich didnt like it so got it stopped . isnt it wonderful how the courts see fit to again punish the less well off:huh:

[I1L2T3]

or could it be that the little people jumped on the bandwagon to save a few quid and the rich didnt like it so got it stopped . isnt it wonderful how the courts see fit to again punish the less well off:huh:

 

Because the very wealthy do it, it doesn't make it right for everyone else. Everybody has to pay their share from the very top to the very bottom. Unfortunately the way our tax regime operates it is much easier to avoid tax the more wealthy you get. It's no accident it is set up that way

[ricgem2002]

Unfortunately the way our tax regime operates it is much easier to avoid tax the more wealthy you get. It's no accident it is set up that way

i wonder how long it takes the government to see that the little people have had enough of that

[Tony]

It's nothing to do with "the way our tax regime operates it is much easier to avoid tax the more wealthy you get". It's because wealthier people tend to have more complex and diverse financial activity and so require more exotic solutions.

 

When you (for example) sell a business with stage payments through the sale of various share classes, a commuted pension pot and a management buy-in slice, it doesn't go down as common or garden PAYE.

[I1L2T3]

It's nothing to do with "the way our tax regime operates it is much easier to avoid tax the more wealthy you get". It's because wealthier people tend to have more complex and diverse financial activity and so require more exotic solutions.

 

When you (for example) sell a business with stage payments through the sale of various share classes, a commuted pension pot and a management buy-in slice, it doesn't go down as common or garden PAYE.

 

Do us a favour

 

Where did you copy that from :hihi:

[Tony]

That's what HMRC usually ask too.

[taxman]

Yeah but if a person uses a totally legal avoidance method then they where never liable for the tax, so how can it cost the country something its not entitled to in the first place. How can avoidance be a threat, people are useing methods that are totally legal. Do you pay more tax than you are legally requied too.

 

What actually can the taxman do to people useing avoidance methods. If for example i used a totally legal avoidance method to reduce my tax bill, would the taxman come after me demanding i pay up the amount i avoided. Your either required to pay it or not.

 

That's not tax avoidance. Tax avoidance is when a liability is avoided.

 

You are confused. They were liable to pay the tax, but avoided doing so.

 

Completely different to, for example, putting money into an ISA. When I put money into an ISA I am not avoiding a tax liability.

 

If I was to engage a firm of acountants to come up with some bizarre scheme to avoid my PAYE tax liabilities then I would be guilty of tax avoidance.