Archive for April, 2016

h1

Sandwich man

April 11, 2016

I don’t think there is any smoking gun for David Cameron in the Panama papers from what we’ve seen so far.  He sold his shares before he became Prime Minister.  He moved into accommodation paid for by the taxpayer, so he rented out his own place.  He pays tax on the three to six grand he receives in interest. His dad left him money below the inheritance tax threshold, and the family planned for inheritance tax by making inheritance-tax-free gifts to each other, as allowed for in the legislation, so that their wealth could follow John Major’s ambition of cascading down the generations.  He has done nothing wrong.  Right?

I was once in a queue at a supermarket – twenty years ago now, it must be – in the “five items or fewer” stream, behind a bloke who, I couldn’t help noticing, had more than five items in his basket.  I had given him a Stern Look, but he was impervious, so I said “this is the five items queue…”

By this time he was unpacking his basket onto the conveyor belt and so had to try and charm both me and the assistant.  But he had enough to go around, broadcasting genial bonhomie as he declared, well, there are two sliced loaves and a packet of ham in here, and that’s just a sandwich really, so that makes it… six.  Oh, and tomatoes.  A ham and tomato sandwich.  So it’s only five items *really*.

But he was unpacking his basket quickly, and he had his wallet in his hand, and it would have taken longer to make a fuss and have him move to a different queue and start again, and the fact that he had blatantly queue-jumped and was trying to charm his way out of it, well, life’s too short.  Right?

Privilege at work.  Someone who goes to the supermarket once in a blue moon can’t believe that the petty rules about what goes in your basket can apply to them.  Most of our leaders have never had a proper job but they know what will motivate the unemployed.  Cameron might not have got through Eton on a paper round but he leads a political class who genuinely believe they pulled themselves up by their bootstraps so they are the exception to any rules.  He’s a man with two loaves, a packet of ham and a punnet of tomatoes telling you we’re all in it together and why are you persecuting him when he’s only eating his sandwich.

Posted in Bit of politics | Leave a Comment »

h1

Resource usage

April 7, 2016

If you look at HMRC’s list of deliberate tax defaulters here you’ll see pubs and sandwich bars, window salesmen and an eBay trader.  You won’t see many accountants or wealth management companies and there’s nothing there that screams to me “concealed overseas assets and income”.

There’s an interesting piece of qualitative research here which looks at the attitudes of people given prison sentences for tax evasion as a result of the “volume crime initiative” – which looks at VAT fraud, undeclared income and use of fraudulent documents.

And, I don’t know about your google skills, but I can’t seem to find a more recent “HMRC most wanted” list than this one from 2013 which shows a gallery of… well, click on them yourselves.  VAT fraud, fag smuggling, a smuggler of non-EU garlic incorrectly described as ginger…

I have a simple question for HMRC.  How many staff (how many “FTE” – full time equivalent – staff) are engaged on the detection, investigation and prosecution of booze and fag smuggling.  And how many are engaged on examining the Panama papers and will be allocated to investigate and ultimately prosecute any wrongdoers?

Posted in Avoidance, Bit of politics, HMRC | 3 Comments »

h1

Panamanorama

April 5, 2016

Day.  A plane takes off.  Our reporter looks manfully into the camera.  “Tax haven,” he says.  He walks down a sunlit beach towards a generic office building.  “Look,” he says, “why would a lawyer have an office in a tax haven?”

Night.  A plane is landing, silhouetted against a London skyline.  Our reporter is seen in profile, sitting in his car, looking manfully at a pile of documents in a folder on the seat beside him.  “Hundreds of thousands of documents,” he says.

Day.  Our reporter is walking alongside another white man, on a path through a field.  “But did you?” he says.  “Look,” the other man says, “I have already emailed you the answers to your questions and I’m not going to give an interview.  Now can you go away please?”  “Yes, but DID YOU???” asks the reporter.  “Go away,” the man says, going through a gate into a garden.  The reporter stands outside the gate and looks mournfully into the camera.  “Well, did he?” he asks.  “We may never know.”

Posted in Uncategorized | Leave a Comment »

h1

Before the Panama papers…

April 4, 2016

I am writing this at seven o’clock on Monday evening, before Panorama airs its programme on the Panama papers, so it’s not based on any knowledge of the programme but on the various comments I have seen on FaceBook and other social media today.  I just want to say three things.

First, tax is not “a private matter” (as the PM’s spokeswoman apparently told The Guardian).  The Prime Minister’s salary is £143,462 and is widely used as a measure of what is meant by a substantial salary, not least in various shock horror stories in the press.  If he is also the beneficiary of an offshore family trust which hasn’t paid tax, do we really think this is a “private matter” or something which should be disclosed in the public interest?

Secondly, is it not time that we took the shackles off HMRC with regard to taxpayer confidentiality more generally?  As Jolyon Maugham has written today:

I could stand, smiling, on national news, next to HMRC’s Chief Executive and declare that I had paid every penny I owed and even if HMRC’s Chief Executive knew this [to be] an outrageous lie she would still not be able to contradict me.

Personally I can see no reason why tax returns should not be open to publication under the Freedom of Information Act, and particularly that MPs’ and Lords’ returns ought to be laid before Parliament (so that it would be a resignation matter were they found to be inaccurate).  But if that is a step too far, can those clever legal eagles amongst us not devise some form of unshackling that at the very least allows HMRC to give one of three responses when asked:

  • This person has made a return and their self assessment has not been audited.
  • This person’s self assessment has been audited and no major issues were found.
  • This person’s self assessment has been audited and either negotiations are ongoing or they have repaid £x tax plus £y interest and £z penalties.

Finally: can HMRC deal with the Panama Papers effectively at all?  By which I mean, do they have the resources?  Back in 2013 ARC, the union of senior managers in HMRC, put forward a Budget submission where they requested

Additional legal resources, 150 trained lawyers and 50 legal assistants, to accelerate litigation of the Tribunal backlog and accelerate yield.

Cost       £45.5m
Projected yield over 4 years to 2016/17       £2000m

Did they ever get their 200 additional legal and paralegal staff?  Are they now staffed to examine the panama papers and take forward any prosecutions that might arise?  Does the government seriously want them to, or would it rather they sat quietly on their hands, or “worked within their funding envelope”?

Take a wild guess.

Posted in Avoidance, Bit of politics, HMRC | Leave a Comment »

h1

Consultation day

April 1, 2016

It’s that time of year again: the Budget is over but the summer recess isn’t quite upon us yet.  A good time for publication of consultations for some of the more, er, challenging ideas the government has in its bottom drawer.  If you go to gov.uk and search on today’s date you’ll see the following new consultations are out there from today.  And some are further out there than others!

  1. Set up a rival Revenue and Customs body.  Like the old joke about “how come there’s only one Monopolies commission?”, it has long been argued in certain quarters that HM Revenue and Customs would benefit from the injection of a little competition.  Well, now you have your opportunity to comment on the proposals.  Once HMRC retreats into its 13 redoubts, the proposal is to ask a couple of venture capitalists to provide the start up funds for new networks of tax offices and customs centres, based on the schools academy proposals.  The idea is that a local tax office would be part of a chain of offices owned by (say) Richard Branson or Lord Sugar.  Tax customers would then choose whether they wanted to pay the standard HMRC tax, the Sugar Tax (where all the tax rates would stay the same except for the one on Sugar, obviously) or the Virgin Tax, where apparently there would be spectacular savings for certain taxpayers who could pass some rather stringent conditions.
  2. Tax competition.  It has long been a government ambition for our country to be a place which is seen as “open for business”: where multi-nationals want to base their headquarters because the tax rates are low and the tax authorities are sympathetic souls who will understand.  The government now wants to extend this to individual taxpayers.  Tax competitiveness is for the many, not just for the few, is the slogan out front of some rather interesting proposals.  Essentially anyone with income over £50,000 a year will be eligible to register to vote in any constituency, not just the one in which they happen to reside.  They will be taxed on their income, using the Scottish Income Tax model, on a variable rate depending on their constituency.  Constituencies will be able to offer competitive tax rates via a new organisation led by Lord Gerry of Mander which will assess the likelihood of new voters changing the balance of power, although I have to say it is not entirely clear from the consultation document whether altering it is considered a good or bad thing!
  3. Tax simplification.  There’s a rather interesting proposal from the Office of Tax Simplification that would reduce the length of the tax code considerably.  In essence, it’s a new application of the “one in, two out” principle that applies to regulatory measures.  How it will work for tax is, however, quite markedly different, if the proposals are legislated in accordance with today’s consultation.  The lead proposal is to cap the tax code at its present length and reduce it by two pages for every page of new legislation introduced.  The clever part, however, is that the creeping repeal of existing legislation is done on a very simple brute-force basis.  If a Finance Act adds one page of new legislation to the “end” of the tax code, it simply repeals the first two pages from the “front” end.  If each new Finance Act introduces no more than fifty pages of new legislation at a time, the entire tax code will be down to nothing by 2356!

Posted in Bit of politics, Look at the date | 1 Comment »