Is it wrong to avoid paying tax?

All avoidance is legitimate. Only evasion is wrong. The government may offer tax-free incentives for people to save, but I take advantage of the scheme, not by saving but by transferring savings to take advantage of the tax-free wrapper.

Come to that I did exactly what Ed Milliband did. My sister and I did a Deed of Arrangement after my father died so that some of his estate went directly to our children and not us so that inheritance tax would not be paid if we died within 7 years.

Nothing wrong with doing what is legitimate. The government encourages ordinary people to save by offering tax-free incentives.
It's the people who look for loopholes and go against what the ordinary people expect that is wrong.

An interesting way to close the taxgap.

www.taxresearch.org.uk/Blog/2014/12/17/shut-parliament-for-a-year-to-close-the-tax-gap/

It would be particularly okay for those who think that having a job as an MP is just part-time.
The government makes laws about tax, but not many MPs know what goes on in a tax office. Maybe they should all work in their local tax office for a month to see the results of their deliberations.

If the government offers taxpayers perfectly legitimate (to them)opportunities to avoid paying tax why shouldn't they use them?

I take out an ISA each year. The money that goes into it isn't money I am putting into savings at the time I take it out, so it is not, to me or many ISA subscribers, an incentive to save. It is money I already have saved in other tax paying locations. I use my ISA to shelter from tax, income that I would otherwise pay tax on. I am using a perfectly legitimate government-approved method of avoiding tax.

This came from the HSBC Chairman’s statement this morning:

"The recent disclosures around unacceptable historical practices and behaviour within the Swiss private bank remind us of how much there still is to do and how far society’s expectations have changed in terms of banks’ responsibilities. They are also a reminder of the need for constant vigilance over the effectiveness of our controls and the imperative to embed a robust and ethical compliance culture."

Does he really believe what he said?
Our expectations haven't changed, or at least mine haven't. I always expected banks to be above reproach, to be open and honest.
I did not expect them to help rich people to avoid paying tax, any more than I expected accountants to do it.
The chairman still doesn't get it, does he? And of course, it's all historical, and not happening under his watch!

Nor the boss of HSBC.

www.theguardian.com/business/2015/feb/22/swiss-account-secret-of-hsbc-chief-stuart-gulliver-revealed

I think that the black economy will never go away, hard up householders will always pay cash in hand for jobs, especially smaller ones. I recently had my central heating updated and I got a bill as I do with all specialist jobs, such as heating, plumbing, electrical etc. This is for safety reasons so I know they are genuine traders when I get a receipt. However for smaller jobs such as grass cutting, decorating etc I just pay cash. Many people just cant afford huge bills and most traders work by doing the occasional cash in hand job I fully support them, they have to make a decent living and why not make a little bit on the side. When I worked self employed I declared all of my earnings and it caused such a lot of paperwork that I wished I had not done it.
However these small traders making a bit on a weekend are not in the same league as the huge businesses that fiddle millions, these are the ones they should be chasing.

This is very interesting. The link was from an article in 2011, so I do not know what is happening now.

"HSBC has a controlling stake in 27 PFI projects, which are predominantly hospitals and schools. It is also the outright owner of three NHS Hospitals, which are located in Barnet, Central Middlesex and West Middlesex.

The banking corporation controls the projects through an offshore subsidiary, HSBC Infrastructure Company Limited, which is registered in Guernsey. This means HSBC and its shareholders pay no tax on the dividends they receive.

This model of ownership is becoming increasingly common. Established in 2006, HSBC Infrastructure was the first offshore fund of its kind but there at least four others now registered."

I wonder if HMRC have looked into this.

of course, under some business guise or other!

And no doubt tax deductible !

Some of the very (very very) rich actually take their accountant for a fancy holiday every year, just for the purpose of plotting how they can 'avoid' as much tax as possible. A week in the Carribean in a 5* Hôtel is just a little dust for them.

www.bbc.co.uk/news/magazine-31517383

Gilly I agree wholeheartedly about HMRC and other government departments targeting the comparative 'small fry' and letting the sharks get away with so much.

It is crazy that billions are 'lost' to HMRC and therefore to UK citizens by failure to pursue international companies when small, local companies employing a small & probably local workforce are followed through with rigour to claim a few thousand.

Well said Gilly.
I know what you mean about the tone of the letters.
I once accidentally underpaid employers' NI by 9p - I paid £x.34 instead of £x.43.
The letter I got telling me of this ran to a whole side of A4, railing in the most damning language against employers who didn't care about their employees' entitlements to pensions etc.

Firstly let me say that most companies are decent, honest and pay all of their taxes. Secondly I would like to say that HMRC are very good at picking on the easy targets and letting the big fish get away with murder (so to speak). We recently hit some problems paying our corporation tax bill after suffering a relatively big loss from a customer who went bust. We approached HMRC (before the tax was due) and explained the situation asking if we could pay the bill off in 5 monthly instalments to include interest and were met with a resounding NO. Without going into great detail on a public forum, I think there are two rules within HMRC. One for the big sums and the big guys and another for the small sums and the little guys. I would love to have the chance to speak to someone with some clout in HMRC and tell them to listen to the way they speak to people like myself. Actually read the wording in the letters they send (usually arriving weeks late) and meet some small businesses face to face. They won't of course. They are too busy being wined and dined by Amazon, Starbuck, ,Boots, Gary Barlow etc.

Rant over.

Here's a 38 degrees epetition to sign before Osborne tells us his next budget.

https://secure.38degrees.org.uk/close-mayfair-loophole

I also think it's wrong that the budget should be just before an election. It's obvious that there are going to be bribes in it.

Eloethan, there are figures to show that every pound spent on extra staff in HMRC at least ten pound is gained for the exchequer. The tax payer must win by having more staff. Maybe that's why Osborne has cut the number of staff, in favour of his tax-cheating friends.

I've also never understood why newspapers give more credence to business leaders as far as tax is concerned. They all have one vote, just like the rest of us.

I really do think it should all be transparent. If all salaries and all tax returns were in the public domain we might get more whistle-blowing on companies and the very wealthy.

I'm sick of hearing about how people on benefits are scroungers and programmes on tele all the time and today reports yet again about people on benefits due to illness being checked out. This is not the first time that they have said this or had people over the coals about their disability.

There was a thread about people having more children when on benefits. I don't think people should be allowed to make more babies when already claiming. Sort yourself out first and stand on your own two feet first, earn a wage for self support. I claim, I am disabled and have lots of health problems but wouldn't have dreamt of having any more children when I first started claiming. I have worked in between claims by the way. But my health is failing.

I am not in favour of anyone grabbing more money off the government in whatever way, benefits if you don't deserve, people getting pregnant over and again, tax avoidance, people coming into the country and not having paid into the system before claiming or using NHS, housing etc. Everybody should be accountable, not just one sector. If everyone paid and was honest then we wouldn't be having the problems of NHS, schooling, services, bringing towns back to life, more employment, apprenticeships.

It's a huge balance sheet and if I did the same on a small scale and said to my greengrocer that I would have my goods but not pay my bill, then how would that make the country go round? The government are too soft, and pick on the already poor and vulnerable.

A good article durhamjen.

I found it astonishing that HMRC fails to collect tax returns from at least 300,000 companies a year and allows at least 600,000 companies to delay submitting their returns for anything up to five years.

The writer, Richard Murphy, estimates £50 billion may be lost each year from non-payment of taxes. It may well be worth, as he suggests, radically changing the system so that banks have to give details to HMRC of companies' financial status. Of course, it would require a good deal more labour resources but at the outset it would mean more money would be retrieved and ultimately it is likely that most companies would be much less keen to cheat the system because of a very real prospect of being caught.

I still think that on top of such measures there is a need to simplify the tax rules so that there are far fewer "loopholes" available to be exploited. The purpose of these tax reliefs was to encourage investment but it has become clear that many of the schemes designed around them are not used for that purpose.

I also feel there should be a re-think about what constitutes a "charity". I don't understand why private schools and private healthcare companies like BUPA should be granted charitable status and thus eligible for tax relief.

It's really simple, there should be no sweetheart deals for big corporations and rich people should pay their taxes like the rest of us. Therein lies good hospitals, schools and other public services, in other words those things which make us a civilised nation.

I mentioned this Lilygran. I does happen elsewhere and salaries are public knowledge too. I think much of the inequality would go if both were available to all.

Someone suggested that everyone's tax arrangements should be public. It might help.

A very long article indeed durhamjen. The idea of banks reporting all company income directly to HMRC seems reasonable enough although I can imagine the additional civil servants/bank costs involved would be huge. But what about the man on the street or the sole trader who's bank accounts are personal? Should we stop at companies or should we have HMRC looking into all of our accounts? Why not go a step further and have a system where we all have to send our bank statments to HMRC every month for scrutinisation? Oh dear but that means the people getting paid in cash will get away with it.

A very long article.

www.taxresearch.org.uk/Blog/2015/02/19/how-to-beat-tax-evasion-in-the-uk/

Wrong is not the same as illegal. Not paying the tax owed because of clever schemes deliberately designed to avoid paying tax is wrong. Everyone uses at least some of the services for which taxation is the source of revenue. If someone is, say, injured in a traffic accident and taken to hospital by ambulance, then treated by NHS surgeons and nurses but has avoided paying tax which they knew was rightly owed (otherwise they wouldn't have embarked on a tax avoidance scheme) is, in my book, tantamount to dipping sticky fingers in the till.

Claiming legitimate costs against tax is, of course, perfectly acceptable.

I just can't accept that all parties have such an incestuous relationship with big business as the Conservatives. Even though Labour stupidly went along with "light touch" regulation, at the time they were criticised by the Conservatives for not being anywhere near "light touch" enough. It is widely acknowledged - and on record - that the Conservatives rely very heavily on donations from financial institutions, very wealthy individuals and big business and, as a result of the largesse of these people and organisations, the Conservatives are reported to have three times more to spend on their election campaign than Labour.

The line between avoidance and evasion can be unclear. Some actions, such as providing false accounts, are obviously illegal but others need to be investigated more closely, which is why some schemes are put before tax tribunals. There are likely to be many complex tax schemes that are not valid but which will not yield a large enough potential repayment for HMRC to risk incurring the cost of putting them before a tribunal. It seems that when those involved in these discredited schemes are Conservative supporters (Gary Barlow, Hugh Sloane, etc.) they are viewed as acceptable business practice. However, David Cameron saw fit to make a public statement about Jimmy Carr, describing "Carr's tax arrangements as "straightforward tax avoidance". He said it was unfair on the people who pay to see Carr perform that he is not paying his taxes in the same way that they do."