Uncategorized » Tax Research UK

Liberal Left

Feb 082012

I was pleased to see this in the Guardian today:

The first Liberal Democrat group openly opposed to the coalition is to be launched at the party’s spring conference in Gateshead next month with a warning that the coalition has been a political disaster for the party, as well as a denial of its radical roots.

Launching a website on Wednesday, the group Liberal Left said it hoped to become a rallying point for members opposed to the coalition and those who see the party as a centre-left organisation seeking common cause with Labour, Greens and others on the centre left.

Has the fight back against the Orange Book begun? I hope so.

I will be at the Gateshead Conference, speaking on Friday evening.

I guess the Swiss think we’re stupid

Banking, Switzerland, Uncategorized 3 Responses »

Feb 072012

I loved this in Bloomberg this morning:

Switzerland’s government will unveil a new “clean money” strategy at the end of this month, SonntagsZeitung reported, citing unidentified people.

Proposed regulations, to be put forward by Finance Minster Eveline Widmer-Schlumpf, will require banks to demand a declaration from non-Swiss clients that all their assets are properly taxed, the Swiss newspaper reported.

Let’s be clear about what this means.

The Swiss know they are harbouring tax evaded funds, or they would not be doing this.

And those who are tax evading will already have signed false statements to their tax authorities as part of that process of tax evasion. The Swiss will know that.

But now, to let themselves off the hook of having to investigate tax evasion they are saying they will take at face value a statement that people are not tax evading without any supporting evidence to validate the claim.

That’s absurd!

Get people to show Swiss banks their tax returns to support the claim or this is nonsense, I say. Without that then any banker has to have suspicion that their client is tax evading if they ask for information not to be disclosed to their domestic tax authority (as will be the case in Switzerland) – and have a duty to report them under money laundering rules as a result. But of course, that’s precisely what the Swiss do not want to do.

Want to know why HMRC bad debt was £10.9 billion? Simple: they sacked the debt collectors

HMRC, Tax gap, Uncategorized 9 Responses »

Feb 072012

It’s been revealed that H M Revenue & Customs’ bad debt in 2009-10 was £10.9 billion.

According to HMRC’s accounts the provision was £10 billion in 2010-11 and £11.5 billion in 2009-10. They did not, as far as I can see (and I’ve searched) disclose a write off figure.

In earlier years write offs of about £4 billion a year were considered normal.

So why the increase? Well that’s easy to explain. If you sack your debt collectors your bad debt goes up, and that’s exactly what HMRC under the direction of Dave Hartnett has been doing. In 2005 HMRC had 100,000 staff. By 2015 it will be 50,000. Many of these were debt collectors.

Total HMRC staff costs in 2010-11 were just over £2.2 billion. Seeking to reduce that has cost many, many times that sum.

No wonder the tax profession, HMRC staff unions and anyone trying to deal with HMRC agree that HMRC is understaffed. Now we know the cost.

When will sanity prevail and more spending on staff at HMRC be sanctioned? It’s the only way to solve the tax gap.

The American right wing turn on the old – and it’s a trend we’re bound to see copied

Uncategorized 6 Responses »

Feb 072012

This video shows the new line of thinking from the American right on the cause of our economic problems – blame the old.

To understand some more about the speaker, just click here. This is Koch Industries at work.

But mad – and bad – as this logic is expect it to be followed. The idea that we ‘can’t afford the elderly’ is growing rapidly. It’s the inevitable outcome of the ‘we can’t afford pensions’ argument. And morally it takes us toi places I’d rather not go – but will if I have to, because I sure as heck do not think we consign the old to destitution, even if the right do.

Hat tip: TJN

Nigel Lawson – an exercise in wantonness

Economics, Uncategorized 12 Responses »

Feb 062012

I often think Nigel Lawson lives on a different planet to the rest of us. He wrote this in the FT this morning:

Capitalism works – and works far better than any other system – because the discipline of the marketplace keeps greed, folly and incompetence in check. When this is lacking, when businesses are considered too big, too important, or too interconnected to fail, this crucial discipline disappears, and disaster is almost inevitable.

Maybe he hasn’t noticed that what happens on the theoretical black board of capitalism, which is what he describes, is not the same as the capitalism we inevitably get in practice, which is a very different beast altogether. But to argue for the blackboard version of capitalism as if it would solve the problem it inevitably creates is indicative of one of two things and they’re either wanton inability to understand the real world or wanton deception to support the abuse that happens in the real world of capitalism. It’s one or the other and since I’ll assume Lawson is honourable it’s inability I have to go for.

Either way, lawson is a long way past his usefulness, if he ever had any.

There’s no point HMRC saying they’ll penalise people when they don’t

HMRC, Uncategorized 11 Responses »

Feb 042012

The news was full of the story that 1 million people will pay £100 fines for submitting their tax returns late yesterday.

Except they won’t.

I did some research on tax penalties a year or so ago. The data here all comes from my report on small company administration (around page 50). It is all based on parliamentary answers. These showed the following with regard to penalties issued for corporation tax over a number of years:

Vast numbers of penalties were waived: they were simply for returns not due, or that could not be traced.

But staggeringly of those due, almost no recovery was made. Years worth of unpaid penalties were outstanding at each year end.

That’s the price of not having enough staff to collect debt at HMRC. But just think what could have been done with that money if it had been collected. And without a shadow of doubt if HMRC had kept on top of this issue much more could have been collected than was, and cost efficiently too.

In the meantime, assume that due to mismanagement at the top of HMRC the £100 million opportunity for the state that lat payment penalties represent at this moment will just be more money squandered away.

Farewell to a friend

Richard Murphy, Uncategorized 2 Responses »

Feb 032012

I’ll be spending much of today at the funeral of my oldest friend.

I mean oldest because Jack Ray was 95 when he died, and I don’t know anyone older than that right now.

But oldest too because I have known Jack for over 40 years, and there aren’t many people, family apart, I’ve engaged with for that long.

Jack was a very powerful influence in my life. We met because he built an amazing model railway, and he needed people to run it. I went along out of curiosity and he gave me a hobby for life: I still read railway history and build model railways.

My interest in business started because I read those railway histories. They opened a curiosity about what business does, how and why that continues to this day. I wouldn’t do what I do but for Jack.

But he was so much more important than that. When I was 14 he told me to write. In fact he told me writers change the world.

Jack wrote. He changed many people’s lives as a result. He coached, inspired and encouraged me. No one had believed in me like that before he did. No one had bothered about what I thought and wrote as he did. And no one corrected, challenged and demanded better like Jack did – almost without his realising it.

And he was also quite simply a friend – someone to call on, whose advice was worth heeding, and who always had time for a story, a laugh and a shared appreciation of life.

I’ll miss Jack.

Farewell my friend.

There’s one rule for the rich and another for everyone else

Uncategorized 31 Responses »

Feb 022012

The furore about the use of a personal service company to supply the services of the director of the Student Loan Company is appropriate.

It is virtually impossible to see how this man should not have been on PAYE at source: he was very clearly in a master /servant relationship under a contract for service and as such what was called Schedule E tax has to apply.

But it didn’t. He is likely to have taken part in three tax avoidance activities:

a) He has transferred his income to a third party (the company) to save tax

b) He has probably recategorised the income as investment income (a dividend from the company) to save the tax due on employment

c) He may have deferred paying himself the income to delay paying tax.

The IR35 rules should have stopped this. They did not.

Graham Aaranson’s general anti-avoidance principle won’t go anywhere near it.

No normal employee would be allowed it.

Sp the real question is, why was a boss? Why was a special arrangement made for a person on high income unavailable to the rest? What is this bias towards abuse being seen yet again in HMRC towards those with wealth?

If HMRC did approve this then heads should roll, again. Not because it is a personal service company; they happen, but because this arrange should never have been approved.

Richard Murphy talking to the Renegade Economist – part 1

Courageous State, Economics, Uncategorized 3 Responses »

Feb 022012

This is a video just released of me talking a couple of weeks ago with Ross Ashcroft of the Renegade Economist about the state of the UK economy and how to rescue the failed discipline of economics.