The FT has an article today in which they note that:
Tax advisers said HM Revenue & Customs had made a “refreshing shift” away from harsh measures in tackling unpaid tax on overseas assets, as it focused on raising taxpayers' awareness of their obligations.
On Tuesday, [HMRC issued documents] that revealed that tax collection rates for international debt are far lower than for domestic tax debt, at around 35 per cent compared with about 90 per cent.
I have long argued that this is likely, of course. The whole basis of the work I and others have done on tax havens has been based on the promise that this is likely to be true. It's good to see that our logic has been acknowledged, at long last. But the questions is, what to do about it?
As a result had a look at the nHMRC discussion document. I can't actually see the figures the FT use, but am happy to believe them. I did not have time to read everything. What I did see was three things.
The first is a great deal of puff from HMRC about being nice to those making honest mistakes about the need to declare their offshore assets, which it seems HMRC believe encompasses most who do not pay tax owing. With respect, in this particular case that is nonsense. Prima facie, using offshore is about tax evasion until proven otherwise, in my opinion. If there was a category of people where ‘being nice' to secure cooperation is unlikely to work this is it.
Second, I saw a great deal of ‘nudge' thinking at work, as if a text message to a person is really going to make a significant difference to their behaviour.
Third, there was absolutely no acknowledgement that this problem was created by the underfunding of HMRC, and solving that would be the biggest contributor to solving this issue.
But last, I saw this extraordinary paragraph:
Our aim is to use data earlier on in the registration and self-assessment process to help people get their offshore tax right first time. By using data in different ways and intervening earlier in the process, we can help raise taxpayers' awareness of their offshore tax obligations and prevent common mistakes from occurring. This would create a better experience for taxpayers and better tax compliance. For example, providing taxpayers with help in real time, as they completed their tax return, could help them get their tax right and minimise the likelihood of any follow up intervention from HMRC. This would help HMRC concentrate efforts on those who deliberately seek to abuse the tax system.
So, those using offshore (call them the wealthy who are not too keen on tax compliance, for convenience) are to get a service that it would seem (based on experience and observation) no one else (apart from those with high net worth, which groups might well overlap) get right now.
So, at the time the government is doing all it can to sanction those on benefits who arrive a few minutes late for an interview it wants to provide a personalised support service to offshore tax cheats to avoid, to the greatest degree possible, having to treat them as the tax cheats that they are.
You literally could not make such class based prejudice up unless it was happening right in front of our eyes.
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I for one am pleased that the age of deference to those who are better than me is returning. I know my place – 40 minutes in a Q to speak to an undertrained HMRC bod whose best endeavours will lead to nowt of any use.
We could learn a little from the Italian tax authorities – they went to the ski slopes, marinas and upmarket places and asked ‘where did you get that?’
The Panama Papers didn’t uncover much UK tax not being paid. The Luxembourg Facility had only one, named and known that is, user, Dame Margaret, Lady Hodge, who entirely and absolutely paid all the tax due already and anyway. The Swiss Banks information exchange showed unpaid tax to be about a tenth of what even Osborne was expecting, let alone the La La numbers from the tax justice crowd. Vodafone owed no tax on that Luxembourg stash.
We really don;t have that much evidence of these large numbers for tax evasion….
HMRC very clearly do not agree with you
I have money offshore.
Does that make me a tax evader Richard?
Yes, if you do not declare the income or gains arising
No, if you do
Please do not waste my time
Well, according to you using offshore is about tax evasion until proven otherwise.
Which means by your rules, I’m a tax evader, with no evidence needed to prove it.
I thought the law worked innocent till proven guilty.
I didn’t say you were evading
That’s for you to determine
You did not ask Gregg if he was UK tax domiciled or not and if non-UK tax domiciled how long he had lived in the UK.
You did not ask Gregg if he had remitted any income to the UK.
Very basic questions to ask before flinging around accusations of tax evasion.
Questions anyone knowledgeable about tax would have asked.
I made no suggestion that he was evading
And like you, he was trolling
“Prima facie, using offshore is about tax evasion until proven otherwise”
This is the exact thing you said.
Which means in your opinion I am a tax evader, because I use offshore and I haven’t proven otherwise.
Firstly, the law says innocent until proven guilty.
Secondly, what you’ve said could be taken as libel.
People use LLPs like your all the time, and it has been known for people to use them to evade tax. By the same logic you’ve claimed everyone using offshore is evading tax until they prove otherwise, I can just as easily claim you are evading tax until you prove otherwise.
You don’t have to prove it to me
But you gave successfully proved yourself a troll
I suggest you take your time wasting elsewhere
HMRC is to focus “on raising taxpayers’ awareness of their obligations.” They think that those who stashed assets in overseas jurisdictions don’t understand their tax obligations, that they just put their money in, say, the BVI ‘cos it’s a sunny place with nice beaches and are just simple people who want a quiet, but well-heeled life?
Looks like HMRC is being co-opted to the Tories’ cronyism and corruption fascism.
Hmm. Surely this is all about HMRC encouraging people to pay the right amount of tax at the right time, rather than assuming everyone is an evil tax evader?
Sorry, but “Prima facie, using offshore is about tax evasion until proven otherwise” is wildly overblown. Many many people have offshore income or gains for entirely legitimate reasons – the Polish plumber who rents out his house in Poland while he is living in the UK, the pensioner who spends 6 months a year in Spain who sells a small flat there to buy another one closer to the beach, the office worker who still has a German or French bank account from when they worked there. It is not all City traders and the landed gentry hiding money in Switzerland or the Cayman Islands. As the LITRG will tell you, the tax affairs of people with relatively low incomes can be fiendishly and unnecessarily complex, doubly so if they might have moved from the UK to elsewhere or vice versa.
I’m also not sure where you got the idea that HMRC might end up running a “personalised support service”, as if there might be some sort of HMRC butler waiting to do the taxpayer’s bidding. You quote from paragraph 2.8. The next one makes it clear that the sort of “help” they are thinking about includes routine correspondence to remind taxpayers to notify HMRC and to file returns, and online prompts as they complete their tax returns.
The three mention of “personalised” tax returns makes it clear this is about tailoring tax returns – as is already done when you complete a tax return online: you are asked what kind of income or gains you have, and what kind of reliefs you have, so you only need to fill in the necessary parts, and you are guided through the process. (For what it is worth, I’ve found the online filing of tax returns much quicker and simpler, and much less stressful, than doing it on paper. A next step will be pre-populating the return with information from from PAYE, banks, CRS reports, etc. “Do you need to tell us about …”)
We’ll have to agree to differ for once.
The whole point of this is seeking to prevent people being treated as tax cheats, even if they are
I see no such attitude with regard to the self employed
Nor do I see it for those who make errors with benefits
And I relate these comments to the high net worth unit
After all, who else gets texts in particular sources of income? I certainly don’t. Do you?
I think my interpretation that this is exceptional, and biased is right. I cannot read it any other way
What I would like is the same attitude to all who make mistakes that results in 65% of income being omitted from tax returns
My reading is that they are trying to get as many people as possible to comply voluntarily as part of the normal tax return process, without the need for expensive and protracted enforcement action. The more people they can nudge in that direction the better – whether that is through prompts in the tax return, or emails or texts reminding a taxpayer to complete and file the return, or more targeted communications saying, essentially, we know about your offshore accounts and we know where you live, so is there anything you want to tell us?
Which is not to disagree with your other points. People claiming benefits are treated in a scandalous manner – and in particular the financial punishment beatings handed out as “sanctions”. Similarly the asylum and refugee system is falling apart, as is the court system. After a decade of austerity, many public services are on their knees. HMRC is chronically understaffed and underfunded, which makes no sense whatsoever.
I agree that encouraging compliance is desirable
But why not start with companies – where non-compliance us very high – instead of one of the more favoured groups in society, overall?
I’m reading Philip Mirowski’s ‘ Never Let a Serious Crisis Go To Waste’ at the moment which charts Neo-liberalism’s survival and rude health even after 2008.
Mirowski identifies Neo-liberalism’s ‘constructionist’ approach – basically a need to change society (a very authoritarian stance by the way) in order to make it work as the Neo-liberals see fit. Mirowski quotes Jamie Peck on page 54:
‘ Neo-liberalism was always concerned…….with the challenge of first seizing and then retasking the State’. What is ‘neo’ about Neoliberalism …[is] the remaking and redeployment of the State as the core agency that actively fabricates the subjectives, social relations and collective representations suited to making the fictions of markets real and consequential’.
I have to say that reading this, other stuff I’ve read over the years and looking at the direction of travel of this ‘Government’ I agree with Richard.
Remember that your country is being ran by a proven liar Andrew. He/they will say one thing but do another. They borrow progressive language for the PR but get on with agenda come what may.