It would create huge public anger if the papers that matter devoted to it the same energy as they did when they whipped up national outrage over the Baby P saga. I suspect they won’t.

Interestingly, the Guardian’s made another (minor) cock up in discussing tax – in choosing Project Knight to discuss in great detail, they seem to have picked the one leaked scheme that doesn’t actually involve an overall tax saving – the effect of Project Knight is that tax is still paid at 30% – it’s just paid by the guys taking the loan, not by Barclays. Why HMRC are annoyed by it is that the tax is paid in the US, not the UK, which puts something of a different complexion on their outrage.

(For the avoidance of doubt, what I’ve read of the others suggests that they are rather more aggressive – it’s just unfortunate that the Guardian again has made a tactical fuck-up when discussing schemes.)

I really wouldn’t trust Richard Murphy’s technical chops on this kind of thing at all, BTW – it’s a very specialist sub-field among tax professionals, based on detailed close reading of legislation that didn’t even exist when he retired eight years ago.

The Guardian Media Group do much the same.

(I would also avoid using the word ‘scam’. It might be libellous, given that they are not breaking the law).

The Guardian really did claim a genuine relief in exactly the fashion set out and intended by Parliament though[1].

They’re about as agressive as News International (i.e. not very.)

[1] albeit one implemented because everybody who could afford it were buying capital losses.

Have the TPA picked up on this at all?

xD.

Sad to say, I don’t think there will be much outrage specific to this: with the deluge of news relating to the shenanigans/greedy practices of so many financial institutions, I suspect the effect is one of generating general hatred of such institutions, with the particulars of any particular instances of wrong-doing getting lost in the torrent of such tales.

Perhaps people should start getting angry about my pension contribution – that involves legal tax avoidance too.

The anger should be directed at the lawmakers, not those who are nehaving perfectly legally.

(Though the Guardian’s hypocrisy is laughable.)

Simplify the tax rules so that such loopholes as there are disappear.
One low, flat, unavoidable rate please.
Or is that too much to ask?
(Of idiot boy, micro meddler Brown I know it is.)

You can have a simple tax system, or a fair and sensible tax system. Pick one. One of the reasons that simple tax systems almost never occur in practice is that they either are appallingly easily side-stepped, or lead to people paying enormous amounts of tax through innocently wandering blindly into a pitfall.

Nonsense – the reason why simple systems never occur is that politicians love meddling and lobbyists always press for special allowances and rates for their own advantage.
The case for a simple system is simple – it cannot be sidestepped – no special cases.

The case for a simple system is simple – it cannot be sidestepped – no special cases.

On a practical point of fact, um, yes, they can. Generally very easily. As an example, I have two companies, one in the UK, one in Jersey. The Jersey co lends lots of money at a high rate to the UK company. Goodbye UK profits, hello non-taxable profits in Jersey!

That says nothing about simplicity versus complexity – merely that Jersey is a tax haven.

Jersey was merely an extreme example – try Ireland, which has a 10% rate, or any of the UAE, which, while not being tax havens per se, have no income taxes…

The Tax Payers Alliance asking rich people to pay their tax? Pull the other one Dave!

I didn’t use scam anywhere in my piece – that’s a bit of the editor, Sunny

As for the Graun’s hypocrisy – much of that is to do with the running of the GMG, which seems to be increasingly far removed from the paper itself, hence the letters the past few days protesting at GMG’s cuts on other papers. Unlike the other papers the Graun does also at least admit that its partnership with Apax involves avoiding tax – you’ll never see the Mail informing its readers’ about Rothermere’s non-dom status or the Times etc commenting on Murdoch’s consistent and persistent tax avoidance.

News International are actually (and you’l have tol forgive me for being vague about the source of my knowledge) very boring from a tax perspective these days, and have been for most of the decade.

That still doesn’t tell me anything about whether the UK’s own system should be simple or complex, does it?

“which it wants the government to insure”

Which it’s trying to stop the government from forcing it to insure, surely?

“Richard Murphy is another man who [understands complex accounting issues]“

Based on the dealings I’ve had with him, I’m sceptical at best of this claim.

Septicisle @ 14 is absolutely right about the irrelevance to this article of GMG’s activities, though – are we suggesting that Observer journalists in the 1980s had no right to investigate ropey arms-dealers and sanctions-busters?

Sunny, why would the TPA attack tax avoidance policies? Its mission is to gives taxpayers a voice, highlight waste and inefficiency within the State and campaign for lower taxes, not to encourage more tax to be collected and then pissed up against the wall.

Preachy Peach has demolished Scepticisle’s rant against Barclays in a few sentences. Does anyone have a response?

I wouldn’t go that far – I agree to some degree with the spirit of SepticIsle’s post, to be honest, but, really, it’s like the Amnesty International thing – pedantic care about the facts is occasionally needed.

(Personally speaking, a lot of the fuss kicked up about tax avoidance boils down to people forgetting that social constructs (such as profit) are well, socially constructed, and very often, there is no ‘right’ amount of tax to pay – there may well be what the tax authorities think should be paid (i.e. lots) and what the tax payer wants to pay (i.e. little), but in contentious cases, there’s very often no right answer. It’s yer competing nexuses of power in action, basically.)

“Simplify the tax rules so that such loopholes as there are disappear.
One low, flat, unavoidable rate please.
Or is that too much to ask?”

Ah …..the brown shirt solution to everything…more tax cuts for the rich elites. The flat tax is a meaningless joke. What rate are you going to set the flat tax at, 20%? 39%? 80%? 99% ? They will never tells us because if they set it at 20% they will have to explain where all the cuts are going to come from. And if they set it at 80% then the rich won’t want the flat rate .

Over the last 30 years the rich have seen their taxes come down substantially and the price of their assets go up. And yet, are they happy with this?, no, they just want to pay even less tax. These people will never be satisfied. What is required is for people who get caught not paying their taxes is for them to get tougher sentence s. I propose 10- 15 years in prison. And not open prison, which is where the white collar criminals are put. After all, the Right is always telling us that prison works and acts as a deterrent.

As for Tax havens, the answer is that if people want to live in these places then that is where they should go and stay. Not like John Ashcroft who lived in a tax haven for years, and then suddenly wants to come back to Britain and bankroll the Tory party. Or Philip Green, who lives in a tax haven yet seems to be hear most of the time running his retail chains. If you don’t want to pay British tax then fine, fuck off , sell up your houses and your assets and take your families with you. And don’t come back until you will pay tax.

John Ashcroft is bankrolling the Tory party? ‘king hell, I knew things were bad, but seriously…

“John Ashcroft is bankrolling the Tory party? ‘king hell, I knew things were bad, but seriously…”

Sorry, I meant Michael Ahcroft. I can’t bring myself to call him Lord. Anyway The man who is buying up all the VC medals. very creepy.

PreachyPreach,

Sure, we can argue about what is the “right” amount of tax which people or corporations should pay, ie the most appropriate rate which should be levied, and there will obviously be differences of opinion. There is a simple principle though that whatever the rates of income tax and corporation tax people or companies should not be able to pretend that their income or profits are less than they actually are in order to reduce their tax bills, ie everyone should pay their fair share. In that context arguments about flat taxes are irrelevent because the same principle would still apply.

Sunny, why would the TPA attack tax avoidance policies? Its mission is to gives taxpayers a voice, highlight waste and inefficiency within the State and campaign for lower taxes, not to encourage more tax to be collected and then pissed up against the wall.

If more taxes are collected they can be used to reduce other people’s taxes or cut government borrowing, they don’t have to be “pissed up against the wall”.

“Its mission is to gives taxpayers a voice, highlight waste and inefficiency within the State and campaign for lower taxes”

Its mission is to gives taxpayers a voice, highlight waste and inefficiency within the State and campaign for lower taxes FOR THEIR RICH BACKERS.

That is what you should have said..

chavscum, he didn’t demolish my post at all, if you bother to read what he actually said. Rather, the schemes which the Graun didn’t go out of its way to highlight and which I wrote about in slightly more detail in the original http://www.septicisle.info/2009/03/smartest-guys-in-room-get-hot-under.html do look like highly artificial tax dodges. It also doesn’t alter my conclusion that companies should adhere to the spirit of the law as well as the letter of it, although Barclays doesn’t seem to have notified HMRC of some of these projects in any case. Any disagreement on that score?

PreachyPreach didn’t read the Project Knight memo carefully enough. The 30% tax paid is recovered by the US bank as a credit against its own US tax bill as the whole point of this trade is to allow both sides to credit it. It is very much a tax trade. His/her argument is totally mistaken.

You’re right. It occurred to me this afternoon that the US side would be able to credit the WHT (assuming they’ve checked the box etc.) – mind, that said, Barclay’s shouldn’t need to claim a UK tax credit relief, as the income from the deal is never supposed to come into the UK tax net in the first place…

They credit it against the sum equivalent to corporation tax in the CFC comp – assuming they have to do one. This scheme will be a nightmare to stop, with the Cadbury’s angle.

The note explicitly says that the LuxCo shouldn’t be a CFC on very simple and common-sense grounds, which exemplifies pretty much what, on further reflection, would make the scheme devilishly tricky to block.

In each of the three jurisdictions involved (the UK, Luxembourg and the USA), and taken in isolation, it’s a set of entirely legitimate and innocuous transaction, and no particularly torturous or aggressive interpretation of the legislation is required in any of them for it to work.

As said in the note, the only practical way for HMRC to attack it is by arguing that the loans Barclays takes out in the UK to fund its end weren’t for a legitimate business purpose. Theoretically do-able, but damn tricky in practice to prove to the commissioners.

So Barclays can develops schemes that essentially launder money through various channels and thus avoiding playing tons of tax and it’s ok.

But if a poor person tries to avoid paying tax – suddenly all these rightwingers are up in arms over a ‘broken society’.

Why isn’t society ‘broken’ if our companies, who have a legal and social responsibility to the country they operate in to pay taxes, pay so in full?

Of course the TPA isn’t going to say anything – they’re interested condemning local football schemes as a gross waste of money because they take the kids off the streets.

The thing is:-

a) there’s no bloody clear cut line between what Barclays does, and legitimate tax planning – where one draws the line really comes down to, at the bottom of it, personal tastes and prejudices. Considering the tax impact of your proposed transaction in advance is perfectly legitimate, as is trying to find a way to miminise that burden[1]. Where I personally draw the line is carrying out transactions solely for their tax advantage, but believe me that these aren’t the worst examples by a long chalk.

b) The proposed solutions that some of the contributors to the Guardian’s tax gap blog were coming up should give most people here concerns. I’m not so sure, TBH, that tax avoidance is such a dramatic social evil that it justifies the government having the freedom to unilaterally ignore law that proves inconvenient to its interests.

[1] Which, other than preparing tax returns, is what most of my career to date has been. “We want to do commercial activity X (e.g. sell a property/subsidiary business, buy a company) – how do I do this tax-efficiently?”