Tax avoidance

[Tangled up in Blue]

Is it time to put tax avoidance in the same category as tax evasion?
Personally I think so.

"Accountants are often hired as auditors by the same companies they are providing tax advice to."

At least it would be a start for the Goverment (if they as are serious as they claim to be about cracking down on tax avoidance)not to employ people from the big four accountancy firms to advise them on tax policy.

After all, poachers really shoudn't be employed as gamekeepers too.That's just comon sense,isn't it?

Over to you.

http://www.guardian.co.uk/commentisfree/2013/feb/01/accountancy-big-four-laugh-tax-office

 

[South Bank Hank]

Is it time to put tax avoidance in the same category as tax evasion?
Personally I think so.

"Accountants are often hired as auditors by the same companies they are providing tax advice to."

At least it would be a start for the Goverment (if they as are serious as they claim to be about cracking down on tax avoidance)not to employ people from the big four accountancy firms to advise them on tax policy.

After all, poachers really shoudn't be employed as gamekeepers too.That's just comon sense,isn't it?

Over to you.

http://www.guardian.co.uk/commentisfree/2013/feb/01/accountancy-big-four-laugh-tax-office

At last, a sensible use of a linked site with a personal opinion to go with it. Good work Barna.

Quite an interesting question but I don't agree with your conclusion - no surprises there I guess.

Where Tax Evasion is a form of tax non-compliance, Tax Avoidance is the legal usage of the rules to reduce the amount of tax that is payable. NOBODY wants to pay tax so the law is there to effectively prescribe what tax is and isn't payable. It's completely correct then that the law should protect both parties to the equation - for the collector to maximise their income and for the payer to minimise their contribution. While it's fair that everyone should pay any tax due according to the rules laid down, it's equally fair that they shouldn't pay any tax that isn't due according to those same rules. What is the point of having a set of rules if they don't protect both parties?

The system is PERFECT in so much as, if the law doesn't exactly capture what it is intended to, then the exploitation of loopholes and the subsequent closing down of such loopholes will provide a correction.

I've always thought the problem lies in the complicated nature of the laws. Rather than look to target people who are actively using the rules, the best answer is to simplify tax to its most basic components and remove any opportunity for creativity in the avoidance process.

All that said, there is an argument for targeting avoidance procedures which are blatantly devices to get around the system, but the challenge there is how you come up with a set of rules for judging that when the problem has only arisen due to an existing set of rules for tax collection not doing their job?

 

[Davros]

it is odd that some forms of tax avoidance are encouraged (eg ISA's), but some are frowned upon.

I guess the problem is that its when the big boys start using loopholes etc that the poorer person cannot afford (due to the cost of a clever accountant), but then can we really police the tax system on a basis of jealousy of others?

 

[C'mon you Shrimpers]

ISAs were introduced to encourage people who might not otherwise to save so it had a social use. Tax avoidance/evasion is not the same.
Personally I would like all firms that employ tax evasion/avoidance to have a legal duty to tell the tax payer i.e. you and me who cannot wriggle out of our duty, so they have the choice of whether or not to use their services. Might concentrate a few minds i.e. Starbucks.

 

[C'mon you Shrimpers]

I enjoyed them squirming in front of the select committee. And yes they should all lose their government contracts. And yes the loop holes should be closed.
Having said that I am also for a low tax economy but these companies seem to think there should be a no tax economy. Such a waste of talent TBH thinking up these schemes. Better spent on thinking up better ways to make the economy grow for the greater good.

 

[C'mon you Shrimpers]

it's worse than I thought. Found this when Binging (I don't Google anymore) looking for a list of companies that avoid tax. BTW it's NOT a dig at Barna

very few companies are completely "clean": the Co-op bank has an offshore banking arm, the BBC's use of freelance contracts has been attacked. The Guardian Media Group itself has been criticised for holding some of its assets through companies in the Cayman Islands and Luxembourg.

 

[prawntobewild]

I'm an accountant & I look upon these superstars at the big 4 with some disdain -in the accountancy press not a week goes by without one or other of them copping a large fine for a major screwup. If small firms are deemed to make minor errors in audit files without any financial implications they are basically told to stop auditing. There are 2 very different sets of rules - one for them & one for us.
In my role as a accountant to small local firms I try to point out to my clients the perils of tax evasion & the problems that may arise in the future - most people appreciate this & play by the rules however there are exceptions & it is not worthwhile dealing with these people - at the end of the day they will blame anyone but themselves.
However to get to the point of the article the goverment need advisors & it's hard to see where they are gonna get them from unless they use people who deal with these larger concerns. What may help is if more independence could be granted to advisory bodies & helping to eradicate political bias that currently may be influential at the moment.

 

[Mad Cyril]

Surely the BBC, Guardian and CoOp are "good" tax avoiders though?

I suspect the Starbucks incidents would have been overlooked by the Guardian if it was somewhere its readership frequented.

 

[Yorkshire Blue]

I'm all for putting the boot into the Big 4. I think they have huge conflicts of interest but if we are talking about conflicts of interest in relation to this story the biggest is hearing a committee of the body responsible for creating all the loopholes in the first place complaining about how people are then exploiting those loopholes. IF YOU DON'T WANT PEOPLE NOT PAYING TAX, STOP CREATING LOOPHOLES. The blame lies firmly with Parliament.

And if we're talking transparency, maybe the Grauniad should be reminding readers of it's hypocrisy.

 

[Rusty Shackleford]

I'm all for putting the boot into the Big 4. I think they have huge conflicts of interest but if we are talking about conflicts of interest in relation to this story the biggest is hearing a committee of the body responsible for creating all the loopholes in the first place complaining about how people are then exploiting those loopholes. IF YOU DON'T WANT PEOPLE NOT PAYING TAX, STOP CREATING LOOPHOLES. The blame lies firmly with Parliament.

And if we're talking transparency, maybe the Grauniad should be reminding readers of it's hypocrisy.

What's your issue with the Big Four YB? I've worked for all of them in my time and you couldn't find a better assortment of intellect and intolerance. My kinda people.

 

[Yorkshire Blue]

That they have an oligopoly, that they're hugely conflicted between their auditing and advisory roles and I don't have much confidence in their ability to prevent another Enron. Their fingerprints are also all over many PFI disasters that are going to explode in future years.

 

[RobM]

Got a company pension? that's tax avoidance.

 

[Tangled up in Blue]

Got a company pension? that's tax avoidance.

Seem to remember that Newsnight last week were quoting a statistic to the effect that only 13% of UK workers are now still in final salary pension schemes.

 

[Yorkshire Blue]

Seem to remember that Newsnight last week were quoting a statistic to the effect that only 13% of UK workers are now still in final salary pension schemes.

Because the overwhelming majority are in money purchase schemes.

 

[McNasty]

Got a company pension? that's tax avoidance.

Company pensions are taken into account as earned income for taxation purposes when being drawn. If you are saying tax benefits on contributions are tax avoidance what do you class the tax paid on payments received ?

 

[DTS]

Got a company pension? that's tax avoidance.

How is that tax avoidance?

 

[steveo]

Got a company pension? that's tax avoidance.

Also, buy a Hybrid car. That's tax avoidance but within the law so its ok.

 

[Yorkshire Blue]

How is that tax avoidance?

Because you are avoiding tax!

The main reason to invest in a pension is that it's tax efficient.

 

[McNasty]

Because you are avoiding tax!

The main reason to invest in a pension is that it's tax efficient.

I invest in a pension so I am not totally reliant on the State in old age, not to avoid tax.

You do talk bollocks sometimes Matt.

 

[Yorkshire Blue]

I invest in a pension so I am not totally reliant on the State in old age, not to avoid tax.

You do talk bollocks sometimes Matt.

There are plenty of ways of providing for your future. A pension is just one option. The reason to chose to invest in a pension rather than investing in property and living off the rent, or shares and bonds and living off the dividends and coupons (which is what largely makes up your pension) is that a pension is tax efficient.