The Official ‘Hi-Risk Anus PM’ Clusterfuck Thread

[coprolite]

10 minutes ago, Dawson Park Boy said:

Easy to say but harder to implement.

Tax evasion is illegal, tax avoidance is not.

I imagine you claimed tax relief on your pension contributions at the highest rate depending on your income.

Your SIPP, perfectly legal affords you tax advantages.

There are so many other things you can do if you are not under PAYE, as you must know, to mitigate your liabilities such as paying yourself dividends from your own company and avoiding N.I.

Unless you want to become a communist basket case such as Cuba, in a Western country there isn’t a lot you can do.

I can tell you from experience that HMRC spends a huge amount of resources on stopping tax evasion. Inevitably, some people will get away with it.

What rules, precisely do you want to change to bring about this big influx of money.

A lot of the problems come from trying to tax large, mainly US tech companies, who try to move their profits to the lowest taxed jurisdiction e.g Ireland, Luxembourg etc. To combat this sort of thing you need international agreements which isn’t easy.
What you are saying is total nonsense unless you can be specific.

 

4 minutes ago, Suspect Device said:

 

 

I assume you'd be giving the tax back on any ISA or SIPP you've had?

There is too much conflation of the two in the media as if they are the same thing. One is illegal and one isn't.

Most folk if they're sensible would avoid tax and the government even encourages it.

Pension breaks etc aren't avoidance. 

That's what the law is meant to do. 

Avoidance is making the law work in ways it wasn't intended, i. e. within the letter but outwith the spirit of the law. 

[Suspect Device]

3 minutes ago, coprolite said:

I think tax avoidance would be a terrible choice of battlefield. 

The Tories over the last 12 years have introduced some major rule changes and led international cooperation, mainly on multinational corporates but also on "self employed" employees. 

To my mind the problem with the tax system is within the legitimate rules. Gapital gains, dividend rates and national insurance as well as the size of VAT all combine to make work pay less than wealth. 

This. 

I don't see the reason why dividends are treated differently to income. Also combining the NI and income tax would surely be simpler and get rid of the daft situation where the NI rate drops for the very well paid.

[Suspect Device]

19 minutes ago, coprolite said:

 

Pension breaks etc aren't avoidance. 

That's what the law is meant to do. 

Avoidance is making the law work in ways it wasn't intended, i. e. within the letter but outwith the spirit of the law. 

Avoiding tax is avoiding tax however it's done. IMO. They need to make the laws simpler and harder to get round. Not so easy when all the folk who make the rules get poached by tax advisors. 

 

Edited October 30, 2022 by Suspect Device

[Granny Danger]

1 hour ago, Suspect Device said:

 

 

I assume you'd be giving the tax back on any ISA or SIPP you've had?

 

 

Edit: Obviously egregious tax avoidance could be clamped down on. I'm not saying all tax avoidance should be legal. There are plenty instances where the laws should be changed.

What a bizarre first point.  I’m glad you added the other.

1 hour ago, coprolite said:

I think tax avoidance would be a terrible choice of battlefield. 

The Tories over the last 12 years have introduced some major rule changes and led international cooperation, mainly on multinational corporates but also on "self employed" employees. 

To my mind the problem with the tax system is within the legitimate rules. Gapital gains, dividend rates and national insurance as well as the size of VAT all combine to make work pay less than wealth. 

Really.

https://www.theguardian.com/technology/2022/jul/20/amazon-handed-uk-tax-credit-hmrc-profits-soar

[Antlion]

[coprolite]

11 minutes ago, Granny Danger said:

What a bizarre first point.  I’m glad you added the other.

Really.

https://www.theguardian.com/technology/2022/jul/20/amazon-handed-uk-tax-credit-hmrc-profits-soar

Yes, really. 

Not sure you've put the right link if that's meant to show avoidance. 

Looks like they overestimated their previous year's tax by a rounding error and took advantage of an incentive that was meant to increase capital investment by increasing capital investment. 

I don't doubt that Amazon are still at it, but their scope for mugging UK plc is hugely reduced in the last ten years. 

[Guest]

2 hours ago, Dawson Park Boy said:

communist basket case such as Cuba

Little to do with the thread topic but for the sake of social hygiene, misinformation should always be corrected. Therefore:

Communist Cuba has had $130B of wealth denied to it by US embargo. By contrast, neoliberal Mexico is in a free trade zone with USA. Cuba ranks above Mexico in the Human Development Index. The basket cases in that region are all capitalist.

[coprolite]

1 hour ago, Suspect Device said:

Avoiding tax is avoiding tax however it's done. IMO. They need to make the laws simpler and harder to get round. Not so easy when all the folk who make the rules get poached by tax advisors. 

 

That’s a perfectly legitimate view i guess, and one of the reasons why avoidance is a difficult topic for politics. I remember ISAs etc being brought up by CBI types when starbucks et al were in the headlines in 2012-2013. Politics struggles with nuance. 

[Granny Danger]

17 minutes ago, coprolite said:

Yes, really. 

Not sure you've put the right link if that's meant to show avoidance. 

Looks like they overestimated their previous year's tax by a rounding error and took advantage of an incentive that was meant to increase capital investment by increasing capital investment. 

I don't doubt that Amazon are still at it, but their scope for mugging UK plc is hugely reduced in the last ten years. 

https://www.thebookseller.com/news/amazon-paid-no-corporation-tax-in-2021-as-profits-rocketed-60

https://www.theguardian.com/technology/2021/sep/07/amazon-uk-arm-pays-38m-more-corporation-tax-despite-19bn-sales-rise

 

 

[Dawson Park Boy]

22 minutes ago, FreedomFarter said:

Little to do with the thread topic but for the sake of social hygiene, misinformation should always be corrected. Therefore:

Communist Cuba has had $130B of wealth denied to it by US embargo. By contrast, neoliberal Mexico is in a free trade zone with USA. Cuba ranks above Mexico in the Human Development Index. The basket cases in that region are all capitalist.

Have you been?

[coprolite]

6 minutes ago, Granny Danger said:

https://www.thebookseller.com/news/amazon-paid-no-corporation-tax-in-2021-as-profits-rocketed-60

https://www.theguardian.com/technology/2021/sep/07/amazon-uk-arm-pays-38m-more-corporation-tax-despite-19bn-sales-rise

 

 

That’s more of the same story. 

They've wiped out their profits with a super deduction. You're meant to be able to do that if you spend enough on plant.

You could argue that their profits don't accurately reflect their UK activities but 10 years ago they were invoicing from the channel islands. 

Amazon were one of the companies specifically in mind when diverted profits tax was designed and introduced to stop big multinationals easily stripping profits out of the uk. 

For clarity, Osborne clamped down on tax avoidance as a quid pro quo for cutting corporate taxes for political expediency and not on principle. He was instrumental in international cooperation because he wanted diddies like Ireland and the Beneluxes to stop undercutting our low tax regime, not out of principle. 

[Dawson Park Boy]

4 minutes ago, coprolite said:

That’s more of the same story. 

They've wiped out their profits with a super deduction. You're meant to be able to do that if you spend enough on plant.

You could argue that their profits don't accurately reflect their UK activities but 10 years ago they were invoicing from the channel islands. 

Amazon were one of the companies specifically in mind when diverted profits tax was designed and introduced to stop big multinationals easily stripping profits out of the uk. 

For clarity, Osborne clamped down on tax avoidance as a quid pro quo for cutting corporate taxes for political expediency and not on principle. He was instrumental in international cooperation because he wanted diddies like Ireland and the Beneluxes to stop undercutting our low tax regime, not out of principle. 

Yes.

Theres a huge and legitimate argument as to where the profits of these companies should be as the US argues that the intellectual property and therefore the ‘brains’ behind Apple, Microsoft et al resides in Silicon Valley and they should get the lion’s share. It’s not just a case of where the sales are made.

[coprolite]

20 minutes ago, Dawson Park Boy said:

Yes.

Theres a huge and legitimate argument as to where the profits of these companies should be as the US argues that the intellectual property and therefore the ‘brains’ behind Apple, Microsoft et al resides in Silicon Valley and they should get the lion’s share. It’s not just a case of where the sales are made.

Essentially, but There’s a bit more to it than that. The US isn’t the only place outside the UK, so it’s not just a case of dividing up the profits two ways. The UK has made huge strides in getting our share but there’s still profits ending up mid Atlantic or in the Caribbean. 

[carpetmonster]

16 hours ago, TxRover said:

Christ, that and the four buts approach makes this look just like the Trump playbook. It’s disappointing that Sunak, as PM, can’t meet Trump, as President (unless some really weird s**t happens). If he did, the quotes from Trump after he had to meet Sunak would be pure gold, as racist and phobic as Donald is. He would say something so absolutely terrifying stupid and offensive that someone hearing it would be unable to contain themselves.

More culture war bullshit as new Minister For Women voted against legalizing abortion in Norn Irn and against buffer zones outside clinics. 

https://www.theguardian.com/politics/2022/oct/30/tory-mp-maria-caulfield-minister-for-women-abortion-rights

[TxRover]

3 hours ago, Suspect Device said:

This. 

I don't see the reason why dividends are treated differently to income. Also combining the NI and income tax would surely be simpler and get rid of the daft situation where the NI rate drops for the very well paid.

The reason is those with the dividends made the laws. It all goes back to reducing taxes on passive income, a major source of income for the top 10%, while generating the necessary income from taxes on actual pay package amounts. The constant refrain is that the money generating the dividends was taxed, so we’re being double taxed, but that’s simply crap. To a certain extent, the idea of a capital gains tax rate differing from income tax rates is likewise dubious. But, again, that’s another source of passive income for the top 10%+.

Its all smoke and mirrors, like VAT, designed to keep the wealthy wealthy and still fund the Government, all the while convincing people that the tax schemes are progressive. A consumption tax is inherently regressive unless it excludes life’s necessities, but it’s a major portion of tax revenue, and thus sacrosanct.

[Granny Danger]

48 minutes ago, carpetmonster said:

More culture war bullshit as new Minister For Women voted against legalizing abortion in Norn Irn and against buffer zones outside clinics. 

https://www.theguardian.com/politics/2022/oct/30/tory-mp-maria-caulfield-minister-for-women-abortion-rights

I’m not sure that’s a clever move.  The idea that all/most Tory voters are anti-abortion is pretty bizarre.  In that respect the left/right political split in the UK does not reflect the USA.

[Soapy FFC]

5 hours ago, Suspect Device said:

This. 

I don't see the reason why dividends are treated differently to income. Also combining the NI and income tax would surely be simpler and get rid of the daft situation where the NI rate drops for the very well paid.

 

1 hour ago, TxRover said:

The reason is those with the dividends made the laws. It all goes back to reducing taxes on passive income, a major source of income for the top 10%, while generating the necessary income from taxes on actual pay package amounts. The constant refrain is that the money generating the dividends was taxed, so we’re being double taxed, but that’s simply crap. To a certain extent, the idea of a capital gains tax rate differing from income tax rates is likewise dubious. But, again, that’s another source of passive income for the top 10%+.

Its all smoke and mirrors, like VAT, designed to keep the wealthy wealthy and still fund the Government, all the while convincing people that the tax schemes are progressive. A consumption tax is inherently regressive unless it excludes life’s necessities, but it’s a major portion of tax revenue, and thus sacrosanct.

Is the reason that tax on dividends is less that income tax because the dividend has in theory already had some tax taken off it?

My take on it is that as a share holder you own part of the company, therefore you are entitled to a pro-rata share of the profits. The company pays corporation tax etc on these profits on your behalf, so as a result by the time you receive the dividend you have already paid some tax on it. The lower rate of dividend tax takes into account the tax that has already paid, so that the overall tax that has been paid on your share of the gross profits is equivalent to the tax paid on a similar amount of income from say a job.

So, to a certain extent your views on dividend taxation will depend on where you think the shareholder (i.e., company part owner) starts to own the profit, the gross untaxed profit, or the profit after company taxes.  If it’s the gross profit, then the lower dividend can be justified. If it’s the profit after company taxes, then the dividend tax is too low.

I'm not advocating one view is right and one wrong, I'm just trying to get my head round why dividends are treated in the way they are. Also a lot will depend on whether companies pay a fair/correct amount of corporate tax on profits.

[Fullerene]

5 hours ago, Suspect Device said:

This. 

I don't see the reason why dividends are treated differently to income. Also combining the NI and income tax would surely be simpler and get rid of the daft situation where the NI rate drops for the very well paid.

Dividends are paid to shareholders but shareholders are not necessarily individuals. 

A shareholder could be an institution or another company such as a hedge fund or a pension fund.

[TxRover]

2 hours ago, Soapy FFC said:

Is the reason that tax on dividends is less that income tax because the dividend has in theory already had some tax taken off it?

It depends how the payments are structured. If you refer to dividends from companies, the company has paid taxes on the income from which they distribute dividends…but, by the same token, the company pays taxes on the money they then use to pay salaries, and the money distributed as salaries certainly isn’t tax free. That theory doesn’t hold water.

[Dawson Park Boy]

49 minutes ago, oaksoft said:

From the mouths of HMRC themselves:

 

Dividends are derived from a shareholding and not employment. They cannot therefore be classed as earnings and do not attract NICs.

Yes, that is correct but in a one- man company where the director has, say 2 shares, there is an argument that can be made that all the company’s income is from the one director’s efforts and should all be earnings and come under PAYE and not partly through dividends which, as you say, do not attract NICs.