UKC

I note that given the government can't control / tax the banks, high earners and other powerful and wealthy institutions / individuals it has turned to a softer and easier target. i.e. cash-in-hand

http://www.bbc.co.uk/news/uk-18964640

Why is tax a moral issue though? This whole thing makes my blood boil. Yes, it isn't right, but then why should I have a third of my pension skimmed by secret fees and charges? Why can I only get a savings rate of 3% for one year from a government backed bank? Why do I pay through the nose for car insurance? Surely the mechanisms that see my money disappear into various bottomless pockets are much more immoral?

In reply to EeeByGum:

There's your answer.

Glad to be of service.

In reply to EeeByGum: Like you I don't want to pay tax, why should we pay for unemployed workshy to sit on their arses all day or for nurses or teachers or the infrastructure of the country?

In reply to EeeByGum: it's all to do with scales of morality. just because large scale tax evasion is going on, it doesn't make small-scale evasion any less objectionable. Obviously the minister is going to answer a question about any tax evasion with the same answer regardless of the scale for the reasons I've just mentioned.

I suspect it's only a sound bite that will fade into the ether like the billions £ tax sent off shore by wealthy businessmen and directors while mr sparky struggles to get his customers to pay on time because Cash is now seen as a Morally objectionable method of paying because of non-articles like the one above!

In reply to EeeByGum:
The HMRC is obliged to maximise the tax they collect, the role of accountants is to reduce their client's tax liability - it's a game of cat and mouse that's been going on since the dawn of civilisation, so getting all moralistic over it now seems a bit desperate.

In reply to higherclimbingwales:

Not sure I follow the point about the sparky - if their customers are so keen to take the moral high ground I am sure they'd think that prompt, trouble free payment for work is the right thing to do.

In reply to FrankBooth:

Isn't the issue all about morality and hypocropcy?

In broad terms there has been public revulsion at the tax avoidence techniques of the rich, yet this very public is itself on the fiddle.

In reply to EeeByGum: I have one word for you;

INFRASTRUCTURE.


Look at ours compared to all the other countries in the world. There are 196 countries in the world. I would bet we come in the top ten by any reasonable measure.

In reply to EeeByGum:

I find this current trend for bringing morality into tax a bit unsavoury. They aren't exactly screaming about the morality of the financial sector (to work a tired cliche). Tax evasion (not declaring full income or paying VAT) is illegal. Paying for services with cash is not illegal. I don't even know where my chequebook is (if I still have one) and setting up an online bank payment is a hassle and there is a delay. Many local one-man-band handymen don't have credit/debit card facilities. Cash payments for small jobs is ideal - you can see the work has been done, and the workman knows that he's been paid, it won't bounce or fail to appear in his account.

Similarly with larger issues, I don't feel morality should come into it. If someone is doing something illegal, throw the book at them. If someone is working a loophole, close that loophole. While I don't agree with tax avoidance, I genuinely think it should be a black and white issue - is it illegal or not?

In reply to Monk: You lot are not (in the main) idiots.

So why are you all battering on about banks etc when you all know very well that pragmatic deicsions are made about legislation based on wanting to attract the banking industry to this country and not alienate it.

It doesn't mean grovelling, but it does mean not placing burdens which do not exist elsewhere. After all, we have actually had a lot of benefits from the banking sector in this country when it comes to revenue

In reply to Wonko The Sane:

I don't disagree with this, and I was a bit wary about mentioning the financial sector. I wasn't trying to say that we should shut them down or move them on. I appreciate that they are probably the most important industry we have in the UK. I was trying to aim at the talk of morality - the government are chomping on about morality when someone who is generally critical is caught out, and is trying to tarnish the rest of us with immorality, yet morality didn't get much of a mention in cabinet when all the dodgy, yet highly complicated, trading practices that poisoned the world economy came to light. It seems to me that they are gunning for easy targets while not necessarily addressing larger issues.

In reply to Wonko The Sane:


I would have agreed with this statement at one point, but the recent programme "The Bank of Dave" on Channel 4 revealed a couple of things that make me feel very uncomfortable. Namely:

1. The banking industry is run by a small group of grossly wealthy men. 20 years ago, they may have been called "The Establishment"
2. The FSA (government) who regulate the banking industry are in on it to a certain extent.
3. The banks are basically gambling with our money, not with our interests in mind, but those of the wealthy few at the top.
4. There is little or nothing we can do about it.

In reply to Wonko The Sane:

I heard Vince Cable say that he thought that the idea of large financial institutions leaving the UK were the govt to implement stricter controls was laughable, or words to that effect. I think he's a guy who knows what he's talking about in this area.

But I agree that our systems for running stuff depend on cooperation between govt and big business, and cracking down too hard would have negative consequences. That balance is struck correctly where you manage to get every last penny of tax out of them, and prevent every last bit of lying and cheating at others' expense, before the institutions withdraw cooperation (sorry that's a bit vague, best I can do just now).

Do you really think that that balance has been achieved, or do you not feel, like most people, that there is still a colossal piss-take going on?

In reply to Monk:

I don't quite get your point. There has been widespread moral outcry, albeit fairly vacuous when it comes to changing anything, from politicians as well as everyone else about the behaviour of the financial sector. They did, after all, lie and cheat for decades until their lying and cheating caused the collapse of the world's economy, affecting the lives of millions or even billions of other people. And then continued to pay themselves obscene bonuses for their efforts, out of taxpayers' money. The only people who think that this is OK are those who are able to shut out the information for their own psychological well-being.

As for paying cash-in-hand, it's just a daft, vacuous statement from a politician - it wasn't wasn't well considered and doesn't really mean anything IMO.

In reply to Jon Stewart:

Yup.

The UK is a global tax pariah (non-dom status, offshore tax havens ect). Expecting customers to somehow police how tradesem handle their accounts is a bit rich.

In reply to Jon Stewart:

I have yet to hear any serious opinion that the banks will 'leave' because of controls. No matter how tight the controls there will be ways to make SOME money and for that reason they will stay. There is a difference though between staying and UK being a prefered choice of place to do business.

I want the UK to be a prefered place to do business. It is a dog eat dog world and I want to be a big dog.



I think more CAREFULLY considered legislation is required over the next few years which will stop very bad practice yet allow a free market. I strongly dislike knee jerk responses.


I think there is a bit of a piss take going on. But this piss take does add to our revenue. I have no issue at all with people becoming obscenely rich if it is generally in our interest. I think in general, the banking sector is. Some tweaks needed, yes. But bonuses? Nothing to do with me or you in my opinion.


>

In reply to EeeByGum:

(Disclaimer - I work for a bank, although not in a role anywhere near the financial side of things)

The one episode I saw of that show (because it wasn't in any way serious journalism) was so full of holes it wasn't funny.

He's travelling round Burnley speaking to people about their requests for loans, he chats to one guy who asks for a Halal loan. His CFO says "his background credit check has thrown up some issues." Dave says "I trust him ... I'm going to lend to him anyway."

He's just broken his risk controls - essentially what Fred the Shred did when RBS bought ABN AMRO (and we all know how that turned out).

He travels to "Wall Street" and proceeds to "make" just over 3% on an £100,000 investment in one day via day trading and then proclaims "if I can make 3% in one day why are we not being paid 5% rates?"

Um well ... because some banks (like the one I work for) ban day trading because it's incredibly risky and they don't want to take that kind of risk with your money.

Of course he's also not taken into account any of the fees which need to be paid to the exchanges for trading or salaries of the person carrying out the trading, etc. etc. so overall he's probably actually made a loss.

Essentially all that the Bank of Dave has done is set up an investment mechanism similar to Zopa but for people who don't have a A+ credit rating.

In reply to Wonko The Sane:
But bonuses? Nothing to do with me or you in my opinion.

Not even when contribute to banks taking excessive risks that lead to taxpayers picking up the bill when everything goes wrong?

Interesting take on yesterday's announcment:

http://defencebrief.blogspot.co.uk/2012/07/tax.html

In reply to Wonko The Sane:

I agree.



It is when they come from our taxes, which is what causes the moral outrage. Otherwise I agree.

The BBC article on this has about 2500 comments, mostly coming up with excuses, apparently delivered with a straight face, for why not paying tax is OK for tradesmen but reprehensible for "the rich".

In reply to zebidee:


But that is the whole point. He had built a personal relationship with the person with the dodgy credit rating (due to not paying a phone bill - whatever that has to do with running a business) and compromised by giving half the money. This is what the old fashioned bank manager used to do. We are now in a state where if the computer says no (rightly or wrongly) you are screwed and there is little or nothing you can do about it. In this case, the machine was bought, the money paid back the world was a better place for it. That is what the banks should be doing but aren't.


I think the word you use is SOME. Traditionally, banking isn't about gambling on the stock market whether it be short or long term investments. It is about offering a savings rate to savers and then using that money to lend to borrowers. The bank takes a small cut and everyone is happy. Only these days banks have become greedy and want it all.

Good point. So some of the profits the bank makes of the back of your money is being skimmed by a multitude of hidden middlemen. A bit like those who keep skimming my pension.

I disagree. The difference is that he covered his costs and then gave the profits to charity. He is also running the bank with the interests of the local community in mind. Believe it or not, this sort of business used to be quite common but in today's greedy society everyone is out for themselves which is rather sad IMO.

What I would like to know from you is how you feel about the fact that the FSA wouldn't even talk to him? Should you really have to have gone to a specific school or know someone in power to be able to start a business that happens to be a bank?

In reply to EeeByGum:


Well sort of but more so because the system doesn't work in your favour. It was invented, set up, an is run by people who have a vested interest in causing 'you' the individual to pay so that 'they', the people who make decisions and have the means of exerting their will at that scale, can continue to live off the back of your efforts whilst ensuring a continuation of these two positions existing over you, for their children and generally for their class. Didn't you see that yet? That is what it means to be a slave in the system. You work for the benefit of others and they let you have enough profit from your labour to clothe and feed yourself and your family and to be reasonably satiated in your desires and they let you have enough choice every four to five years, being an easily domesticated animal, that you don't revolt.

The moral scale is only between the way that these two classes of people behave towards other human beings. You cannot imagine yourself implementing such an unfair system to have control over other people's lives whilst 'they' have no similar moral boundary and will happily take from people who are too stupefied to realise what's happening. Everybody you meet is somewhere on that scale, between moral and psychopathic. It's just that the psychopaths have control and there are comparatively less of them as one looks up the scale.

How to fix it? Well that's up to all of us as individuals to do whatever we feel is appropriate. Talking about it honestly is a good place to start though.

Of course we have a choice as individuals where we choose to be on that scale. So you can't just claim that it's human nature. The people who are doing this to you know exactly what they are doing and still do it. Look at Tony Blair, lies as from all other politicians and yet he still stood before the nation daily proclaiming good intention with a huge smile on his face to sell an idea of honesty to the public. It is a dog and pony show (look that up). Don't for a moment exonerate the people who laud it over you. They know what they are doing and they hide it in subtleties and propaganda so that they can keep doing it. Trick one if you haven't already is to give your tv away.

In reply to EeeByGum:

Because they can't collect tax from the Black economy so they are whinging and moralising about it. The only solution is to face reality, accept the Black economy, align the real economy with the Black economy by having a more sensible and significantly lower take e.g. a flat rate 10%. It generates them more income and people can cope with that level of parasitism.

In reply to Dave Cumberland:


So where is that position on the scale I described above? Seems pretty much to me that you are stating that there is a case for a level of parasitism by some on others. Personally I don't find it acceptable.

In reply to EZ:

Are you aiming for zero taxes?

In reply to EZ: 'Seems pretty much to me that you are stating that there is a case for a level of parasitism by some on others. Personally I don't find it acceptable.'

So instead of being 'preyed on' you're happy to arrange and pay for your own sewers, roads, police force, armed force, school, hospital, university, even banking regulators, trading standard officers, law courts...

Sounds like you want to a wear animal skins and live in a cave. Go ahead.

In reply to Rob Exile Ward:

Really? I read it more as a "let the system work for you rather than you work for the system".

In reply to Rob Exile Ward: I am waiting with bated breath for EZ's return, whereupon he will lay out, in broad terms, how he envisages his system will function.

In reply to SFM:

I can see the world working really well when everyone adopts that point of view.

What annoys me is that income tax and national insurance is payable on the earnings that go to repay student loans. I agree with no tax relief with repayments on items you own (mortgage, car loan) but a student loan to fund education is different.

If instead of a person, I was a business, and I paid for training/education from a provider, I would be offsetting that cost against profit resulting on less tax. In fact if now, I employ someone and fund their education not only can I offset the cost but I get additional tax relief at 2.5x their salary (R&D tax relief - I don't know or need to know the full rules, but the FD says it's good).

In reply to Philip:

In fact if now, I employ someone and fund their education not only can I offset the cost but I get additional tax relief at 2.5x their salary (R&D tax relief - I don't know or need to know the full rules, but the FD says it's good).


225% tax relief is the current amount (up from 150%, then 175%, then 200% - so keeps getting better), and yes, it's exceptionally generous.

The 225% can be applied to gross salary, NI and any pension contributions made by the company. This is my specialist area of tax by the way

In reply to Axel Smeets:


I was close. I'm more the practical end (managing the actual R&D). I think it's great - it's certainly good in a climate where the financial implications of employing R&D staff are well scrutinized.

In reply to Philip:

If you have any patents (or are thinking of obtaining them), keep an eye out for the Patent Box regime from April 2013 - a 10% rate of corporation tax for profits derived from patents. Fits nicely with the R&D tax relief scheme.

The UK is a good place to be doing R&D and innovation at the moment (from a tax perspective).

In reply to Axel Smeets:

It's hot, my eyes read that too quickly. "Patents" looks like "Parents". We (here) had a good chuckle at my mis-reading.

In reply to Philip:

Ha ha! A 10% rate of corporation tax for profits derived from parents. Better than inheritance tax rates anyway!

In reply to EeeByGum:
Num Num finds the avoidance of tax more a practical issue than a moral one.

In reply to EeeByGum:

The interesting thing about this is that the builder that does a job cash in hand with the connotation that they do it to avoid Tax is going to inject that cash back into the economy rather than pay it to the Govt. and see a proportion of it wasted i.e. the cost of govt.

In reply to EeeByGum:


I note that the Treasury Minister (David Gauke) was asked a very specific question, and if anyone is surprised that he gave the answer he did, then they are astonishingly naive.

The more interesting question is why is The Telegraph interested in diverting attention onto small time tax evaders, and away from people like their owners - http://en.wikipedia.org/wiki/David_and_Frederick_Barclay - who reside on the Island of Brecqhou in the Bailiwick of Guernsey, which is famous as being an "offshore" financial centre?


Just maybe - gosh(!) - there is a motive for diverting attention away from big corporate tax "minimising" exploits?


Also, it's worth pointing out that nowadays, companies and their owners that are seen to be minimising their exposure to tax are going to be more and more exposed to adverse publicity, and more and more pressure is going to be put on shareholders to "do the right thing", or forever be tarnished.

Once things are on the internet, they are there for a long time, and if the shit stinks, then it also sticks.

There has been a recent campaign of publicity to get the various Official Sponsors of the 2012 Olympics to opt out of the tax dodging schemes that they are eligible to benefit from, and companies like McDonald's and Coca Cola have been very quick to publicly state that they will not seek to "minimise" their tax exposure of any income gained from the Olympics, as a result of that campaign.

In reply to Wonko The Sane:

Apparently the UK is 6th according to this:
http://www.rediff.com/business/slide-show/slide-show-1-nations-with-the-wor...

In reply to EeeByGum:

To divert attention away from news that minsters don't want you reading about...?

"Paying tradesmen cash in hand morally wrong, says minister"

In reply to Indy:


You mean evade (which s illegal as well as immoral).


Don't you thunk all tax avoiders/evaders - rich or not - use that as an excuse?