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About LinkBacksthis exactly... its for them to decide.Originally Posted by SeriousSam
this exactly... its for them to decide.
but this is a fatal error.
My contact with Sweden over many years shows me that frankly it's not so great. Everyone knows everyone else's income and it's nearly impossible to climb the income ladder by hard hard work because everyone would immediately know you'd got a pay rise, and the way the unions work makes it a "level playing field" as best they can. In some cases it stifles extra effort.
Hence... 5pm... Swedish office worker in UK office... stood by the door waiting for a lift to the hotel.
"Not finished yet Olaf, come sit and wait"
"When will you leave Zak?"
"I tend to work through to 7pm ish, but it depends how much I have left to nail down"
"Call me a taxi please"
utterly refused to do a minutes more work even though I knew how far behind he was with the project
We were close as work colleagues but they INFURIATED me many times at their lack of desire to press on and be noticed as a grafter.
Personally I would not have an issue with that, however would public tax records actually have prevented this issue? I think not. It would however have increased confidence that people had nothing to hide. Would a politician now claim for something dubious on their expenses knowing that they would have to publicly justify it?
The HMRC can only do its job to the standard of the information gained. While companies/jobs exist that take advantage of tax loopholes, this problem will likely remain. Remember that the rich pay others to deal with their financial affairs, while the majority do/can not. As long as there is an incentive for people to take advantage of a system, they shall, so maybe the system needs to be rewritten?
That tax planning, per se, is fair and moral is your opinion though isn't it? 'Tax planning' using offshore funds, whilst certainly legal, can almost certainly be viewed as immoral, depending on the direction of your moral compass. My Father, before he died, had his own successful company, and was advised numerous times that should he 'Tax Plan' using offshore facilities, he would be able to take advantage of paying less tax. He was assured, again numerous times, that what was proposed would fall well within the bracket of 'Tax Planning' rather than 'Tax Avoidance', but he always refused, insisting that, to him, it was immoral. Equally, my Mother now outright owns a large property in London that will, one day, be bequeathed to me and my 2 siblings. We could now, between the four of us, easily put 'Tax Planning' measures in place to ensure that we minimise the risk of paying IHT as a result of it being passed on and it would all be entirely legal. I would feel that if we were to do that, whilst not breaking any law, it would certainly be immoral. You ask 'Is it unfair to do what the government were trying to get us to do?'. Well that would depend on what motives you think the Government had when setting up the rules. If you think that, in the case of IHT rules, they were set up to benefit a minority of (relatively) wealthy people to help them legally avoid paying IHT, at a cost to the public purse, then yes you could argue that they are unfair, and can certainly claim them to be immoral, Government sanctioned, and sophisticated or not. Equally, you might be of the opposite opinion, in which case they could seem entirely ok. For example, I find it incredulous that parents who pay private school fees are entitled to avail of the schools charitable status to have those fees offset against their tax bill. Legal? Most Definitely. "Tax Planning'? Certainly. Immoral? IMO, without a doubt.
It's certainly not the case, IMO, that tax planning always means it equates with being fair & moral.
You're trolling surely? I can't comment on the business side of things as it would depend on the circumstances but why is it moral - rather than naive! - to pay 40% tax on anything over 325K that will have been largely if not entirely (depends on the law at the time - MIRAS, etc) paid for out of income that was already taxed? Is it immoral to get tax relief on your pension contributions?
You've just proved my argument about what people having different ideas of what is moral. IHT, in it's earliest incarnation, was designed to be another tax on property passed on, regardless of whether the property was paid for with income that had been taxed. It was simply another revenue raising tax for the Government, quite separate to income tax. Further down the line, changes were made to allow people to legally avoid paying the tax by tax planning, and that IMO, is wrong. Why shouldn't I be required to pay 40% on the money given to me over the threshold? I personally didn't pay any tax on the money that the property was paid with, and I don't see what is unfair about asking me to contribute with IHT given that that was what IHT was initially designed to do. That changes were made to allow relatively rich people to contribute less to the public purse than they previously would have had to (as evidenced by previous Tory plans, blocked by the Lib Dems, to raise the threshold to 1M pounds) makes no difference to me. You call me naïve, but you are completely wrong – what I'm doing is quite deliberate, and It's for the same reason why some people don't take advantage of some, perfectly legal, tax planning schemes. The comparison with tax relief on your pension contributions is disingenuous. My pension contributions are entirely my affair, paid for by me with my money that I've earned & been taxed on. Being given a share of a house that I had absolutely nothing to with purchasing, or paying for, is completely different.
I was going to make a similar reply to opel's earlier comment, but having read it through carefully I can see his point of view (I don't agree with it, but I can see it).
Essentially it's the morality of the individual vs the morality of the system. If you think the system is immoral, then using the system - even as intended - is inherently immoral; although maybe on a collective level rather than a personal one.
At that point, however, you're on dodgy ground if you point the moral finger at the individuals using it, because it's the system that you think is broken. You're far better off making your complaints clearly and transparently about the system, because the individual morality of the users of the system is essentially irrelevant. If you think the people are broken blame the people; if you think the system's broken blame the system; if you think the people who create the systems are broken, then pray that enough people vote for someone different at the next GE
You should know me by now
The "Oh look Mrs Smith" comment was my usual offhanded way of saying... if you think this is a good idea then quite frankly you're a blithering idiot and quite possibly a waste of carbon
Admittedly sat in your kitchen after a few beers I'd have probably been more graphic in my description of the potential pitfalls
If Wisdom is the coordination of "knowledge and experience" and its deliberate use to improve well being then how come "Ignorance is bliss"
People often look at what they are prepared to do as "fine" while having issues with other... Take an example of Torrenting. Plenty of people find this practice fine, where in fact it isn't. Avoiding paying tax (be it whatever type) is equally not fine, but many are prepared to do it, and plenty more are prepared to profit on others who are prepared to do it.
I still fail to see how declaring your tax return would prevent this from happening, since I'm led to believe that it uses business linked to their friends, hence wouldn't appear on their tax returns at all?
What has been amazing about this is how the general public obviously view 'off shore' money and shares.
I think because of this ignorance people automatically assume that 'off shore' is somehow immoral. I've got an Off Shore company, I had to set it up because of regulations for trading in Australia.
What's so funny about this is not just the amount in question is laughably small, but how other people, such as a certain shadow cabinent member, have been given a free pass on their blatant tax dodging of around £2m.
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There's certainly no fixed line for all purposes - I don't think anyone would say there is - but given that IHT now applies to people that I would say (subjectively again) don't have considerable wealth, and are likely to have paid considerable income tax over their lifetime it seems cruel to - effectively - inflict tax upon the next generation which (e.g. looking at the current economic situation) may not have anything like the same opportunities to earn and save as their parents did. I understand IHT was originally designed to capture only the richest in society and I don't think it does that any more - so rather than a time based exclusion (7 years) I would support it either being set at a much higher level or being abolished completely - or to be 'fair' applied as a flat rate... Though I would say that you'd get people managing / hiding assets in other ways on the back of it being a flat rate.
That was partly my point. There are plenty of people who use the legal loopholes in the tax system, and say that it is perfectly moral to do so on the basis that what they are doing is legal. I disagree, and that's why I said that it all depends on ones own moral judgement.
A PAYE employee has little control over how he is taxed and effectively, the system only works one way for him or her. Someone with his own company however can use and manipulate the system in a multitude of ways and, IMO, the argument that 'the system lets me do this, ergo it's only the systems responsibility', does not necessarily absolve him or her of their moral obligation, and certainly doesn't if he or she are currently in No. 10 telling us we're all in it together.
(I know I shouldn't quote myself but) I agree:I was going to make a similar reply to opel's earlier comment, but having read it through carefully I can see his point of view (I don't agree with it, but I can see it).
Essentially it's the morality of the individual vs the morality of the system. If you think the system is immoral, then using the system - even as intended - is inherently immoral; although maybe on a collective level rather than a personal one.
At that point, however, you're on dodgy ground if you point the moral finger at the individuals using it, because it's the system that you think is broken. You're far better off making your complaints clearly and transparently about the system, because the individual morality of the users of the system is essentially irrelevant. If you think the people are broken blame the people; if you think the system's broken blame the system; if you think the people who create the systems are broken, then pray that enough people vote for someone different at the next GE
We can debate on the specifics all day but I would argue that the current system needs change - I'd favour something far simpler and far more generous at the lower end, e.g. greatly increasing income tax allowance across the board rather than adding additional tax credits, etc back. And to move the burden onto business rather than supporting low wages with benefits...
...but I don't know what impact this would have in practice - how much better or worse off people would be, whether there would be an impact to the wider economy if we made businesses pay rather than subsidise low paid workers. I'd like to think the pragmatics win out rather than what's ultimately entirely fair, and I suspect making it fairer probably wouldn't mess things up, but maybe things are already 'optimal' - I seriously doubt it but I acknowledge that messing with things to make them fair on the surface is likely to have consequences (intended or otherwise).
Last edited by malfunction; 11-04-2016 at 02:02 PM.
To be pedantic morals have no place in a discussion about tax, as there is no "right or wrong" in the classical sense. This is an area where what we should be debating is the ethics of particular situations. Now to some morals and ethics are the same thing, but strictly speaking they are not.
- Morals are the principles on which one’s judgements of right and wrong are based; abstract, subjective, and often personal or religion-based.
- Ethics are principles of right conduct; practical, conceived as shared principles promoting fairness in social and business interactions.
So in regards to tax planning for inheritance tax let me ask a question...
Is it fair that those who have worked hard all there lives and saved money to (a) look after them in their retirement and (b) give their children a helping hand with the remainder should then have to pay tax on something that has already been taxed? Especially when from a tax perspective these are the very people that have already contributed far more than the average amount.
I can understand the moral argument that "I didn't earn it so I should be taxed on it" argument. However, as I outlined that isn't a basis for judgement in this situation. It all comes down to a balance in the equation of "what's fair for the individual", "practical to operate" and "ultimately of benefit to society". Of course that is a rather complicated and complex conundrum of the type that most post people don't want to think about or even acknowledge. So they stick to emotion and gut feel... with the odd pitchfork being brandished.
Last edited by SeriousSam; 11-04-2016 at 01:57 PM. Reason: ; to '
If Wisdom is the coordination of "knowledge and experience" and its deliberate use to improve well being then how come "Ignorance is bliss"
Which is why I started that entire post with "In my view", andAs for morality, that's a quagmire.a large part of the problem is that there is no comprehensive definition of where tax planning becomes avoidance, or where avoidance becomes aggressive avoidance, which then somehow morphs into evasion.
Personally, I will conduct my tax affairs in a manner that I am convinced is legal. I'm also quite prepared to seek an opinion from HMRC on that. In very large measure, that involves acting in accordance with what was clearly the intent of Parliament in writing laws. For instance, if they set an allowance, I'm quite prepared to take advantage of it. For instance, I would take into account before deciding where to invest whether the returns were likely to be income (such as share dividends) or capital gain (such as increasing share value). If I have unused CGT allowance, that might swing my decision of where to invest. Similarly, when I sell shares or other assets that have appreciated in value, that allowance would be a factor in when to sell, and whether to sell part of all of a holding in a given year.
That's the type of thing I mean when talking about tax planning, though obviously, there's vastly more to it than that. I don't regard complex offshore entities as tax planning, but rather as either avoidance or aggressive avoidance IF the objective of that structure was tax reduction. It isn't always.
As for morality, my view is that my tax affairs are between me and HMRC, and morality has nothing to do with it. Legality does. If I'm happy with it, and HMRC are happy with it, it's none of anybody else's business and I don't give a flying fig whether someone else thinks it's moral or not. I also don't have a moral opinion on anybody else's tax affairs, unless they are a public person setting themselves up in a position to make decisions that affect all of us, like politicians. Then, their personal finances are of relevance, to the extent that their decisions could be self-serving.
Personally, in the event of a property inheritance and options as to how to arrange ownership to affect tax, I not only would minimise the tax burden, but did do so. I pointed out to my parents that if they jointly owned their home, an IHT bill of .... well, lets just say in the ballpark of a six figure sum .... would hit their estate. If, on the other hand, the each owned 50% solely, that £100k-ish tax bill vanished.
To be clear, both joint ownership and separate ownership are legally valid and not just for tax reasons. There are perfectly genuine reasons, both ways, that are nothing whatever to do with tax.
So I explained both options, with non-tax implications, to my parents. I also pointed out they one option implied £100k-ish going to the taxman, and the other way it went to their beneficiaries. I also pointed out gift rules and the 7-year sliding scale, etc, and THEY decided they wanted their beneficiaries, not the taxman, to be the recipients. So we drew ip the necessary papers.
Is that moral? In my opinion yes, and I don't care what anybody else thinks. An interesting point is that a few years later, IHT tules changed with the effect that that £100k-ish bill wasn't relevant, with or without the change in ownership. It seems even government considered the situation an anomaly, and changed IHT law to prevent the ownershop issue even cropping up.
Had it been my decision, I would have done exactly as my parents did, and opted for my estate, in so far as is legally possible, to go to MY choice of recipients, not the taxman. I won't evade tax, and I won't use obscure and complex legal structures to frustrate the intent of law, but short of that I see no obligation, at all, to pay more than required by law. With all the various taxes we pay, government does quite well enough out of me already.
Corporation tax is effectively a business expense. Taxation regimes are also competitive. The U.K. Government sets tax breaks to encourage businesses (particularly in the financial sector) to operate from London rather than (say) Paris or Germany.
So if the UK government wants to reduce tax avoidance, it could reduce Corporation tax, introduce tax incentives, and so on. Of course, this will have the red tops and the left of centre howling in mock outrage about "benefits for toffs" so it won't happen. It would also damage the economies of the offshore centres.
The thing to remember is the Governments don't create wealth, they spend it. However, they can create the conditions that favour business activities that DO create wealth.
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