I assume that we all know the difference between avoidance and evasion.
www.bbc.com/news/uk-politics-27364089
So, Gary Barlow, on the advice of his accountant, invested in a tax avoidance scheme.
The scheme was legal
His actions were legal
He has broken no laws
There is no financial penalty
HMRC has now said that they will not accept this scheme as a valid avoidance approach.
The scheme is still NOT illegal
Barlow's actions are still legal
He has still broken no laws
There is no financial penalty.
He will have to pay the tax owing as his tax liability has now been recalculated.
And some small-minded jumped up prat thinks we should "strip" him of his OBE? Presumably fresh back from ringing BBC Radio Devon.
Stupid enough to start with, then it turns out that Margaret Hodge is also one who thinks that he should do so.
Perhaps she would like to remember the following. And then I will happily buy a sword for her to fall on.
www.dailymail.co.uk/news/article-2230915/Margaret-Hodge-Multi-millionaire-Labour-MPs-family-business-paid-just-0-25-tax-profits.html
But you know what Hodge's defense was?
"What I did was legal and within the rules".
So why is that an acceptable defense from her, when she won't accept it from someone else?
Prepared to show us your tax records Hodge?
If nothing else I do hope that one of the impacts of UKIP is to force these idiots out.
Last edited by: VxFan on Mon 19 May 14 at 02:03
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Her late husband was a lovely bloke. She OTOH can be a complete arxe.
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Personally I'm more p'd off that I am partially paying the £millions it cost to get these turds to pay what they owe.
The cost of investigating such schemes should be added to tax owed if found to be inadequate.
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>>The cost of investigating such schemes should be added to tax owed if found to be inadequate.
Seems fair enough. Just so it applies to everybody.
>>these turds
A strange comment. Barlow at least seems a decent bloke, and since he hangs around with the others I'd assume that they were ok too.
Surely nobody pays more tax than the rules say they should on purpose? I don't.
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>> Surely nobody pays more tax than the rules say they should on purpose? I don't.
Neither do I - I am self-employed (as most GP partners) and use an accountant to ensure I pay as little a possible.
I don't advocate creating schemes purely as a plan to minimise my tax burden, although the Labour nonsense of a 50% higher tax rate is a great way of encourageing them.
Personally I'd imagine having higher tax allowances (say to ~£15k) and then raising income tax to a flat 30% or so would reduce the complexity and likely raise similar amounts.
In fact in my little world I'd get rid of NI as well and just lump it into income tax.
>>A strange comment. Barlow at least seems a decent bloke, and since he hangs around with the others I'd assume that they were ok too.
Met TT around 1991 when they were playing everywhere to get attention and you're right they seemed pretty decent guys. ISTR Robbie was a bit nuts even then though.
Is a bit like the Jimmy Carr stuff from a couple of years ago - if you've got a pile of 4 or 5 million quid and a 'financial adviser' tells you they have a way to minimise how much goes to the govt I bet it's hard to look too closely at the details.
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HMRC is a menace. I had all my affaris taken care of five years ago ISAs "Tax Wrappers" the lot. Nothing illegal just sensible precautions. I have had to delibrately keep my income below the 40% tax rate since I "retired" for two reasons I don't want to do self-assesment and I don't want my savings it with the higher rate tax. In fact in the aftermath of my first wife's earl death I became quite obsessed with it. I sorted most of my stuf fout, finally, 12 months ago...thy have just hit me with another tax change which has now led me to cut a day a week from my job at CAB...I find them difficult to deal with at the best of times.
I have some sympathy with Mr Barlow...he's had "issues" and he seems a decent enough lad - he was probably advised to do what he did. As for stripping himmof his OBE ? couldn't give a stuff....outmoded nonsense...a least he's not a kiddy-fiddler...
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If what he is doing is still legal, and presumably legal when he did it, why should he pay back any tax?
I know literally dozens of small trades people who do jobs for cash. Some not so small either. I often cut a few lawns in the area and get paid a tenner an hour. That makes me equally guilty, so it's just a matter of degree.
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Why should we take any notice of what MPs tell us what they believe should be done over so-called tax avoidance schemes when the vast majority of us regard them as little better than expenses fiddling toe rags?
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Thinking about it Im not guilty as for the past three years my part time earnings, and investment income, have been below the tax threshold. Even had rebates from HMG for tax taken off interest earned. I can breath easy again.
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>>why should he pay back any tax?
Because he didn't pay it in the first place - he (or more likely the 'scheme') argued that he was entitled not to pay the tax as the company it was put into made whopping losses (doing exactly what I have no idea).
And you are not equally guilty - you are more guilty as you are evading tax - ie not disclosing income that you know could be taxable - which is a criminal offence punishable through the courts (as well as tax penalties).
Avoiding tax is perfectly legal, but if a tax avoidance scheme is deemed inadequate the tax becomes due - this involves HMRC (ie everyone else) investing time and money to investigate the scheme.
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>>If what he is doing is still legal, and presumably legal when he did it, why should he pay back any tax?
Because there are two different things;
1) whether or not the scheme is legal, doing something legal etc. etc.
2) whether or not it is a valid approach for tax avoidance.
So essentially HMRC has said "you're welcome to do that with your money if you wish, but we're not going to be accepting it as a method for avoiding tax".
Income Tax is essentially a self-assessed tax, albeit according to HMRC rules. The maximum penalty for not paying tax is that you must now pay that tax.
Unless you evaded that tax by lying or failing to disclose something to change your apparent tax liability, in which case you have broken the law.
Not paying the tax once HMRC have declared that you are liable to pay it, is an offence.
Imagine I need a suit for work. I write on my tax form that I am deducting £1,000 from my gross to cover the suit as a work essential expense and I openly write down that I am doing so.
HMRC could then come back to me and say "you can buy that suit, but we do not consider it an essential business expense, so you may not use it for tax avoidance. Now pay the extra £500.
I just need to pay the tax. This is called avoidance.
Imagine that the suit was a reasonable work expense, but I had lied and didn't actually buy the suit. That is evasion and against the law.
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Legacylad,
As I understand it he and other band members invested money in some sort of scheme with a stated objective of supporting the music industry. Having done so losses were then declared and tax relief claimed upon them reducing the liabilities to tax of the band/its members.
HMRC claimed that the tax avoidance and not the supposed benefit to the industry was the main purpose. An appeal was made to the First-tier Tribunal where the Judge found for the Revenue.
The scheme itself is still legal but there is no entitlement to the relief claimed and it will have to be repayed.
The Tribunal decision is here:
www.financeandtaxtribunals.gov.uk/judgmentfiles/j7741/TC03545.pdf
Don't think even Mapmaker would see that as a racy read!!
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Ah, thanks for the explanation. I had not looked closely at the situation and now understand.
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I have absolutely no quibble with Gary Barlow and any other famous or non-famous individual seeking to pay the minimum of amount of tax that is expected from them.
His CBE or whatever was awarded for his services to charity - nothing to do with his tax payments.
99 per cent of members of this forum - and indeed the rest of the population - would do exactly the same to pay the minimum amount of income tax expected from them. It's not a crime.
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>> 99 per cent of members of this forum - and indeed the rest of the population - would do exactly the same to pay the minimum amount of income tax expected from them.
Some of them might hesitate to make a Tory party political broadcast in the run-up to an election though. There's something a bit uncomfortable about grown-up respectable rockers. Leftism and anarchism seem to come more naturally.
But perhaps I'm just old-fashioned.
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>> Spot on Stuart.
Not really. What Barlow et al were engaged in by the sound of it was a wheeze, as the tax people call them. Organising your legitimate business and claiming your allowances is fine. The trouble is the difference isn't usually very clear.
Brown I think it was who basically said that if you come up with a scheme to exploit a loophole or artificially make use of an exemption clearly not intended for your purpose, then you will have to pay the tax anyway (very approximately, obviously), but quite how you enforce that is a riddle, which is why you have all these funny agreements going on with say one large mobile network operator.
The real problem though is the sheer amount of tax legislation now, it has grown like Topsy and is hideously complex. There are legions of experts in companies like E&Y dreaming up new ways of circumventing the legislation.
What's needed is a simplification of tax, strip it right back and it will be harder to find these dodges.
When HMRC wins a case on one of these wheezes, the settlement often includes an undertaking that the taxpayer won't use any more 'schemes', which isn't really congruent with the idea that it's all fair game.
If somebody earns millions every year here and pays about 10% tax (I'm making the numbers up) then they are doing something wrong when an ordinary bod is paying 20% or 30% through PAYE. If it looks, walks and quacks like a duck, it's theft in my book.
He'll pay, anyway. Nothing to do with his OBE, an irrelevance, just get the money off him.
Last edited by: Manatee on Tue 13 May 14 at 07:41
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Exactly how I see it Stuart.
For 31 years of my life my tax deductions were exact and straight forward.
Now I find myself self employed, running a business and I expect my accountant to ensure I pay the least amount of tax possible...as long as he/I remain within the law.
If there's loopholes it's up to HMG to close them, not criticise those who use them.
I actually believe we should have something like a flat 20% tax across the board..and that's it. Then there'd be considerably less people trying to avoid paying.. and all those domiciled abroad might well come back..and pay tax.
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>>I expect my accountant to ensure I pay the least amount of tax possible...as long as he/I remain within the law.
ditto, my accountant worked wonders for me and, when we lived in Tenerife I had my ill-gotten gains put into a 'fund' based in Luxemburg and, the interest was paid into a bank on the Isle of Man and, I withdrew that interest in Tenerife via a c/c so, I didn't pay any tax at all at all, like.
Last edited by: Arjades on Tue 13 May 14 at 09:04
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Whilst some of us spend our money wisely, others blow it on fancy holidays, fancy cars, plasma t.v.s etc - thereby avoiding paying inheritance tax. Isn't this a form of tax avoidance that should be investigated? ;-)
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I you buy these things you are paying VAT on some of them and stupid Air Passenger Duty on the holiday flights.
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>> Isn't this a form of
>> tax avoidance that should be investigated? ;-)
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The Chancellor should be investigated for peddling ISAs, a clear invitation to invest in schemes whose sole purpose is to avoid tax.
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If it was legal then I cant see what he did wrong and I very much doubt that Barlow knew exactly what was being done by his accountant, most people employ an accountant precisely because they dont understand the tax system.
If this behaviour is deemed wrong, change the law, simple as, no need for the character assassination of Barlow ( as a declaration of interest, my wife is a Take That fan and I am contratually obliged by marriage to atleast pretend to like Take That )
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Well he has written some very nice little ditties
www.youtube.com/watch?v=273eSvOwpKk
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>> If it was legal then I cant see what he did wrong and I very
>> much doubt that Barlow knew exactly what was being done by his accountant, most people
>> employ an accountant precisely because they dont understand the tax system.
The allowances the scheme sought to exploit are legitimate concessions for businesses that make a loss in their early years. HMRC said these partnerships didn't qualify and the Tribunal agreed.
In one view it's a nice try and in another (more likely in my view) he and his advisers knew they were pushing the envelope but thought they could get away with it.
The Tribunal decision may constitute sufficient clarification of the law, though as it's at First-tier it's not 'authority' as such. Also, since the Barlow scheme started the general rules have been tightened and AIUI tax is now payable and recovered if the exemption is found applicable.
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>>In one view it's a nice try and in another (more likely in my view) he and his advisers knew they were pushing the envelope but thought they could get away with it.<<
Perhaps but I dont think Barlow would have done it if he thought it wasnt within the rules, I trust what my accountant tells me, that is why I employ them and I am only a sole trader.
I think if you need to go to court to decide if a rule has been broken, it probably isnt clear enough in the first place.
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>> I think if you need to go to court to decide if a rule has
>> been broken, it probably isnt clear enough in the first place.
How much more clear can a law be than a speed limit yet people still go to court to prove they've not broken it.
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I see very little difference between Amazon arranging its affairs to minimise tax when compared to the Barlow situation. Both are legal and intended to reduce the amount of tax paid.
The trouble for HMRC is that Amazon is "too big" to take on, so the smaller guy (literally) gets the hit. As for the likes of you and me - we haven't got a hope of fighting them.
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Gary Barlow and Tax Avoidance. - Bromptonaut
