[News] Pandora Papers: Secret wealth and dealings of world leaders exposed

[Machiavelli]

Hi, I probably know very little more than you, just some professional experience/understanding of the UK’s tax system. Plus, like you, a personal inquisitiveness into and loathing of tax evasion and immoral tax avoidance.

I think the disparity you touch on is that the HMRC are tasked with tax collection under the UK’s legal framework. They cannot go beyond what’s set by parliament and the courts. If they attempted to, tax avoiders would win at the drop of a hat at tax tribunals and courts. Probably no different to other western systems.

The TJN and Guardian take this much further by estimating all evasion and immoral avoidance.

[To clarify definitions for Tax Avoidance, I add immoral, because a load of tax avoidance is legitimate and acceptable. For example, if you pay £5k extra in your tax plan, you receive a reduced tax bill. A business that decides to spend £1m on plant just before its year-end reduces its ensuing tax bill on profits. These are examples of legit tax avoidance/planning].

Digressing, tax evasion is very much NOT an English-speaking preserve. Obvious really, but this all became clear when the German authorities obtained secret papers from Switzerland and Liechtenstein in 2008. Vast numbers of Germans proved to be tax fraudsters, on an industrial scale. The Panama Papers proved the same, tax fraudsters live everywhere.

And now this:
https://www.bbc.co.uk/news/business-58984813
Tax cheats stealing £127b from continental governments.

So returning to your post, yes I agree the £359b is quite feasible. I think what they’re saying is that the City of London has enabled 40% of that global total, it isn’t that the loss to the UK exchequer is that sum.

I’m guessing we think along the same lines on the overall subject. If only we could set the UK and global rules and systems!

Yes, it was Switzerland that began the practice after WW1. 'The UK' has had a longer history of financial and tax obfuscation, which stretches all the way back to the founding of the Bank of England in 1694, and the investments in slavery and colonialism associated with it, from which the complex jurisdictional arrangements of the Treasure Islands/Tax Havens have probably emerged, which are connected to the City of London. I put the UK in scare quotes because the City of London is actually a separate jurisdictional entity from the UK.

 

[Wardy's twin]

I don’t wish to derail the thread so I won’t comment anymore. All I will say is, yes, I do believe there is a covid virus, however, I don’t agree with the response which has been implemented. I realise that this will not be what the majority believe, but that doesn’t mean the majority is right. Group-think.

Throughout time, the majority always believe the propaganda, so just because the majority agree with something doesn’t make it true. Just think about history and what people have believed because they’ve been told by people in power/authority.

If you make people scared enough, you can make them do whatever you want within reason.

In regards taxation and the elite, the left want to impose higher tax rates on those who maybe earn £100k+ a year, but that’s not the issue. The issues is the super rich and large corporations getting away with it, and the ‘plebs’ argue amongst themselves over left/right, Labour/Con, Republican/Democrat and the elite keep laughing. As Bliar has proven, once most people get their snout in the trough they’ll lose their morals.

There are a lot of people who don't agree with the response that has been implemented , not everyone agrees on the same implementation though as many want it to go further and others think the current plan is to far. What I am not sure what you are trying to say though, are you saying 130k people have died but its nothing to do with what i labelled COVID but something else or hasn't happened at all. Do you think its a conspiracy and those who believe it are at best ill informed or perhaps just stupid because they are following what the majority of medical opinion indicates is the best way forward.

 

[Weststander]

Yes, it was Switzerland that began the practice after WW1. 'The UK' has had a longer history of financial and tax obfuscation, which stretches all the way back to the founding of the Bank of England in 1694, and the investments in slavery and colonialism associated with it, from which the complex jurisdictional arrangements of the Treasure Islands/Tax Havens have probably emerged, which are connected to the City of London. I put the UK in scare quotes because the City of London is actually a separate jurisdictional entity from the UK.

I think we differ here, because I see it as a wholly global issue in 2021 and that includes the solutions. It's so complex, all the tax evaders and their tax lawyer/accountant facilitators love it that way.

Practical points rather than throwing in the towel:
1.I like the action on multinationals and corporation tax, that would never have happened under Trump. Immediately a load of people moaned that it wasn't enough, but it was the best that diplomacy across the western world could get us at this moment in time. The p-take of Ireland, Netherlands and Lux raking in overseas employment and tax revenues, by giving Amazon and Starbucks an artifcial CT rate, hopefully now hit badly.
2. UK - I'd like the offshore veil to be completely blown away. Individuals and any bent corporates to face far stricter compliance, a mandatory crimimal offence, where people lie or osbcure.

This is widespread. My old bosses once met some wealthy-ish guys on a cricket tour, say in 2005, so under a Labour government. They were 100% British, as was their business, they'd never spent a day in Belgium in their lives. They wanted to sell for say £10m so pretended to relocate to Belgium for a couple of years. Under the radar of UK and Belgium tax authorities, they paid zero tax. So many other stories I could tell you. Please don't think it's purely posh Tories with the right connections. I've seen plenty of working class businessmen made good, purported lifeling Labour voters they told me, who'd do anything to evade tax and did.

The saying Money Corrupts, is so true. When people can, they'll cheat the public purse.

 

[Wardy's twin]

I think we differ here, because I see it as a wholly global issue in 2021 and that includes the solutions. It's so complex, all the tax evaders and their tax lawyer/accountant facilitators love it that way.

Practical points rather than throwing in the towel:
1.I like the action on multinationals and corporation tax, that would never have happened under Trump. Immediately a load of people moaned that it wasn't enough, but it was the best that diplomacy across the western world could get us at this moment in time. The p-take of Ireland, Netherlands and Lux raking in overseas employment and tax revenues, by giving Amazon and Starbucks an artifcial CT rate, hopefully now hit badly.
2. UK - I'd like the offshore veil to be completely blown away. Individuals and any bent corporates to face far stricter compliance, a mandatory crimimal offence, where people lie or osbcure.

This is widespread. My old bosses once met some wealthy-ish guys on a cricket tour, say in 2005, so under a Labour government. They were 100% British, as was their business, they'd never spent a day in Belgium in their lives. They wanted to sell for say £10m so pretended to relocate to Belgium for a couple of years. Under the radar of UK and Belgium tax authorities, they paid zero tax. So many other stories I could tell you. Please don't think it's purely posh Tories with the right connections. I've seen plenty of working class businessmen made good, purported lifeling Labour voters they told me, who'd do anything to evade tax and did.

The saying Money Corrupts, is so true. When people can, they'll cheat the public purse.

Years back there was a lot of focus on the black economy and how non payment by the self employed probably added 2 or 3p on the rate of tax for others . I suspect the numbers of self employed have gone up since then is this area still in the spotlight?

Note I am not saying its my opinion just I remember the discussions.

 

[dazzer6666]

I think we differ here, because I see it as a wholly global issue in 2021 and that includes the solutions. It's so complex, all the tax evaders and their tax lawyer/accountant facilitators love it that way.

Practical points rather than throwing in the towel:
1.I like the action on multinationals and corporation tax, that would never have happened under Trump. Immediately a load of people moaned that it wasn't enough, but it was the best that diplomacy across the western world could get us at this moment in time. The p-take of Ireland, Netherlands and Lux raking in overseas employment and tax revenues, by giving Amazon and Starbucks an artifcial CT rate, hopefully now hit badly.
2. UK - I'd like the offshore veil to be completely blown away. Individuals and any bent corporates to face far stricter compliance, a mandatory crimimal offence, where people lie or osbcure.

This is widespread. My old bosses once met some wealthy-ish guys on a cricket tour, say in 2005, so under a Labour government. They were 100% British, as was their business, they'd never spent a day in Belgium in their lives. They wanted to sell for say £10m so pretended to relocate to Belgium for a couple of years. Under the radar of UK and Belgium tax authorities, they paid zero tax. So many other stories I could tell you. Please don't think it's purely posh Tories with the right connections. I've seen plenty of working class businessmen made good, purported lifeling Labour voters they told me, who'd do anything to evade tax and did.

The saying Money Corrupts, is so true. When people can, they'll cheat the public purse.

100% correct - it's nothing to do with political leanings or nationality - right wing toffs, working class people made good, celebs, sports stars, champagne socialists etc etc etc....they're all at it. Like you I have so many stories after many years working in offshore private banking (and dealing with plenty of 'issues' where people or organisations might have inadvertently tripped over a regulation or two ). As you say the complexity of cross border taxation, residency and domicile rules etc keep armies of lawyers, bankers and tax advisers in very good business finding ways round it.

 

[B-right-on]

our federal treasurer has just been outed for giving network 7 over 200 million in jobkeeper payments , the CEO of network 7 was the best man at his wedding 3 years ago ....it's that blatant it's almost unbelievable. In a time of "austerity" our current liberal govt. is looking at spending 460 million on a new war memorial , the CEO of the war memorial foundation is kerry stokes , owner of network 7 and the father of the CEO........

Thats just bloody criminal. But because they are 'above the law' they get away with shite like that.

I bet there are more criminals in the Houses of Parliment who have 'stole' more money and Lords than all the 'actual' criminals have stolen who are put away in Wormwood Scrubs, Strangeways and all the other UK prisons - combined..

 

[Weststander]

Years back there was a lot of focus on the black economy and how non payment by the self employed probably added 2 or 3p on the rate of tax for others . I suspect the numbers of self employed have gone up since then is this area still in the spotlight?

Note I am not saying its my opinion just I remember the discussions.

Obviously far more people run small businesses now, this was true pre-lockdown/pandemic which we know increased it further.

In the noughties, Brown encouraged people to incorporate sole traders/partnerships into limited companies. Hence the favourable tax regime (not so favourable now btw) that riles nsc’ers in employment …. it’s a carrot.

A tax lecturer told us it was done to legitimatise business in terms of tax, make them more transparent. It’s true, HMRC software can easily scrutinise electronically filed accounts (mandatory for companies for many years now), comparing to industry norms, identifying inflated expenses, etc. That’s how the big push to limited companies came about.

 

[Machiavelli]

I think we differ here, because I see it as a wholly global issue in 2021 and that includes the solutions. It's so complex, all the tax evaders and their tax lawyer/accountant facilitators love it that way.

Practical points rather than throwing in the towel:
1.I like the action on multinationals and corporation tax, that would never have happened under Trump. Immediately a load of people moaned that it wasn't enough, but it was the best that diplomacy across the western world could get us at this moment in time. The p-take of Ireland, Netherlands and Lux raking in overseas employment and tax revenues, by giving Amazon and Starbucks an artifcial CT rate, hopefully now hit badly.
2. UK - I'd like the offshore veil to be completely blown away. Individuals and any bent corporates to face far stricter compliance, a mandatory crimimal offence, where people lie or osbcure.

This is widespread. My old bosses once met some wealthy-ish guys on a cricket tour, say in 2005, so under a Labour government. They were 100% British, as was their business, they'd never spent a day in Belgium in their lives. They wanted to sell for say £10m so pretended to relocate to Belgium for a couple of years. Under the radar of UK and Belgium tax authorities, they paid zero tax. So many other stories I could tell you. Please don't think it's purely posh Tories with the right connections. I've seen plenty of working class businessmen made good, purported lifeling Labour voters they told me, who'd do anything to evade tax and did.

The saying Money Corrupts, is so true. When people can, they'll cheat the public purse.

We don't disagree there at all. Pretty much agree with everything, especially the problem with New Labour. Mandelson always likes to point out the qualifier -- "so long as they pay their taxes" -- to his "we're intensely relaxed about people getting filthy rich". Problem is that they didn't keep on top of and in track with tax developments under their watch, and they encouraged exploitation of loopholes. Their PFIs/PPPs weren't their finest idea either (although they didn't initiate them).
I'm aware of the kind of issues and examples you're raising. I think -- but might be wrong -- that these could be addressed by proper transparency (and a crackdown on opacity of businesses and their registrations) and aligning CGT with income tax. I can't see anything being addressed effectively without some kind of global co-ordination, and see a certain political project beginning with B in no small part to try and avoid or delay this.

 

[Weststander]

We don't disagree there at all. Pretty much agree with everything, especially the problem with New Labour. Mandelson always likes to point out the qualifier -- "so long as they pay their taxes" -- to his "we're intensely relaxed about people getting filthy rich". Problem is that they didn't keep on top of and in track with tax developments under their watch, and they encouraged exploitation of loopholes. Their PFIs/PPPs weren't their finest idea either (although they didn't initiate them).
I'm aware of the kind of issues and examples you're raising. I think -- but might be wrong -- that these could be addressed by proper transparency (and a crackdown on opacity of businesses and their registrations) and aligning CGT with income tax. I can't see anything being addressed effectively without some kind of global co-ordination, and see a certain political project beginning with B in no small part to try and avoid or delay this.

On that very last point we may never know, but with Arron Banks, Farage, one or two others …. probably. I’m less conspiratorial than other posters, I don’t think most Tory and Labour celebs/backers of the UK leaving the EU did it to reduce their tax bills over time or increase the scope for tax evasion.

Tax cheating folk, whether they be British/Irish/Russian/German/French, were all achieving that swimmingly for decades already and still do. Remember that Corbyn and others had always called the EEC/EC/EU a club for big business and the wealthy.

The Swiss, Lux and Panama papers reveal that. An awful lot of white-collated people doing rather nicely for themselves, criminally.

 

[highflyer]

[To clarify definitions for Tax Avoidance, I add immoral, because a load of tax avoidance is legitimate and acceptable. For example, if you pay £5k extra in your tax plan, you receive a reduced tax bill. A business that decides to spend £1m on plant just before its year-end reduces its ensuing tax bill on profits. These are examples of legit tax avoidance/planning].

Digressing, tax evasion is very much NOT an English-speaking preserve. Obvious really, but this all became clear when the German authorities obtained secret papers from Switzerland and Liechtenstein in 2008. Vast numbers of Germans proved to be tax fraudsters, on an industrial scale. The Panama Papers proved the same, tax fraudsters live everywhere.

Not wanting to get too caught up in this, but a few points that I think are important

There is no formal definition of tax avoidance but the one that is widely accepted would be along the lines of 'within the letter of the law but not the spirit of the law'. Or something like not using the law 'as parliament (lawmakers) intended'

So when there are tax deductions made for personal savings or linked to (genuine) investment this would NOT be seen as avoidance. Not by anyone that I know of. It's only where there is something articicial about the way that a tax deduction is created - sometimes referred to as 'aggressive' tax avoidance that it would be included in any calculations. Most of those involved will know the difference. I've heard it talked about as 'risk mining'. Eg the tax advisers involved are deliberately pushng the limits of what the law allows - trading the risk of being investigated and found fraudulent against the financial benefits.

Nearly always these schemes get referred to as 'entirely legal'. And the organizations involved have to do this, to avoid getting sued. But it's not strictly true, because the reality is that what it really means is just that the schemes have not been tested and found illegal. They are deliberately located in a grey area and are quite often are found to be fraudulent when investigated - but that doesn't usually happen (and many companies are banking on that) because tax authorities are under-resourced and it's easier to go chasing the little guys who don't have an army of tax advisors to support them.

And finally - to back up a point already made -we aften think that corruption happens elsewhere. But we, the UK, sit right at the heart of global the system that enables a lot of major corruption. UK companies, banks, advisors and the places that we control (BVI, Jersey etc) help make it possible for tax avoidance, tax evasion and the movement of large sums of money by dodgy people all over the world. We are the world's greatest enablers.

It's certainly hard to fix. It's a system build up over many decades. But there are plenty of things that could be done, and yet our government is dragging it's heels as hard as it can (wonder why hmmm?) https://www.thetimes.co.uk/article/stop-property-being-used-for-economic-crime-demand-mps-ngdjzs9zf

And I agree that the link with Brexit is tenuous at best

The EU is subject to lobbying from big business just as much, if not more, than the UK parliament and is also moving as slow as it can get away with on meaningful reform: https://www.eurodad.org/eu_fails_to_introduce_real_public_country_by_country_reporting

 

[A1X]

100% correct - it's nothing to do with political leanings or nationality - right wing toffs, working class people made good, celebs, sports stars, champagne socialists etc etc etc....they're all at it.

Yep, and it's bad whichever side of the fence you're on. If you're of the left, it's denying public services much needed money and lowers the tax take considerably on what it ought to be. If you're on the right, it pushes up taxes on those of us who obey the rules and hits us all as individuals while allowing others to get away with it.

 

[Weststander]

Not wanting to get too caught up in this, but a few points that I think are important

There is no formal definition of tax avoidance but the one that is widely accepted would be along the lines of 'within the letter of the law but not the spirit of the law'. Or something like not using the law 'as parliament (lawmakers) intended'

So when there are tax deductions made for personal savings or linked to (genuine) investment this would NOT be seen as avoidance. Not by anyone that I know of. It's only where there is something articicial about the way that a tax deduction is created - sometimes referred to as 'aggressive' tax avoidance that it would be included in any calculations. Most of those involved will know the difference. I've heard it talked about as 'risk mining'. Eg the tax advisers involved are deliberately pushng the limits of what the law allows - trading the risk of being investigated and found fraudulent against the financial benefits.

Nearly always these schemes get referred to as 'entirely legal'. And the organizations involved have to do this, to avoid getting sued. But it's not strictly true, because the reality is that what it really means is just that the schemes have not been tested and found illegal. They are deliberately located in a grey area and are quite often are found to be fraudulent when investigated - but that doesn't usually happen (and many companies are banking on that) because tax authorities are under-resourced and it's easier to go chasing the little guys who don't have an army of tax advisors to support them.

And finally - to back up a point already made -we aften think that corruption happens elsewhere. But we, the UK, sit right at the heart of global the system that enables a lot of major corruption. UK companies, banks, advisors and the places that we control (BVI, Jersey etc) help make it possible for tax avoidance, tax evasion and the movement of large sums of money by dodgy people all over the world. We are the world's greatest enablers.

It's certainly hard to fix. It's a system build up over many decades. But there are plenty of things that could be done, and yet our government is dragging it's heels as hard as it can (wonder why hmmm?) https://www.thetimes.co.uk/article/stop-property-being-used-for-economic-crime-demand-mps-ngdjzs9zf

And I agree that the link with Brexit is tenuous at best

The EU is subject to lobbying from big business just as much, if not more, than the UK parliament and is also moving as slow as it can get away with on meaningful reform: https://www.eurodad.org/eu_fails_to_introduce_real_public_country_by_country_reporting

Being in the profession a long time, my personal take is that the definition (you’re right, it’s subjective) has evolved.

In say 1990, there was a straight dichotomy in discussions - evasion is illegal, avoidance was generally legitimate from tax planning as long as the transactions had a commercial basis or were set out in law.

Then I think a load of “tax avoidance schemes” came along eg immoral stuff on faux film industry investments, or the use of trusts to swerve a variety of taxes. In contradiction of the spirit of two well known court decisions - Ramsey, also Furniss v Dawson. The essence, transactions carried out purely for the avoidance of tax. From that period onwards, tax avoidance has had a bad name.

Enter “tax mitigation” which seems to describe legal and moral tax planning, although the lines are blurred, dubious tax lawyers working with ex senior HMRC officers 24-7 to concoct immoral schemes.

Agree totally about the UK and the EU - some very powerful and wealthy influences simply don’t pay their share prescribed in law or what most people would consider just. Most of them very private individuals, not the characters people target on internet fora.

 

[Weststander]

[MENTION=28490]Machiavelli[/MENTION] you'll find this R4 prog interesting - the history of the global £1T offshore banks / money laundering industry. Listening to it now.

https://www.bbc.co.uk/programmes/m0017t8k