Tuesday, 24 July 2012

Working cash in hand

The (in his own words) "morally repugnant" David Gauke is at it again.

This time he is branding those who offer to pay tradesmen cash in hand as being "morally wrong".  For once he's actually talking some sense because paying somebody in cash to evade paying tax is a criminal offence.  The tradesman would be guilty of evading VAT or income.corporation tax or both.  Because the buyer and seller are acting together to avoid tax they would be guilty of conspiracy to evade whichever tax(es) it is they are agreeing not to pay.

According to the BBC report, Boris Johnson admitted that he has paid tradesmen cash in hand many times.  If that's true and it's with the intention to evade paying tax then he is guilty of conspiracy to evade tax.  Although a large part of me suspects that BoJo simply didn't understand the question

It does seem to me that Government Ministers have found a phrase they like, "morally wrong", or "morally repugnant" and intend to run with it... cue the next election being fought on a platform of cracking down on all sorts of "morally wrong" individuals... though surely not a return to the single-mother bashing of the early 90's?

Monday, 23 July 2012

Tax

The Government is once again promising to clamp down on the lawful efforts of people who attempt to keep as much of the money they have earned through lawful work/investment as possible.

David Gauke MP, Treasury Minister, proposes to "name and shame" those using aggressive tax avoidance schemes.  Presumably, the press release will read something along the lines of: "here is a list of people who have done absolutely nothing illegal in respect of their tax."

Since he is so keen on naming and shaming those conducting themselves in ways that our Prime Minister described as "morally wrong", he won't mind me mentioning that he avoided paying £10,248.32 worth of tax in the form of stamp duty when he chose not to pay it but instead to claim it on his Parliamentary expenses.  If you believe that trying to keep your own money is "morally wrong" (I think Mr Gauke actually uses the words " morally repugnant" himself) then you must think that making the tax payer pay your tax for you is tantamount to criminal behaviour.  Interestingly, Mr Gauke gave a speech, and I believe wrote in the Times, describing the purchase of a house through a company to avoid stamp duty as tax avoidance of the sort he wants stamped out... but having the tax payer pay your tax is presumably fine?

David Gauke's "morally wrong" behaviour doesn't stop there.  Earlier this year he advertised for an intern.  The intern's duties were described as including: "administration, basic correspondence, diary management, fundraising, campaigning and related tasks".  The appointment was for a minimum of six-months and although hours are not mentioned, that list of duties look like something that would require a full time effort.  So, our moral crusader looks as if he is attempting to avoid paying the national minimum wage... and the associated employers PAYE tax and national insurance contributions that go with it.  This from the man who is the Minister responsible for HMRC, which is the organisation that said, "[n]on-payment of the national minimum wage is not an option."

Let's stop playing the ("morally repugnant") man and play the ball for a second.  How does the "honourable" member for South West Hertfordshire choose to define aggressive tax avoidance schemes?  He says that they are schemes contrived to defy the will of Parliament by depriving the government of expected revenues.  In his speech he did say that putting money into an ISA is not tax avoidance, although it obviously is since it's entire purpose is to lawfully avoid paying tax.  This definition is so wide that it could include almost anything - including the activities of David Cameron's late father in Panama, his gifts to our PM and provision in his will for a trust in respect of his remaining property for his other children... all of which seem to have no function other than to avoid tax.

There is a reason why tax avoidance is so rife in the UK and that is because we have one of the most complicated tax systems in the world.  Last year, I had a very simple question for my accountant: "do I have to pay VAT on this income?"  The position was so complicated that my very experienced accountant didn't know, nor did any of her partners nor their team.  They had to call in advice from an outside VAT expert to give a yes or no answer.

Simplifying the tax system would cut out tax avoidance.  Unfortunately, the Government's plans seem to be to make the tax system even more complicated.

As a final thought, I'd like to say that I don't object to the Government closing tax loopholes and collecting tax from the super-rich.  What I object to, is the Government attempting to shame people for behaviour that is entirely lawful and is lawful because the Government have done nothing to outlaw it.  I appeared on a French TV documentary last year attempting to explain that in England and Wales (probably Scotland too, but I know nothing of Scots law) everything is legal unless the law prohibits it.  The Government appear to want to reverse that position where tax is concerned.

Friday, 13 July 2012

Hints & tips number 5

To tell the truth, I've lost count of how many hints and tips I've done, so this could be number 5 or 3 or 4 or 6... I just don't know.

The theme of this tip is to TELL YOUR SOLICITOR WHAT OUTCOME YOU WANT TO ACHIEVE.  I always ask clients what they want and they usually look at me like I'm some kind of idiot who can't work out that they just want to a. get off; or b. get out of prison.

Quite often people mistake me for their doctor and tell me lies.  Now that's fine if you're trying to convince a doctor that your smokers cough is nothing to do with your 40 a day habit.  But, if you want to get out of the cells then there's no point in lying to me.

I was court duty yesterday and after several loooooong hours I finally got a client.  He was in for a minor shoplifting, but with 120+ previous convictions the likelihood his being released were very slim.  A fact I made crystal clear.  He instructed me that he has alcohol problems and was desperate for help from probation to sort himself out.  "Fine," says I.  "But, you understand the court will order a pre-sentence report and the chances are it'll be with you in prison?"  He said he understood.

In court, low and behold the judge orders the PSR within the punter remanded despite my most eloquent re-iteration of the defendant's promise not to commit any more offences and to turn up next time.  Amusingly, he had told me to ask the judge to give him just one chance to prove himself.  I made clear I wasn't going to do that as retort from the judge would have been, "Mr Defence Brief, if I release him this would be the defendant's 127th chance".

When I see the punter in the cells after the hearing he's furious.  It seems that his real objective was to be released as quickly as possible.  He is no longer interested in getting any help for his drink problem and is angry that I didn't just ask for him to be sentenced to prison today.  As I explained, if he told me he just wanted to be out ASAP then I'd done that - it's actually easier than arguing for a PSR with somebody who's been to prison so many times before for the same thing.

So, the moral of the story is this.  I'm not a doctor who is going to tell you to stop drinking or smoking.  If you want a particular outcome then tell me the truth about what you want and I'll tell you either how to get it or to stop wasting your time because it'll never happen.


I'm there to help, but if you don't tell me what you want then you'll never get what you want.