Friday, November 02, 2012

Plate Sin With Gold (Chapter 42)

It is being reported that HM Revenue and Customs are continuing with their policy of prosecuting only a tiny minority of tax evaders (and it is an equally tiny minority that ever gets caught) and dealing with the rest by imposing penalties. All of this takes place behind closed doors, and the perpetrators, who may have effectively stolen many thousands of pounds from the public purse,, can go about their lives without the humiliation and public opprobrium suffered by more downmarket thieves. Their CRB checks will continue to come back free of convictions and arrests.
Only the other week we passed a case of tax fraud on to the Crown Court, reminding us just how few of them we see.  Down among the lower orders, we imposed a community penalty on a shoplifter who had stolen goods worth £55 from a store.

(later) And today we hear that an 'honourable' MP has been found to have stolen £12,900 through the issue of twelve fraudulent invoices. He should think himself lucky that he didn't nick fifty quidsworth of Duracells from  WH Smith. He might have ended up in court.

(later still) The about-to-be-ex MP told the BBC that he wanted to take responsibility for his 'mistakes'.  I suspect that he thinks his mistake was to get caught.

How would a bench of magistrates react to a bang-to-rights thief apologising for his 'mistake'? Only a politician steeped in the Westminster culture would dream of trying it on.

31 comments:

  1. Robert the Biker2 November 2012 10:11

    It seems to me you may be conflating different things:You have sent someone up for tax FRAUD which is a serious crime usually consisting of claiming back VAT for a non existant transaction or something of that order. This is quite different from tax EVASION which is to do with not paying tax on some form of income or transaction and can be very difficult to prove; this may be why revenue and customs tend to pick their battles. Lastly, we have tax AVOIDANCE, perfectly legal as set forth in Lord Clyde: Ayrshire Pullman Motor Services and Ritchie v. IRC (1929) 14 TC 754. I do a great deal of tax AVOIDANCE myself, as I see no reason to encourage the buggers with extra loot.

    ReplyDelete
  2. Anonymous John2 November 2012 10:26

    Tax is complicated. Do you really want someone who genuinely misunderstood what can be claimed as expenses to be treated the same as someone who set out to commit carousel VAT fraud? Proving intent to evade is not always easy, unlike shoplifting.

    ReplyDelete
  3. Tax may be complicated, but the burden of proof is not. If a court can be sure beyond reasonable doubt that the defendant acted dishonestly and knew what he was doing he will be convicted. In other cases he will be acquitted.

    Tax avoidance is of course legal, and supports a huge industry of lawyers and accountants. The activities of large corporations, as recently reported, are probably legal, but certainly immoral.

    ReplyDelete
    Replies
    1. Anonymous John2 November 2012 21:34

      I've just caught up with the news item that prompted this. Not declaring interest in a Swiss bank account is easy for a jury to understand. Other types of evasion are less so, and the courts couldn't cope with all cases. A line has to be drawn somewhere.

      Delete
  4. This comment has been removed by a blog administrator.

    ReplyDelete
  5. Managed to track down this quote from a Guardian book review, which spells out the fundamental ethos of those corporations and individuals who can get away with it:
    "What is fascinating about Keynes's essay is how relaxed it is about greed as one of the important drivers of growth. Morality, he insists, is for the time of leisure that is to come. "Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight." Hmmm … what could possibly go wrong?"

    ReplyDelete
  6. Today’s Guardian reports on the acquittal of the Greek journalist who was being prosecuted for publishing the names from the “Lagarde list” of the 2,000 Greeks whose secret Swiss bank accounts suggested the likelihood of tax evasion.

    http://www.guardian.co.uk/world/2012/nov/01/greek-editor-kostas-vaevanis-acquitted

    In relation to the UK, the Guardian says that HMRC has had this list for two and a half years and is working through the 6,000 UK names on it. So far more than 500 individuals have been identified who have been, or are currently, under investigation for serious fraud.

    The report concludes “only one person has been successfully prosecuted so far. The long-standing HMRC policy of reaching settlements and imposing penalties mean that the vast majority of those on the list are unlikely to be prosecuted or named as a result”. On the tax issue, game etc to the BS Team, it seems.

    ReplyDelete
    Replies
    1. The Revenue regards itself as more of a revenue-collecting agency rather than a law enforcement one. Their view is that it is better to maximise revenue collection by recovering the tax due plus a civil penalty on ten malefactors than spend the same resources prosecuting one at Crown Court for much the same final cash benefit to the Treasury. Perfectly reasonable and better value for the taxpayer.

      I'm not sure I would count failure to declare an offshore bank account as "serious fraud". When all said and done, it's still THEIR money that they have failed to pay in taxes. It's wrong, the amounts may be large, and they may go to prison, but they're not serious criminals.

      Delete
  7. There will always be those happy to defend the tax evaders and avoiders. They are usually also very happy to take full advantage of services paid for by the taxes of the less fortunate who can not afford tax accountants or to have money salted away in tax havens. And as for 'a genuine misunderstanding' as an excuse it beggars belief.

    ReplyDelete
  8. I'm with Bystander (and Team) all the way on this. In my own case I avoid income tax (mostly) by not having enough income and I avoid corporation tax by not having enough profit. That seems perfectly reasonable. But I'd rather like to be paying much more of both taxes, because that would mean I was earning a lot more or profiting a lot more or maybe even both.

    But whatever leeway there is for a person to take great income or a company to take great profits with the consequent taxation is a big problem. Now, depending on your point of view you might consider it a problem with the law, or the Revenue, or the politics or whatever. But dishonest is dishonest. It's the opposite of honest. And honest is what all the rest of us expect, not unreasonably (but maybe more in hope than in expectation).

    ReplyDelete
    Replies
    1. ... for *with* read *without*! oops

      Delete
    2. I suppose not telling the revenue about your bank account is a sin of omission, rather than commission. Submitting false expense claims, on the other hand...

      Delete
  9. As an ex Inspector of Taxes who spent 10+ years in Investigation Branch, in Ireland, where "Paddy will feck it" is part of the culture, it is clear that self employment is an open invitation to evasion. The morality of it is another matter, when Governments tend to waste the money anyway. It is a game....

    The ritual flogging of the rich is all part of the show for the mob. We publish many of the naughty and stupid ones, in Ireland. For the employed, we give them increased tax credits, to make up for the expected evasion by the self employed. Ireland encourages profits by corporations and taxes them at low rates, but since this is a government, it must be moral, right? I mean ....

    The revelation that the entire banking sector was evading taxes by hiding the taxes evaded by the self employed in Ireland came as a small surprise a decade ago. Just in time to recklessly lend to developers, the EU allowed the taxpayer to replace bank capital lost to the Revenue, by a 25% return on deposits after 5 years, in addition to the normal interest paid.

    There is no morality, no mala in se, in taxes. Legalized theft begins a morass of recrimination. To feed the banks, allowing them to over lend, beggars the nation, as Thomas Jefferson made clear.

    This column is beginning to sound like socialism!! For a kleptocracy to thrive, it is sometimes necessary to convince the gullible that there is fairness in taxation: so be it! Aid this sophistry by asking for some transparency. Just do not ask why so much depends upon "finance", which is legal, moral and highly sought after, like drugs, gambling and prostitution.

    Consenting adults can stand the losses?????

    ReplyDelete
  10. Tax avoidance may be legal (thanks to a complicit system that provides loopholes to be exploited) but it is still immoral, as is wanting to withold funds that are due to the public purse for the good of all. But I don't expect selfish people in a greedy age to appreciate such merely moral considerations. Gaming the system to enrich yourself is the modern way of life, and only the poorest who do it with benefits end up in the public pillory. But they are no worse than expense fiddlers and tax dodgers, legal or illegal.

    ReplyDelete
    Replies
    1. "No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores".

      If I could think of ANY legal way to avoid paying even 1p tax, I would take it. And I would sleep woundly knowing that me and mine were well looked after.

      Delete
  11. You can be sure that a list of benefit cheats would not be treated in the way the "Lagarde List" was.

    The prosecution in Greece of Mr Vaxevanis is also a worrying development. He published names of some 2059 rich Greeks who had money in Switzerland and he found himself charged with some offence under Greek law. As it happens he was acquitted but the fear is that the rich and powerful will come to use the law more and more to clampdown on anything which reveals their activities.

    The approach of HMRC can be viewed as pragmatic. They get some of the money owed in to HM Treasury without incurring the exceptionally high costs of prosecuting these "tax evasion" cases.

    In the Magistrates' Courts, there is often a parade of "benefit cheats" who have often done something like failing to inform the authorities that they had some part-time work. Money owed is frequently recovered under statutory powers and so the question really needs to be asked whether such people should be prosecuted. Perhaps some should - where (e.g. 1) the amounts are very high or (e.g. 2) repeat offenders. However, in line with the treatment of those on lists such as Lagarde, perhaps these benefit cheats might be allowed to avoid prosecution in most cases?

    Heresy? Perhaps - but the real question in the post relates to the difference of treatment between offenders.

    Tax evasion costs the economy a great deal of money and, inevitably, leads to demands for even more taxation to be imposed.

    The government might do well to recall what Churchill once said. A nation trying to tax itself to prosperity is like a man standing in a bucket of water and trying to lift himself up by the handles!

    ReplyDelete
    Replies
    1. Local authority wallah4 November 2012 23:46

      In fact, that is pretty much what does happen, ObiterJ. Most people are given administrative penalties, unless the sums involved were so large, they were repeat offenders, or the particular circumstances so especially heinous that prosecution seems the only option.

      Delete
  12. "Only the little people pay taxes"

    Who said that ?

    ReplyDelete
    Replies
    1. One of the big people, I expect.

      Delete
    2. A horrible old bat called Leona Helmsley, who thought that having more money than most people made her better then most people. She came to grief in the end.

      Delete
    3. Also known as "The Queen of Mean", she came by the really big lucre the good old fashioned way -- she married into it. She "came to grief" convicted of various forms of tax-related crime. It is likely that none of that would have happened had she not also developed the policy of not paying the help what was their due, so they ratted her out.

      I think that even Keynes would find that practice to be excessive greed.

      Delete
  13. He'll leave politics, take a consultancy position with a top company and make millions.

    ReplyDelete
  14. It's ironic that in a supposed equal society, anyone on half-or below the national average income pays more tax that Jimmy Carr.

    ReplyDelete
  15. There are many unhelpful historical fallacies concerning our democracy. To cite but three, just to give you a flavour
    1. The Domesday Book compiled a comprehensive register of property ownership in Norman England. Just don't go looking for ancient churches; they couldn't be taxed so were of no interest.
    2. Magna Carta guaranteed our fundamental freedoms. Actully, no. It simply got the monarch off the backs of the barons. The hoi polloi carried on exactly as before.
    3. The Industrial Revolution transformed the economy and along with it the living standards of the population. In fact it permitted to rural poor to become the urban poor, and to shed most of their economic security in the process.
    Those at the top have always lived well at the expense of those further down the heap. They will continue to do so because they have centuries of experience and expertise behind them.
    As the good old Anglican hymn (All Things Bright And Beautiful) so succinctly put it
    3. The rich man in his castle,
    The poor man at his gate,
    God made them high and lowly,
    And ordered their estate.

    ReplyDelete
  16. AnotherNorthernJP4 November 2012 16:03

    And yet more tax dodging www.bbc.co.uk/news/uk-20157878. To be an tax accountant it seems that the part of the brain associated with morality is ablated.

    ReplyDelete
  17. The Bystander Team should assist Rowan Bosworth-Davies in fixing the justice system. We would all benefit.

    "This shameful tale identifies so much which is wrong with the way that the criminal law is administered in the UK today, with Government immediately imprisoning the poor, the socially marginalised and the underclass arrested for rioting, while allowing the rich, the powerful, the banksters and Parliamentarians every degree of legal leeway to avoid the possible consequences of their gross criminality."

    http://rowans-blog.blogspot.co.uk/2012/11/denis-macshane-can-and-must-be.html

    ReplyDelete
    Replies
    1. Goodness me...I used to work with Rowan eons ago...a name from the past indeed...

      Delete
  18. The prosecution (and acquittal) of Ken Dodd for tax evasion was the turning point for the Revenue. It was then they realised that juries do not like them and cannot be trusted to convict. "Civil" sanctions were introduced so as to bypass the "untrustworthy" criminal courts.

    The upside is the evader gets away without a stain on his character. The downside is he does not have the protection of "innocent until proven guilty".

    ReplyDelete
  19. It seems if your poor fiddling is theft, if your well off its a mistake. Unless or until those at the top are pursued with vigour and prosecuted for all this fiddling there is no hope.
    Appealing to moral values and doing the right thing might have worked years ago but not today whan it seems those at the top are just out for themselves.
    Its a disgrace these theives are not being prosecuted

    ReplyDelete
  20. As one trying to run a small business entirely within the rules, HMRC communicates regularly, inaccurately (my accountant is pretty good at warning when the next inappropriate letter is coming), and usually threateningly. Its inefficiencies include issuing at least five different numbers to the company for different purposes, and when payments go to their (wrong) account, for a few hundred pounds, all sorts of fire and brimstone is threatened. The VAT system, in contrast, operates simply and well, even though an entirely separate, additional set of accounts has to be maintained at a cost that the government does not contribute to.

    Meanwhile, why has Dennis McShane not been prosecuted ? Either privilege or nothing actually illegal.

    But of course, if it is a large company owing millions, then they get a discount. HSBC paid only £236 million on £2.65 billion profits for 2012, or about 8.9% (see: www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/hsbc2010arn.pdf. So much for the 'progressive' tax system in this country.

    ReplyDelete
  21. Simplification, simplification, simplification- that's the answer.

    Less fiddling and more revenue

    Simpler enforcement and easier prosecution

    ReplyDelete

Posts are pre-moderated. Please bear with us if this takes a little time, but the number of bores and obsessives was getting out of hand, as were the fake comments advertising rubbish.