Things Noticeable this week

[billybunter]

http://www.bbc.co.uk/news/uk-northern-ireland-18541504

[squigg58]

Originally Posted by billybunter

http://www.bbc.co.uk/news/uk-northern-ireland-18541504

Quote: "The wallaby is part of a family unit - two females and two babies - owned by George and TG Troughton who keep the animals as pets. The one who went walkabout is actually the daddy of the group."

Oh boy! He is going to cop for it big time when he gets back! I can see another escape attempt looking!

[scoundrel]

As Dennis Healey once said, the difference between tax avoidance and tax evasion is the thickness of a prison wall.

It is not only not illegal to plan your tax affairs to minimise your tax bill, it is not even immoral; everyone has a moral right to minimise their tax liability, within the rules. Where things are wrong is when people abuse the rules in order to distort the truth of their affairs. This K2 scheme which Jimmy Carr joined was a legal fiction. It works by enabling people to take income disguised as a loan. Loans are technically due to be repaid and are not income, so do not suffer tax. There are exceptions to that rule but that is getting technical and I won't bore everyone with the Income and Corporation Taxes Act 1988. The point is that although it is not a criminal fraud, being a tax avoidance scheme declared to the Inland Revenue (they are in the process of challenging it via the Tax Commissioners), it is in fact a fraud, designed to bypass income tax rules on the basis of a lie.

In the United States, under President Obama, the US Treasury Department has brought in an "economic substance" rule:

"The common-law 'economic substance' doctrine generally denies tax benefits from a transaction that does not meaningfully change a taxpayer's economic position, other than tax consequences, even if the transaction literally satisfies the requirements of the Internal Revenue Code."

~US Treasury Department.

The British tax authorities apply this principle in specific technical cases such as the rules on loan interest paid by UK companies to overseas companies ("transfer pricing"). From the Inland Revenue's website section on "transfer pricing":

Recognising economic substance

Paragraph 1.65 of the OECD Transfer Pricing Guidelines is particularly helpful in finding the appropriate approach towards the arm’s length provision in thin capitalisation cases. This says that the basic transfer pricing approach considers economic substance versus form in thin capitalisation cases:

“[In cases] where the economic substance of a transaction differs from its form... the tax administration may disregard the parties' characterisation of the transaction and re-characterise it in accordance with its substance. An example of this circumstance would be an investment in an associated enterprise in the form of interest-bearing debt when, at arm's length, having regard to the economic circumstances of the borrowing company, the investment would not be expected to be structured in this way. In this case it might be appropriate for a tax administration to characterise the investment in accordance with its economic substance with the result that the loan may be treated as a subscription of capital.”

IMHO, as is already the case in the United States, the Inland Revenue in the UK should have a general legal power to challenge the falseness of a tax avoidance set-up such as K2 on the basis of substance over form. If the taxpayer is serious about their legitimate intent, they may appeal to the Commissioners on the grounds that the Revenue is implying a falsehood and that their arrangements are truthful. K2 is a scheme designed around a lie and would fail any substance-over-form test. In order to minimise the waste of public time and money on defeating such lies, it would also make sense to punish the people who make a profession of inventing such schemes as criminals; if you are implicated in more than two such schemes, there is a pattern rather than inadvertance and you have a case to answer that you are in fact a liar and a fraudster and a parasite. Accountants and solicitors study for years to get letters after their name and would be deterred by the risk of being struck off, let alone sent to HMP Squeal-Like-A-Pig-Boy. Always assuming the authorities are honest and competent and diligent in pursuing abusive tax avoidance...

[squigg58]

I can't help but wonder how many MPs and Civil Servants are now quietly cursing under their breaths that this has come out into the open.

Interesting that Vince cable said that "as far as he knows" no members of the cabinet use tax-avoidance schemes ... and Ed Miliband chose not to criticise anyone. Interesting also that Sir Philip Green decided to sell his business to his wife ten years ago, and purely by coincidence, she isn't a UK resident so no tax was paid on any of the dividends paid to her. Mind you, I'm sure that counts as her money, so Sir Philip doesn't get a sniff of it!

Thank goodness for News Corp who raised this moral issue through The Times!

[otokonomidori]

If this K2 thing is currently legal I can't see what all the fuss is about anyone using it to reduce their tax liabilities - one would need to be crazy to pay any more tax than absolutely necessary.

A non smoking friend of mine who is an airline employee flies to Turkey every week and supplies me with fags at Turkish prices - I never pay a penny of duty to the British Exchequer and it's perfectly legit. It highlights how ridiculously high tax regimes, such as we have in the UK, are counterproductive.

[Devius]

I really can't get interested in this K2 story...
Next thing we'll ask is why certain F1 drivers are now living in Monaco (D'oh)...

[windymiller]

Originally Posted by fleetwood77

If this K2 thing is currently legal I can't see what all the fuss is about anyone using it to reduce their tax liabilities - one would need to be crazy to pay any more tax than absolutely necessary.

Then we can all join similar schemes, no one pays more than 1% tax and the entire country descends into anarchy and chaos. Something has to be done about this.

[Greenman]

I can't see what the fuss is about I think K2 is a very nice mountain

I was watching the last part of the excellent 3-pt series 'Punk Britannia'(BBC4) last night, having recorded it and I noticed that back then the youth had a real grudge against the Government - notably Thatcher - and needed a leading light(s) to guide them. That guiding light turned out to be John(Johnny Rotten) Lydon, and despite his menacing look and the infamous appearance on The Today Show(with Bill Grundy), where if you watch it Grundy actually goads him into swearing, he comes across as the more sensible of the band. I couldn't imagine 'God Save the Queen' being played at the Jubilee Concert but now he is older he is still singing and seems to have survived. Similarly the so-called Modfather Paul Weller has gone on from strength to strength leaving the Jam and going on to the Style Council/Council Collective and then on his own. I wonder how many singers from today like Cheryl(Cole) will be remembered in twenty years time-not many I reckon. I also noticed Lydon and his PiL band are still on the road. Amazing!

[billybunter]

https://www.youtube.com/watch?v=789h...layer_embedded

LOL!

[Jeff Vader]

Today is the centenary of the birth of Alan Turing

http://en.wikipedia.org/wiki/Alan_Turing

Alan Mathison Turing, OBE, FRS ( /ˈtjʊərɪŋ/ tewr-ing; 23 June 1912 – 7 June 1954), was an British mathematician, logician, cryptanalyst and computer scientist. He was highly influential in the development of computer science, providing a formalisation of the concepts of "algorithm" and "computation" with the Turing machine, which played a significant role in the creation of the modern computer. Turing is widely considered to be the father of computer science and artificial intelligence.

During World War II, Turing worked for the Government Code and Cypher School (GCCS) at Bletchley Park, Britain's codebreaking centre. For a time he was head of Hut 8, the section responsible for German naval cryptanalysis. He devised a number of techniques for breaking German ciphers, including the method of the bombe, an electromechanical machine that could find settings for the Enigma machine.

After the war he worked at the National Physical Laboratory, where he created one of the first designs for a stored-program computer, the ACE. In 1948 Turing joined Max Newman's Computing Laboratory at Manchester University, where he assisted in the development of the Manchester computers and became interested in mathematical biology. He wrote a paper on the chemical basis of morphogenesis, and he predicted oscillating chemical reactions such as the Belousov–Zhabotinsky reaction, which were first observed in the 1960s.

Turing's homosexuality resulted in a criminal prosecution in 1952, when homosexual acts were still illegal in the United Kingdom. He accepted treatment with female hormones (chemical castration) as an alternative to prison. He died in 1954, just over two weeks before his 42nd birthday, from cyanide poisoning. An inquest determined it was suicide; his mother and some others believed his death was accidental. On 10 September 2009, following an Internet campaign, British Prime Minister Gordon Brown made an official public apology on behalf of the British government for the way in which Turing was treated after the war.