hmrc tax avoidance shelter lead case

As Government Ignores Common Wealth ...

Tax Avoidance Schemes Cost UK Billions

Should politicians pursue tax dodgers? Or forget them and pursue the money that already belongs to everybody? This 2012 article is from the BBC, Nov 21.

by the BBC

The inability of HM Revenue and Customs (HMRC) to properly curb aggressive tax avoidance schemes is costing the UK billions of pounds, a report suggests.

The National Audit Office said HMRC was dealing with a backlog of 41,000 cases involving individuals and small companies, with up to £10.2bn at stake.

The spending watchdog said tackling avoidance, which is not illegal, was difficult but HMRC must do better.

HMRC said it had successfully challenged 40 schemes in two years.

It is currently estimated there are 30,000 users of what are known as employment intermediary schemes and partnership loss schemes -- where partnerships that make a loss can shelter their other income from tax.

In such cases the loss is artificially inflated -- through the use of "circular loans" or deferred expenditure which is never incurred -- to exceed the amount actually invested in the partnership.

Although HMRC has sought to tackle the practice by taking enforcement action in a few "lead" cases, such investigations can take many years to resolve and the rulings cannot always be applied successfully elsewhere.

Such tax avoidance schemes were being "mass-marketed" -- often by small specialist tax advisers whose business model relies on helping their clients to avoid paying tax.

Authorities were having to "play catch-up" as new avoidance methods were conceived.

To read more

JJS: Who’s in the wrong? The citizen who avoids losing money to the taxing authorities? Or the tax authorities for taking something that does not belong to them?

Actually, the whole issue could be avoided if society recognized their social surplus, the values that they themselves create. If government recovered this common wealth, then it’d have plenty of potential revenue and no excuse for confiscating anyone’s private, individual wealth.

How does society generate wealth? There are two ways. One is avoidable (as are some taxes), the other is not.

1. The public generates wealth when their agent -- government -- grants privilege, such as corporate welfare, fat-cat contracts, corporate charters, etc, that directly or indirectly convey public revenue from the public treasury into fat-cat private pockets. Pieces of paper such as liability limits or banking charters or utility franchises are worth trillions to recipients in the US each year.

2. People also generate wealth merely by living in close proximity to each other, as in cities. When people flock to the same place, they create demand for land there, and have to spend more money to live there. Presently, we let owners, lenders, and speculators capture the spending for land, but are they the rightful recipients? They created neither the land nor its value. While the populace also did not create the land, as a whole it did generate the value of locations.

How much do people spend for land, for oil plus other natural resources, for the airwaves, and even for ecosystem services? In America, it’s many trillions of dollars each year, and everywhere it’s the biggest part of a nation’s GDP. It’s easily enough to replace the revenue that government gets by taxing people’s earnings, buildings, and purchases.

It’s enough for politicians and bureaucrats to run government however they see fit, if that’s what you’d like to do with this stream of spending that economists call “rent”. But you could put the state into the role of steward. A good steward raises the revenue but does not keep it and instead passes it on to its owner. Who owns the spending for nature? All of us equally. If we were to share it, we could eliminate taxes and subsidies and enjoy justice and prosperity. Even small steps on this path show the geonomic ideal to be the right way to go.


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

Ever Hear of Bradley Birkenfeld? - The Progress Report

Firms Keep Wage Taxes, Don't Pay Profit Taxes

Housing Is Too High Sans Real Tax Reform

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