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Theresa May: We’re coming after tax advisers

Britain's new Prime Minister Theresa May speaks outside 10 Downing Street in central London on July 13, 2016 on the day she takes office following the formal resignation of David Cameron. Theresa May took office as Britain's second female prime minister on July 13 charged with guiding the UK out of the European Union after a deeply devisive referendum campaign ended with Britain voting to leave and David Cameron resigning. / AFP / JUSTIN TALLIS (Photo credit should read JUSTIN TALLIS/AFP/Getty Images)

Prime minister Theresa May has pledged to take action against financial advisers who help the rich avoid tax.

In a speech at the Conservative Party conference today, she singled out financial advisers along with accountants as targets in the government’s clampdown on tax avoidance.

May says: “If you’re a tax-dodger, we’re coming after you. If you’re an accountant, a financial adviser or a middleman who helps people to avoid what they owe to society, we’re coming after you too.

“An economy that works for everyone is one where everyone plays by the same rules. So whoever you are you – however rich or powerful – you have a duty to pay your tax. And we’re going to make sure you do.”

May added that while as a Conservative she favours a low tax economy, taxes are “the price we pay for living in a civilised society.”

The government has upped its rhetoric against aggressive tax avoidance in recent months.

In August, HM Revenue & Customs set out proposals to fine advisers who were found to be “enablers” of tax avoidance schemes.

HMRC is looking to levy penalties of either 100 per cent of the tax evaded, or £3,000, whichever is higher. In the consultation, which closes next week, HMRC also calls for measures subjecting each person found to be enabling tax avoidance to a penalty in their own right, regardless of any penalty handed to the individual using a tax avoidance scheme.

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. Avoid/evade big big difference. Professional advisers help to avoid tax, which is somewhat difference than evading tax. Tax avoidance planning is the method by which professional advisers utilise HMRC rules for the benefit of the client

    • Nigel Baxendale 5th October 2016 at 9:12 pm

      Avoid or evade? In the current climate, how much difference is there?

      For many years, ‘clever’ advisers (financial advisers, accountants or others) have been presenting ways for wealthy people to avoid paying their fair share of the tax burden. When I was contracting, I had ‘Umbrella Companies’ offering to let me use their services and receive, net of tax, NI and their fees, 92% of my gross daily rate. This wasn’t tax planning, it wasn’t tax avoidance or even aggressive tax avoidance; it was tax evasion. I rejected their ‘advice’ and used a company that made me pay my fair dues in taxation. The use of pensions and ISA in tax planning is fine. The setting off of proper and legitimate expenditure against tax (where allowable as either a self employed person, an employee or a corporation) is also fine. However, spending money on looking for loopholes to allow those people who are richer or better paid than others, to pay less tax than the ‘average Joe’ is immoral and should be considered illegal; against the spirit of the law. There are many that would say they are just operating within the existing legislation. However, they are doing so in the knowledge that the less affluent could not afford such advice and knowing that, as soon as one loophole is closed, their expensive advisers will find another. All of us, whether as individuals or corporate entities (or both), should pay our fair dues. If we did this, the deficit would disappear more quickly, we will afford to help those who are less fortunate than ourselves, including refugees fleeing Eritrea and Syria, and (believe it or not) we would all be happier for it.

  2. “Prime minister Theresa May has pledged to take action against financial advisers who help the rich avoid tax.”

    At the risk of stating the blindingly obvious this is fatuous nonsense. Everyone rich or poor is entitled to minimise their tax liability as long as it is legal to do so. Avoidance of tax is common sense, it is evasion of payment of tax incurred that is illegal. Surely someone will have pointed this out to our PM but perhaps it’s less dramatic than the comments made? We know she was referring to schemes which involve some dubious (to put it mildly) activity, usually abroad, but the comment is ill thought out.
    Speeches by the leader of the Conservatives made at party conference have been ridiculous ever since IDS was given seventeen standing ovations shortly before being thrown out for being hopeless. Did this one get the usual treatment?

    • Nigel Baxendale 5th October 2016 at 9:12 pm

      Avoid or evade? In the current climate, how much difference is there?

      For many years, ‘clever’ advisers (financial advisers, accountants or others) have been presenting ways for wealthy people to avoid paying their fair share of the tax burden. When I was contracting, I had ‘Umbrella Companies’ offering to let me use their services and receive, net of tax, NI and their fees, 92% of my gross daily rate. This wasn’t tax planning, it wasn’t tax avoidance or even aggressive tax avoidance; it was tax evasion. I rejected their ‘advice’ and used a company that made me pay my fair dues in taxation. The use of pensions and ISA in tax planning is fine. The setting off of proper and legitimate expenditure against tax (where allowable as either a self employed person, an employee or a corporation) is also fine. However, spending money on looking for loopholes to allow those people who are richer or better paid than others, to pay less tax than the ‘average Joe’ is immoral and should be considered illegal; against the spirit of the law. There are many that would say they are just operating within the existing legislation. However, they are doing so in the knowledge that the less affluent could not afford such advice and knowing that, as soon as one loophole is closed, their expensive advisers will find another. All of us, whether as individuals or corporate entities (or both), should pay our fair dues. If we did this, the deficit would disappear more quickly, we will afford to help those who are less fortunate than ourselves, including refugees fleeing Eritrea and Syria, and (believe it or not) we would all be happier for it.

  3. Avoid/evade big big difference. Professional advisers help to avoid tax, which is somewhat different than evading tax. Tax avoidance planning is the method by which professional advisers utilise HMRC rules for the benefit of the client

    • Nigel Baxendale 5th October 2016 at 9:11 pm

      Avoid or evade? In the current climate, how much difference is there?

      For many years, ‘clever’ advisers (financial advisers, accountants or others) have been presenting ways for wealthy people to avoid paying their fair share of the tax burden. When I was contracting, I had ‘Umbrella Companies’ offering to let me use their services and receive, net of tax, NI and their fees, 92% of my gross daily rate. This wasn’t tax planning, it wasn’t tax avoidance or even aggressive tax avoidance; it was tax evasion. I rejected their ‘advice’ and used a company that made me pay my fair dues in taxation. The use of pensions and ISA in tax planning is fine. The setting off of proper and legitimate expenditure against tax (where allowable as either a self employed person, an employee or a corporation) is also fine. However, spending money on looking for loopholes to allow those people who are richer or better paid than others, to pay less tax than the ‘average Joe’ is immoral and should be considered illegal; against the spirit of the law. There are many that would say they are just operating within the existing legislation. However, they are doing so in the knowledge that the less affluent could not afford such advice and knowing that, as soon as one loophole is closed, their expensive advisers will find another. All of us, whether as individuals or corporate entities (or both), should pay our fair dues. If we did this, the deficit would disappear more quickly, we will afford to help those who are less fortunate than ourselves, including refugees fleeing Eritrea and Syria, and (believe it or not) we would all be happier for it.

  4. We can only hope that they know the difference between tax avoidance and tax planning. I think we are all clear in our understanding that anything created just to avoid tax is not allowable, anything passed by a Chancellor to encourage investment and saving is perfectly acceptable.

    • Nigel Baxendale 5th October 2016 at 9:09 pm

      Geoff, yours seems to be the most sensible comment so far.

      For many years, ‘clever’ advisers (financial advisers, accountants or others) have been presenting ways for wealthy people to avoid paying their fair share of the tax burden. When I was contracting, I had ‘Umbrella Companies’ offering to let me use their services and receive, net of tax, NI and their fees, 92% of my gross daily rate. This wasn’t tax planning, it wasn’t tax avoidance or even aggressive tax avoidance; it was tax evasion. I rejected their ‘advice’ and used a company that made me pay my fair dues in taxation. The use of pensions and ISA in tax planning is fine. The setting off of proper and legitimate expenditure against tax (where allowable as either a self employed person, an employee or a corporation) is also fine. However, spending money on looking for loopholes to allow those people who are richer or better paid than others, to pay less tax than the ‘average Joe’ is immoral and should be considered illegal; against the spirit of the law. There are many that would say they are just operating within the existing legislation. However, they are doing so in the knowledge that the less affluent could not afford such advice and knowing that, as soon as one loophole is closed, their expensive advisers will find another. All of us, whether as individuals or corporate entities (or both), should pay our fair dues. If we did this, the deficit would disappear more quickly, we will afford to help those who are less fortunate than ourselves, including refugees fleeing Eritrea and Syria, and (believe it or not) we would all be happier for it.

  5. When will these ignorant people finally understand the difference between avoidance and evasion.

    Anyway, what with Brexit and the other daft ideas being spouted it is very probable that a lot of the rich will be upping sticks and going elsewhere. Then dear lady you will get zilch.

    Just remember what happened in France,. Within a very short time those completely brassed off with their government and made London the 5th largest French city. Don’t think it can’t happen to you. You need the rich and the highest earners – they are the biggest contributors to GDP – that’s why they are rich.

  6. Nigel Baxendale 5th October 2016 at 9:16 pm

    Avoid or evade? In the current climate, how much difference is there?

    For many years, ‘clever’ advisers (financial advisers, accountants or others) have been presenting ways for wealthy people to avoid paying their fair share of the tax burden. When I was contracting, I had ‘Umbrella Companies’ offering to let me use their services and receive, net of tax, NI and their fees, 92% of my gross daily rate. This wasn’t tax planning, it wasn’t tax avoidance or even aggressive tax avoidance; it was tax evasion. I rejected their ‘advice’ and used a company that made me pay my fair dues in taxation. The use of pensions and ISA in tax planning is fine. The setting off of proper and legitimate expenditure against tax (where allowable as either a self employed person, an employee or a corporation) is also fine. However, spending money on looking for loopholes to allow those people who are richer or better paid than others, to pay less tax than the ‘average Joe’ is immoral and should be considered illegal; against the spirit of the law. There are many that would say they are just operating within the existing legislation. However, they are doing so in the knowledge that the less affluent could not afford such advice and knowing that, as soon as one loophole is closed, their expensive advisers will find another. All of us, whether as individuals or corporate entities (or both), should pay our fair dues. If we did this, the deficit would disappear more quickly, we will afford to help those who are less fortunate than ourselves, including refugees fleeing Eritrea and Syria, and (believe it or not) we would all be happier for it.

  7. She’s not the first politician to mix up the use of the terms ‘avoid’ and ‘evade’ and I’m sure she won’t be the last. I hope it is purely down to a lack of knowledge on the speechwriter’s behalf. However when it is obvious that so much care is taken over the political and emotional wording of a speech, it would be nice to think that a little time was also spent making sure that the correct legal terminology was used for the avoidance of doubt!

  8. It is not just a question of Evade or Avoid. There are many legitimate ways for tax mitigation and all sponsored by Government; Pensions, ISAs, EIS’s, VCT’s, BPR etc.
    There’s May and her ‘team’ are after those Advisers who actively and aggressively dig deep to find unintended loopholes and after those Clients . Companies who try to take advantage of them. About time too. I pay as much tax as is legally and morally required and if ALL tax payers did the same then perhaps we would ALL pay a little less or be able to afford a better society for all.
    Also, if the ‘living’ wage is going to be £10 per hour, which, for a 35 hour week, amounts to £18,200 per annum, then the Personal Tax allowance should also be set at £18,200. For too long Government, with ‘tax credits’ has subsidised big businesses who are paying some of their staff less wages than it is humanly possible to live on, whilst Senior Management and Shareholders receive pay/bonuses/dividends that are largely at odds with the contribution made by the ‘human capital’ further down the food chain. (No, I am not left wing, just fair minded)

  9. There is also a clear distinction which many highly educated and experienced advisers have failed to grasp. Something which is clearly undertaken purely for tax avoidance yet strays too close to ‘that line’ or beyond it was and is already a sham and legitimately is fair game for HMRC to challenge under statute. I wish HMRC would challenge more.

    I have no sympathy for those falling foul of busted sham film schemes, for example and arrangements which manipulate the rules beyond legitimate tax avoidance philosophy should be brought to account and indeed backdated too – it is not hindsight legislation but purely catching those who abused the rules at those times.

    All this ‘rubbish’ about ‘internet’ and other ‘recent’ multinationals too – most of what they do is simple abuse of translation pricing and I don’t care how much they have paid clever advisers and lawyers, it just needs courageous national governments to hold them to account.

    I should like to see the rules for benefits and grants tightened too so that investments such as easily accessible ‘insurance bonds’ are included in an applicant’s capital worth calculations – as well as other material and realizable assets.

  10. She actually used the (presumably soon to be legally defined!!) expression “tax dodging”, as opposed to either avoidance or evasion I believe.
    Of course we can all agree that “tax dodging” sounds like it ought to be pursued, who could argue with that – but I guess the difficulty, as many have said, is defining the boundary clearly, leaving no wriggle room, because in a State where the rule of law is supposed to govern, its the law that ought to matter and which should guide outcomes, not the court of public opinion or whatever seems morally right to selected individuals in power at any given time.
    For example, today, a £20k earner could borrow £16k, stick it in a pension and get £17k net out the next day, pay off the loan and get the £1k profit, all other things being equal. Nothing illegally “evasive” about it and it wouldn’t fall foul of any recycling rules either I think and who would begrudge the person a bit of “assistance”. But it might also appear to some to be the type of action that probably wasn’t intended by Parliament – ie they effectively get a £1k free handout from the Government and may never use that money for retirement.
    Perhaps as well as defining evasion, avoidance and dodging, they will also now create a new crime of “intelligent milking”??
    The whole system is a bit dysfunctional, but rather than continuing the current approach ad infinitum, what they actually ought to do is start from the bottom up and design a system that is simple to understand, joined up and fair, isn’t riddled with loopholes and complicated rules that can be bent, doesn’t have cliff edge penal rates of tax and has incentives that are very targeted, simple and clear with the boundaries defined absolutely. Surely this ought not to be beyond the supposedly finest minds in the land….?!?
    Then if anyone acts within the rules, leave them alone.

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