Saturday, 23 June 2012

When you see an elephant ...

... on your doorstep, you know it's there .............

............. this elephant is bigger than Magna Carta, my guess is it will not go away until taxation is completely reformed so that all earnings made in the UK are taxed for the benefit of all those stakeholders in the UK ............. Mr. Cameron.

A small point, society is quite tired of a new aristocracy sitting on the shoulders of hard working people.

The 38-year tax backlog reported in today's (£) Times :
Billions of pounds of potential revenue is tied up in more than 20,000 tax tribunal cases because the Government lacks the resources to deal with them promptly, tax experts have told The Times.

An internal estimate by Revenue and Customs claims that the backlog would take 38 years to clear at the present rate. Interviews with current and former Revenue staff, and lawyers and accountants who advise wealthy taxpayers, have portrayed a department that is struggling to cope with mounting pressure to stop big companies and the rich from avoiding their tax bills. The claims come after it was revealed this week that a host of wealthy people, including footballers, financiers and celebrities, continue to use avoidance schemes to reduce their income tax, despite HMRC increasingly challenging such arrangements.

One of Britain’s most successful businessmen is increasing the pressure today on the Government to produce a tax law that is fair for all. In an interview with The Times, the former chief executive of Tesco Sir Terry Leahy says that if there is unhappiness with the law “then the answer is to change the law”.

He also attacks the status of non-domiciles, who avoid paying full tax in this country by being registered abroad.

“There’s an insulated international group of people,” he says. “I’m slightly puzzled by the UK’s generous treatment of foreign residents. I’m for lower tax but I’d start with British citizens. Why should a non-British person have a better tax treatment from the British authorities than a British person?”

Among the concerns highlighted by the tax experts were:
  • Some wealthy taxpayers whose arrangements have been challenged by HMRC are playing “hardball” in negotiations, in the expectation that the taxman will have to start making deals to clear unresolved cases;
  • HMRC has a disproportionate number of senior staff close to retirement and not enough capable junior employees to replace them;
  • Work by HMRC’s elite specialist investigations unit, which handles the toughest avoidance cases, has deteriorated in recent years, according to some sources;
  • Staff cuts and defections have left HMRC with not enough fully-trained tax inspectors. Overall staff numbers are likely to fall to 55,000 by 2015, down from about 100,000 in 2005;
  • Morale at HMRC is at rock-bottom, with staff frustrated about the lack of resources, pay freezes, cuts to their pensions and a lack of promotion opportunities. The Association of Revenue & Customs, which represents senior staff, claims that this is a “ticking timebomb” that could lead to a wave of defections to the private sector.
Industry and HMRC insiders said that the strain on resources was undermining progress in recent years on cutting evasion. Ian Hyde, a partner at the law firm Pinsent Masons, said: “HMRC is beset by poor morale, high staff turnover, budget cuts, and a lack of quality when it comes to training and knowledge.”

However, a senior source at HMRC blamed the tribunal system, rather than cuts, for undermining the fight against tax dodgers. “We can’t control the tribunal,” the official said. “It’s still finding its way. Two years ago they couldn’t find enough cases. Now apparently they’ve got a backlog.”

The Government committed an additional £917 million in funding during the 2010 spending review to tackle avoidance, evasion and criminal attacks on the tax system. But the Association of Revenue and Customs believes that this is not enough when the department overall is facing a 15 per cent budget cut.

The union has called for the Government to put aside another £260 million to create 250 new senior tax positions to tackle avoidance by large businesses; 400 to ensure compliance by employers; and 200 lawyers and legal support staff to help clear the backlog of legal disputes.

Gareth Hills, a spokesman for the union, said: “ARC members continue to deliver against a backdrop of HMRC resource cuts over many years and insufficient re-investment. We have been consistently arguing that without adequate investment HMRC will be forced to make compromises.”

Last month, the Public Accounts Committee said that said that the loss of 3,300 jobs in the compliance and enforcement functions of HMRC had resulted in £1.1 billion in potential tax revenue not being collected.

A spokesman for HMRC said: “We do believe that we are winning the war against avoidance. The £917 million made available to us as part of our 2010 spending settlement for tackling avoidance, evasion and fraud, is being used against the avoidance “industry’.” 

Observation .............
Britain’s tax system is straining under the weight of thousands of unresolved disputes between companies, rich individuals and Revenue & Customs. 

More than 20,000 cases are piled up in the tribunals and will take at least 38 years to clear at the current rate, resulting in billions of pounds in potential revenue sitting uncollected. The backlog is one of the starkest examples of how the Government’s crackdown on tax avoidance is being threatened by a lack of resources. 
Cynical  .............
One tax expert compares it to the chaotic passport queues at Heathrow. “Sooner or later they’re going to give in and just let people through,” he says.
Solution .............
Simplify the tax system so that no-one needs an accountant to pay taxes ............. and don't let anyone off paying their taxes, even if it does take 38 years.
Unexpected benefit ............. if David Cameron pushed such a system through parliament, he could take his place in history alongside the signatories of the Magna Carta.

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