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News briefing, 1 February 2013
Our weekly comments on tax stories by the national press
Avoidance and evasion
The UK's top four accountancy companies have been accused by MPs of "playing an illegitimate game" when it comes to advising companies on their tax affairs, while benefiting from multimillion-pound government contracts.
Telegraph, Independent, Guardian, Financial Times; Times
While Taxation is strongly against artificial tax-planning, the lack of knowledge within the Public Accounts Committee about the tax system, and the cavalier attacks on the integrity of the profession under protection of parliamentary privilege, was outrageous. See next week’s issue for more comment.
Bookmakers and casinos have avoided paying around £1bn in UK tax on bets by routing them through subsidiaries based in overseas tax havens.
Independent
Online gambling was inevitably going to end up based in tax havens, trading with (rather than from) the UK. It seems unlikely that threats to block advertising will be successful.
One of the UK’s biggest charities, the Cup Trust, is a front for tax avoidance that has allowed wealthy donors to dodge paying at total of £46m to HMRC.
Times
As has been said before, the government provides valuable tax reliefs to encourage both pension saving and charitable giving; HMRC will no doubt take strong action against the promoters and users of a charity if it is shown that it was designed to be an avoidance vehicle – and so they should.
Accountancy giant Ernst & Young has joined the business backlash against attacks on corporate tax avoidance by politicians, telling the authorities to change the law if they are unhappy with the ethics.
Telegraph
Although Ernst & Young’s comments may not be in line with public opinion, they make sense: the government can either more rigorously enforce tax law as it stands or change the rules so that big businesses pay their ‘fair share’ (whatever that may be).
Tax officials have drawn up a timetable of the investigations they intend to carry out into evasion over the coming months.
Financial Times
HMRC are so pleased with the results of their ‘affluent unit’ that they are expanding it for the second time in just a few months.
Business
The Labour party has urged the government to impose an extra tax on bankers’ bonuses.
Financial Times
There is already a bank levy, and any hint of a higher personal tax rate is likely to be met with the usual warning that high-paid workers in the financial sector are set to decamp en masse to lower-taxed regimes.
General
One million letters to HMRC were left unanswered last year, while the private company running the department’s 0845 helplines made hundreds of thousands of pounds in profit from taxpayers' calls.
Telegraph & Times
The taxman’s ‘customer’ service failings were highlighted in a recent report from the National Audit Office. The Revenue is negotiating a new telephony contract and expects to switch to cheaper 03 numbers for their helplines. The department’s poor mail-handling goes back decades; it is hoped improvement will be sparked by the joint initiative on Revenue service selivery.
The Treasury committee of MPs say the chancellor, George Osborne, should make the spring Budget the date when tax decisions are made and stop using the autumn statement as a vehicle for a second fiscal package.
Guardian
Hear hear! Taxation agrees wholeheartedly – and has said so before.
Around 2m pensioners on low incomes may be owed an average of around £200 each because they have erroneously paid 20% tax on their savings.
Mail
The government is making moves to simplify the rules regarding the taxation of pensioners, having abolished the age allowance and invited the Office of Tax Simplification to look into reforms – which were published last week. While many elderly taxpayers are unrepresented by an adviser, form R40 is not particularly tricky to complete and assistance can be sought from the charity Tax Help for Older People.
The government will have raised taxes almost 300 times and ordered 120 tax cuts by the end of this Parliament, according to the rightwing Taxpayers' Alliance campaign group.
Telegraph
With the deficit so high, the government has made it clear it is unlikely we will see meaningful tax cuts for some time to come.
Sugary drinks should be taxed, adding up to 20p a litre to their price, a report by Sustain, a food and farming charity, recommends.
Telegraph
This is yet another call to create a new tax as a kneejerk reaction to a problem. What about all the other unhealthy groceries, most of which are already subject to VAT? Why stop at the beverage industry, which would be entitled to claim it was being picked on, unless there was an equivalent additional tax on, say, crisps or bubblegum.
Inheritance tax
Thousands of holiday home owners who rent out their properties face giving to pay inheritance tax, after a test case ruling.
Telegraph
In essence, the Upper Tribunal decided – in the case of Pawson – that business property relief was not available on an inherited holiday home business, ruling that the property was held as an investment. A fighting fund is being launched to appeal the decision.
Income tax
Plans to give parents tax breaks for childcare could be unfair on stay-at-home mothers and may now be reconsidered, according to the Lords' Treasury spokesperson, Richard Newby.
Telegraph
It is fair to assume that some form of relief or allowance for childcare will replace childcare vouchers in the near future. Depending on its generosity, the attractions of on-site nurseries may become more prominent in employers’ minds.
The prime minister is under mounting pressure to introduce tax breaks for married couples, as a way of placating Conservative MPs who oppose gay marriage. But the deputy prime minister has said such relief would be unfair on those who choose not to wed.
Times & Times
If the reintroduction of an allowance abolished 13 years ago is offered as quid pro quo to quell opposition to gay marriage, many taxpayers will hope further reliefs will be linked to problematic votes in parliament.
International
The eurozone's biggest economies would raise between €30bn and €35bn from their planned tax on financial transactions, according to the European Commission.
Financial Times
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