THE TAXMAN COMETH - NO MORE MR NICE GUY

...TO BE TAKEN TO A PLACE OF EXECUTION
AND HUNG BY THE NECK ...UNTIL DEAD.

The Guardian editorial 29 Nov 12, When bad money drives out good, cites British Virgin Isle (BVI) sham companies, directors, property owners and transactions then repeats the now familiar mantra “…It should be stated clearly that tax avoidance is perfectly legal”.

Before the Guardian is sued by naïve readers from their HMRC or IRS prison cells, who have blithely accepted this oft repeated journalistic nonsense, you should add a legal warning.

A very few tax-haven schemes are, as you imply, for Russian Oligarchs who are not breaking USA / UK laws (they are probably breaking Russian tax laws); BUT most tax-haven companies are owned and controlled by ordinary persons (individual and corporate) tax-resident and tax-domiciled USA/ OECD /UK  and even Greek citizens, in order to evade taxes. The owners twist themselves in knots to pretend they have no control over the assets, to hide their identities, to hide their real addresses (their tax-residency) and to create wildly imaginative transactions that siphon taxable profits, gains, income, salaries, bonuses, dividends, etc. via management charges, loan interest, transfer-pricing etc. And to siphon masses of capital from real, source, commercial activities (in London, Paris, New York etc) to the tax-havens.

TAX AND ECONOMICS ARTICLES 29TH APR 13

These currently commonplace paper-work pretences always were and still are “false-accounting” and where several players are involved become “fraudulent conspiracies”. Trading under a false name can be “fraudulent misrepresentation” (people have a legal right to know who they are dealing with). These offshore arrangements are illegal, criminal acts. If challenged by the tax or money-laundering authorities – the owners are usually heavily penalised financially – but they can also be and sometimes are given prison sentences.

The Guardian and its advisers have, I suspect, fallen into the familiar error “…well everybody does it – so it must be alright”.  Since Reagan & Thatcher, tax schemes have become like speeding offences – everybody does it but only those few who are caught are deemed to have broken the law and are punished.

My professional reading of the tax-planning runes is that 30 years of lax application of the tax-laws is over – tax collectors are chasing the $21 trillion stashed in tax-havens – and the pace of collection and penalties from all OECD countries will rapidly increase. $21 trillion is too much evasion, is too big a prize, for  global Treasuries to ignore.

You are correct in assuming that these re-empowered international collectors will not be tracking down innocent Guardian readers who have bought ISAs or Pension Top-Ups, for licit Tax Minimisation or Avoidance.

Noel Hodson

Founding Partner

McVeigh Hodson Blackstone Franks

Accountants and Tax Experts.   

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