POOR LAW - TAX LAW - FALSE ACCOUNTING

MY PROMISE: "OPEN A TAX-HAVEN
COMPANY AND NEVER AGAIN PAY UK TAX.
IT IS FAR TOO COMPLEX FOR US TO FOLLOW
SO YOU CAN TRADE HERE AND SIPHON OFF
ALL THE CAPITAL TAX-FREE.
 ...BUT IT IS OF COURSE ENTIRELY LEGAL"
David Cameron PM, Great Britain

Another Letter to the Guardian - about the tax-wars.

Post Script - LAGARDE LIST - 4 DEC 2012. Popular Greek newspapers To Vima and Proto Thema allege that a $550M Swiss bank account on the 2,059 "Lagarde List" is controlled by Margaret Papandreou, 89 year old American mother of Greek Prime Minister (2009-11)  Andreas Panpandreou; who, ironically, is dedicated to eliminating Greek corruption. The family deny any connection and say it is a political smear campaign - by the corrupt elements in Greece. LAGARDE-LIST 2,059 GREEK TAX SAVERS . Regardless of which rich Greek siphoned off the half-billion dollars, as the tiny nation is squeezed to death, the plebians, the democrats are getting into a rage. Time for transparent justice before Athens lights the fuse of global revolution.

 TAX AND ECONOMY - ARCHIVE - JAN13

Letter - 3rd DEC 2012 - Jackie Ashley’s powerful article “Firms must pay their fair share of tax – this is war” Guardian 3 Dec 2012, gets the law nearly right, but still parrots the message created by the PR industry for crooked tax-planners, who baffle the entire government by using “…complex accounting rules to avoid paying corporation tax”. This is repeated endlessly by brainwashed or perhaps compromised BBC presenters who confidently state “tax avoidance …which is of course perfectly legal.”  These same presenters also believe in fairies and Father Christmas.

The false accounting used is neither legal nor complex - e.g.

If your local popular family owned pub, Smugglers Rest, Basingstoke, has annual sales of £2M and a net profit of 7.5%, £150,000, the owners pay rates up to 50% in a mix of either payroll or corporation taxes (the family cannot draw the money without incurring personal taxes).

If instead, to “avoid” taxes, they buy for £100 Smugglers Jersey Ltd, and they do a deal with HMRC chief Dave (Monte Carlo) Hartnett, approved by one or more HMRC Board members with businesses based in tax-haven Guernsey; and they allege that Jersey (1) Owns the Basingstoke name and intellectual property for which it charges fat Royalties, (2) Buys all the alcohol into Jersey and sells it on to Basingstoke at high prices (3) Is managed by nominee (false) directors living in Jersey (4) Is NOT controlled by the family – in tax-law terms “it is at arms length” from Basingstoke; and if Jersey sends invoices to Basingstoke for £150,000, wiping out the taxable profits – HMRC would, today, now, at the present-time, legally disallow the Jersey invoices and still tax the £150,000 profits; or if they have been drawn, will tax the drawings as UK salaries via UK payroll taxes.  

This is the law, as it operates today and has done since about 1910 in all OECD countries. At best Basingstoke will have to pay its full tax, at worst all the UK citizens involved, including the lawyers, auditors, accountants, publicans and bookkeepers will be found guilty of false-accounting and possibly fraudulent conspiracy – and go to jail - and pay the back taxes.

“You know this makes sense”; as does that judgmental legal fictional character, “The ordinary man on the Clapham Omnibus.”  The lawyer's lesson in this story of a family owned pub is that business managers are not allowed to simply make-up invoices or costs, send them to themselves - and claim tax relief; no matter how small or large the business is. Tax Deductible Invoices have to be (1) On normal commercial terms (2) At arms length - Not between connected parties (3) Necessary for the business (4) Not contrived to reduce tax. If these conditions are not met, the tax-authorities can and do deny tax relief - and issue a tax demand on the whole profit.

Multiply the Smugglers Rest by 600 branches (£150K x 600 = £90 million profits) – and you have Starbucks or Google or Amazon or any large group selling stuff to our citizens in the UK – and siphoning out all the money. The fiddles that stretch the imaginations of corporate Directors, Lawyers and Auditors who embark on ENRON ACCOUNTING are neither complex nor legal. Apart from not collecting tax, the greater damage to the national economy is that in paying the false invoices, the capital value is gouged out of the local economy - perhaps to never return - denying jobs.

HMRC has the right, in law, and the powers, in law, to disallow all such fabricated deductions, including excessive interest on inter-company loans, for as far back as they want, say 25 years, – and to levy the correct taxes, plus interest, plus penalties. Legally, tax payers are “guilty until proven innocent”. They must prove they did not have the benefit, profit, income, dividend, bonus, etc. If the ordinary, normal, usual back-duty-tax rules were to be applied by HMRC for the past 30 years, as are applied to small businesses, the UK would quickly collect up to one trillion dollars ($1 trillion) – and pay-off all our deficits. Give me the job, 2.5% commission and 500 bright, merciless intelligence officers, and we will legally claw-back the tax-haven funds and fill the Exchequer. No new laws are needed.

While the back taxes are being ruthlessly, rapidly collected to re-build our drained, sad, sick economy, meandering ministers and enfeebled economists can take their time to academically ponder how the tax system for top players became so thoroughly distorted and infiltrated with bent practices and people who are so economical with the truth.

Noel Hodson

Founding Partner

McVeigh Hodson Blackstone Franks

Accountants and Tax Experts

Follow our blog on tax-havens

GLOBAL ECONOMY - BLOG ARCHIVE

 http://noelhodson.blogspot.co.uk/

PS - Dear Jackie Ashley,

It is not through lack of intelligence or international reach that HMRC (once HMIT) fails to challenge the Multi-nationals and posh people’s tax-haven family trusts. It is a political decision to not pursue the rich to pay their proper taxes. HMIT have or had some of the best UK brains. Remember though “We are all in it together”.

http://www.bbc.co.uk/pressoffice/pressreleases/stories/2003/09_september/09/unichallenge_pros_final.shtml

The Inland Revenue is the first ever team to win University Challenge – The Professionals (Monday 8 September 2003, BBC TWO, 8.30pm).