Brexit......what are the likely implications on UK and European boating?

[Deleted User YDKXO]

They pay a royalty fee to HO, on a recent programme it was thought to be around 8%. The same programme, Fair Tax Town, did an experiment setting up Crickhowell the same way the large corporations operate. When they visited Holland they discovered that €8 trillion was funnelled through there.

Yes but what the program failed to mention was that when the residents of Crickhowell bring their offshore profits back into the UK from the IoM, they will pay tax to HMRC on them in the normal way. I'm no expert but as far as I can see such an arrangement only makes sense if the shareholders of those Crickhowell companies were not resident for UK tax purposes. Unless somebody can explain otherwise, it just looked to me like an expensive money merry go round with no benefit to the business owners of Crickhowell other than the BBC paying for a few jaunts abroad

 

[Markergi]

It's not bar room talk exactly, but I confess I did simplify what I heard and don't know all of the details, I'm sure it wouldn't have been 'the' company that purchased the companies for example, those sorts of things are normally done at arms length. It's also not a scheme I've heard of being recommended recently but have heard about old schemes being investigated in more recent times. It was just an example of a company paying money for a scheme they believed to be lawful but have since found out it wasn't. The main point I was trying to make is that just because one of the big four recommends something doesn't mean it's absolutely lawful, they give their best advice and for the most part it will be great advice (you know this!), but Deleted User was arguing that because good advice had been paid for, it must therefore be lawful and as far as I'm aware, that's not always the case.

I should add, I'm no lawyer or tax expert as you've no doubt worked out, but I do believe what I'm saying to be true.

 

[MapisM]

I'm intrigued.

+1, because I never heard of such multiple companies scheme before, and I perfectly understand your objections.

Then again, converting in a kosher capital gain what should be to all intents and purposes a taxable dividend is a cat that can be skinned in more ways than one.
Are you suggesting that the specific SCHEME Markergi mentioned doesn't work, or that there isn't any scheme on earth that can achieve the same RESULT, i.e. "everyone's quids in except HMRC"?
Because the former is after all just a matter of technicalities, whilst the latter changes the wealth distribution of a whole Country.

 

[MapisM]

Deleted User was arguing that because good advice had been paid for, it must therefore be lawful and as far as I'm aware, that's not always the case.

I must second that.
If Deleted User would have argued that because good advice had been paid for, it must therefore be very hard to prove unlawful, I would have agreed with him.

 

[Deleted User YDKXO]

If Deleted User would have argued that because good advice had been paid for, it must therefore be very hard to prove unlawful, I would have agreed with him.

Very elegantly put!

The scheme that markergi refers to takes advantage of a UK tax break called Entrepreneurs Relief which, depending on the length of time the shares are held, allows the gain from disposing of those shares to be taxed at rates as low as 10%. This tax break is specifically set up to encourage entrepreneurs to start and grow companies but HMRC are very strict about the conditions under which this tax break can apply. AFAIK one of the conditions is that the company is substantially a trading company and I have no doubt that HMRC would view the companies described by markergi as non trading companies and disallow his scheme immediately. If you think about it, if markergi's scheme was workable then a hell of a lot of people would take advantage of it and they just don't

 

[jfm]

Mike, that's because markergis scheme totally and utterly doesn't work. As far as I know, noone is even trying it and claiming that it works. It couldn't possibly work for many reasons including the one you cite. It is a total fantasy posting, which is generally the problem with threads on this. People dont want the truth getting in the way of a rant about rich people or google avoiding taxes wholesale, which in truth just isn't the case. folks prefer what the daily mail tells them. Ho hum!

 

[jfm]

+1, because I never heard of such multiple companies scheme before, and I perfectly understand your objections.

Then again, converting in a kosher capital gain what should be to all intents and purposes a taxable dividend is a cat that can be skinned in more ways than one.
Are you suggesting that the specific SCHEME Markergi mentioned doesn't work, or that there isn't any scheme on earth that can achieve the same RESULT, i.e. "everyone's quids in except HMRC"?
Because the former is after all just a matter of technicalities, whilst the latter changes the wealth distribution of a whole Country.

Well I was saying that markerergi's specific scene didn't work, but I wasn't needing to be precise. His scene and anything broadly along the same lines doesn't work

To answer your expanded Q, no there is also no other scheme in uk that delivers the same economic result. The Daily Mail will tell you there is but there isn't. Indeed the are several reasons why markerdj's scheme doesn't work, and hmrc needs only one. I suspect hmrc might even like the scheme, because of the £££ penalty revenue they collect.

In uk it is always possible to not take a dividend when you could, and sell a company full of cash, to get cgt not dividend tax. There are limits on that but broadly it is possible and it is accepted practice by hmrc. Not everyone can do it- you have to be selling a company in the first place, and you need a buyer who doesn't care about HIS dividend tax. So people do not regard that as avoidance. That said, in recent years software contractors (and ir35 types) have been using personal companies then liquidating them annually, to get this tax benefit on their day job earnings. That behaviour is bad and has now been outlawed. The £££ involved is tiny because these are low £££ earners. Frankly you see plenty more such tax avoidance among the small guys than the big banker guys. Daily mail finds that this doesn't sell papers though!

Sorry for long/boring answer

 

[Deleted User YDKXO]

People dont want the truth getting in the way of a rant about rich people or google avoiding taxes wholesale, which in truth just isn't the case. folks prefer what the daily mail tells them. Ho hum!

Thats the point I was trying to make. The idea that there's a bunch of rich individuals and greedy corporations out there who are beyond the reach of HMRC and who, if they paid their 'fair share' of taxes would yield billions for the Treasury is just laughable. Even more hilarious is the idea that these people could be brought to heel if the UK left the EU. Having said that, none of us want to pay more tax than is due under the law and all of us have a right to order our affairs in such a way that the amount we pay under the law is minimised which, of course, is where tax planning comes in

 

[MapisM]

Sorry for long/boring answer

U must be joking, J.
I've yet to find a post of yours which I'd call boring, regardless of its length, and of whether we agree or not. :encouragement:

In fact, credit where it's due - your following sentence is a true masterpiece:

there is also no other scheme in uk that delivers the same economic result.

Bold & underlined part is mine of course, just in case someone missed your subtlety...

 

[MapisM]

The idea that there's a bunch of rich individuals and greedy corporations out there who are beyond the reach of HMRC and who, if they paid their 'fair share' of taxes would yield billions for the Treasury is just laughable.
Even more hilarious is the idea that these people could be brought to heel if the UK left the EU.

Sorry M, but while I fully agree with the latter part of your above sentences, the idea in the former is very far from being laughable.

I'm sure you will agree that Google and UBS are bright enough examples of "greedy corporations", as you called them - both having been penally prosecuted for fiscal fraud.
And I could also mention others, including several HNWIs.

In fact, just in case it wasn't clear, when I replied to henryf that the "legendary ability to avoid tax" of Italians (or Greeks, etc.) is just legendary, while in reality we are just amateurs, I was pretty damn serious.

 

[Markergi]

Apologies if I've misled but the scheme I summed up in a paragraph is no doubt missing a lot of detail, much of which I confess I don't know. But I didn't say this was something happening now, what I said was (at least meant to say) is it was an example of a scheme which a company had paid for and later had to pay up because the scheme didn't work. It is hearsay to a degree but it was information I received from someone who I've got to know over a number of years and is highly regarded amongst most of the businesses I work with, I can't say more than that, other than he regularly consults with some reasonably large companies and is not known to fantasise about these things. Remember, this came about when debating whether a reputable company might offer advice that could turn out to be unlawful, I maintain it does occasionally happen.

I'd be interested in your view of the UBS and Deutsche Bank scheme, I assume they didn't go into this without checking the legals, the quote is from the Guardian not the Daily Mail.

“In our society, a great deal of intellectual effort is devoted to tax avoidance,” said Lord Reed, delivering the ruling. They are “sophisticated attempts of the Houdini taxpayer to escape from the manacles of tax”.

The UBS and Deutsche Bank schemes, he added, were designed to “to avoid the payment of income tax on bankers’ bonuses”. The firms tried to exploit tax exemptions on restricted securities by awarding staff bonuses comprised of shares in offshore companies set up especially for rewarding employees.

 

[Deleted User YDKXO]

I'm sure you will agree that Google and UBS are bright enough examples of "greedy corporations", as you called them - both having been penally prosecuted for fiscal fraud.

Not sure what a Swiss bank has got to do with a Brexit but when have UBS and Google been prosecuted in the UK for 'fiscal fraud'?

 

[julians]

I think markersgi is referring to this.
http://www.theguardian.com/business/2016/mar/09/ubs-deutsche-bank-lose-bonus-tax-challenge

 

[jfm]

@mapism, my post wasn't wordsmithed. I stand by what I said even with the words "in the uk" deleted from the sentence (though I'm commenting on avoiding uk tax; it might be possible to avoid Rwandan tax using this scheme)

@marker, look, whatever the story about who you heard it from, the scheme does not work and never has. If someone attempted it they were stupid and perhaps bought tax advice from someone equally stupid. Stupidity happens

Ref UBS and DB: as ever the newspapers don't tell the whole story because the public prefer to buy juicier stories, they think. Guardian is desperate: circulation down to 600k. Anyway that was a one year only tax scheme, 2004. Back in 2003, uk govt published 150 pages of new tax legislation completely by surprise and against the spirit of sharing drafts in advance. Folks were pretty annoyed with them. Because they stupidly chose not to consult with experts, it contained loopholes, which got fixed a year later (whole pages had to be rewritten; it wasn't just a comma here and there).There was bad blood and some banks implemented schemes for that single year before the loopholes got fixed. I have sympathy for banks and others, in view of government's behaviour. Ultimately the courts found in favour of hmrc not the banks, because of course the mood has changed. That's it. It's a one off 2004 event. Stupid guardian chose to write it in a juicer way; the truth doesn't sell papers.

I'm struggling to see what this has to do with brexit. Belongs on an ancient history forum .

Bon weekend!

 

[Markergi]

Thanks for the response, I respect your opinion. I am happy to accept the theory that someone sold poor advice and someone was foolish enough to pay for that advice and it rightly cost them, I'm confident it did happen.

With regards to the Guardian article, yep agreed, they take an angle to try and shift newspapers, but they also provide a service informing the public of valid issues they need to know about in a democracy. I'm guessing the scathing quote by Lord Reed is accurate and considered, and wasn't made to grab headlines or sell newspapers.

I know I've pulled the thread further off topic and it has next to nothing to do with Brexit, as I keep saying (but this will be the last time I promise), I was responding to what I thought, was a good post of Henry's about the independent coffee shop being seemingly shafted by the likes of Starbucks and then others justifying it by saying it's legal and therefore morally correct, as to not take advantage of the loopholes available would be a disservice to its shareholders which is far worse. I assume they were inferring the shareholders were perhaps elderly pensioners needing a small divvy to put the fire on!

You're right of course, the Deutsche Bank scheme ran more than 10 years ago, but it's only in 2016 (and therefore not suitable for an ancient history forum), it looks as though they'll finally have to cough up what's due to the treasury, who's to say there aren't schemes designed in 2005 onwards that will finally be exposed next year and so on? In the meantime, they've had 12 years to invest that illegal saving on employment costs, to grow their business, pay their bonuses and dividends and slap each other on the back for a job well done, whilst the treasury have had to find the missing money from the honest tax payers (companies and individuals) to plug the gap. In these times of austerity, I think it's a growing concern amongst many in this country, that there has been a tendency by all governments to bury their heads in the sand rather than confront these large corporations especially if they benefit in same way or perhaps even receive donations by those same corporations. People are increasingly unhappy that there appears to be laws for SMEs and individuals dictating the tax they must pay, but for large, extremely wealthy corporations, those same laws don’t quite seem to apply, instead, having access to some of the best brains in the UK, they appear to be able to dictate the amount of tax they're prepared to pay to keep the common folk at bay, using/purchasing their services/products that generate those non-taxable profits.

Yes, have a good weekend, more settled weather means it's time to get the boat out and stop taking life so seriously!

 

[henryf]

JFM.

Back to my post #24....

No one knows but I'm pretty sure the general gist of current trade will continue either way. They need us, we need them so regardless of petty name calling and a feeling we've abandoned the ship things will continue.

As an average Jo I've got 2 concerns:

One is that if we pull out of Europe our banking and financial industry might suffer, but then again it might prosper as we are able to operate without European shackles.

The other is that I'm fed up seeing big organisations doing business within the UK and using loopholes to avoid paying tax in the same way I do. Those big organisations swallow up minnows like me meaning our loss is also the government's loss. I'm not convinced that new jobs are being created, merely small companies amalgamated or replaced by the big boys.

Is Europe at all responsible for these loopholes? Would it be easier to sort out the mess if we were out of Europe?

Do you see any significant benefits either way.

I hope I'm not asking too much for you to ignore you own feelings or personal gains in answering.

Thanks.

Henry

 

[jfm]

@markerdj,
Your post reads just like a daily mail or guardian article!

DB did nothing illegal, however. Every company and citizen is entitled to argue legislation in front of the courts, and please can I remind you that the government played unfair on this particular occasion. DB will likely have deposited the tax on account years ago, and if not they'll pay interest, so the country hasn't lost out.

Makes a good newspaper fodder though to say that the hard workiing Joe or Joanne Average who pays 9 grand a year in tax lost out.

 

[Markergi]

@markerdj,
Your post reads just like a daily mail or guardian article!

Yep, I thought the same thing when I read it back, we could add a few more newspaper names to the list even names like Reuters, their reports on the issue are not significantly different ?

 

[MapisM]

Not sure what a Swiss bank has got to do with a Brexit but when have UBS and Google been prosecuted in the UK for 'fiscal fraud'?

Yup, neither UBS nor Google have anything to see with Brexit - in fact, also in your comment that I quoted, the only Brexit-related part is the second one, and I already agreed with that.

Anyhow, those were just two examples that popped to my mind, of which the first happened to be in the US and the latter down here in IT. Btw, they are right now discussing a settlement, but fiscal fraud it was for good, with penal charges for some legal representative of the company. And in a sense, there's no better proof of that than the willingness to agree on a settlement and avoid litigation...!
I can't think of similar examples for the UK at the moment, but that simply means that my knowledge is limited, which is more than likely...
...either that, or HMRC just missed them so far, which might also be the case.
Of course, a third alternative, i.e. that all corporations are 100% kosher when based in the UK, is also an option.
Surely not the option I would put my money on, but each to their own on that...

 

[MapisM]

@mapism, my post wasn't wordsmithed. I stand by what I said even with the words "in the uk" deleted from the sentence (though I'm commenting on avoiding uk tax; it might be possible to avoid Rwandan tax using this scheme)

Well if it wasn't, that would be a notable exception to your usual posts...
And I'm strictly thinking to "wordsmithed" in its positive sense of course, though I understand that's not what you meant here.

Anyway, I was simply noticing the following:

1) I asked whether you suggested that...
there isn't any scheme on earth that can achieve the same RESULT, i.e. "everyone's quids in except HMRC"

2) And you replied...
no there is also no other scheme in uk that delivers the same economic result

Now - as I understand - you are saying that your above statement still stands also without the "in UK" restriction.
But frankly, I don't buy the idea that someone who wants to avoid UK taxation can't arrange schemes/structures anywhere else, eventually achieving that result in the UK...
And "anywhere else" includes, but obviously is not limited to, Rwanda.
In fact, the best consultants out there know exactly what each and every place has to offer, with all their pros and cons.
And as I hinted before, there's no need to pay top fees for 100% lawful suggestions.
On these matters, it's rather a bulletproof scheme that folks are interested in and willing to pay for, regardless of how lawful it is.
Which stands to reason, because a 100% lawful opinion is something I can give for free right on these pages: pay whatever is due!