Friday, July 30, 2010

MPs get special treatment for home to work commuting

They're at it again. Sadly it takes tax geeks to spot it and I'm indebted to Mike Truman, editor of Taxation, for spotting this little fiddle.

Regular readers will recall that my comments on the tax questions arising from the MPs' expenses scandal last year. It is VERY disappointing to learn that even under the new regime someone has seen fit to secure discriminatory and special treatment for MPs.

The explanatory notes to clause 7 of Schedule 4 of the most recent Finance Bill explained that:
"amendments to ITEPA will provide a statutory exemption for certain travel expenses paid or reimbursed to MPs by IPSA as expenses necessarily incurred in the performance of MPs’ Parliamentary functions."
That seemed reasonable to me. It created new s293A ITEPA 2003 which also looks reasonable in itself. (I especially liked the explicit exclusion in the legislation of alcoholic drinks from a tax free allowance for evening meals eaten in, what passes for an office canteen at the Palace of Westminster, if the House sits after 7.30pm).

Mike however dug a little further. s293A grants tax relief for expenses paid in accordance with s5 of the Parliamentary Standards Act 2009. This in turn refers to the MPs' allowances scheme prepared by IPSA. And Mike identified that, read carefully (see bold extracts below), this gives MPs a tax-free allowance for the costs of travel upto 20 miles to and from their home, if they live outside the constituency.
7.2 MPs may claim Travel and Subsistence Expenses for journeys which are necessary for the performance of their parliamentary functions, and fall into one of the following categories:
(a) For MPs who are eligible for Accommodation Expenses, journeys between any point in the constituency (or a home or office within 20 miles of their constituency) and Westminster or a London Area home;
(b) ......
No other employee would get such an allowance - and if they did it would be taxable as it's evidently for 'home to work' travel.

A cursory glance at the rest of the guidance provided by IPSA suggests that the new scheme is MUCH tighter than before. The expense reimbursement terms I looked at seem much more in line with the over arching principles of the scheme and similar to those that would apply in the commercial sector. So why is there any element of special treatment? It can hardly be a mistake. It must be deliberate.

It's a disgrace. Again.

Who sought the allowance? Who agreed it? Does anyone in HMRC know about it? Did they accept that special treatment for MPs was appropriate? I think we should be told. Don't you?

Afterthought: A more generous view of all this would be that the special relief for MPs is a hint as to a new relief that will shortly become available for all employees for home to work travel. Especially those who do some of their work at home.

Double standards at HMRC re IR35?

I had resisted commenting on the story in last week’s Sunday Times about HMRC’s IT Chief leaving his job and being “re-employed” as a contractor through his own limited company.

During the week I have seen it suggested in various online commentaries that HMRC are responsible for double standards here - because of what we know as IR35.

I think it's important to distinguish two issues:

Firstly, we now have proof that HMRC is the same as all other employers in wanting the flexibility to engage with contractors rather than only employees. The CIO in question resigned but was required to cover the vacant role after he left until a replacement could be found. Like other employers HMRC wanted to arrange this without risking the possibility of becoming liable to account for PAYE. The ex CIO had moved into consultancy but, given he was covering his old role an Inspector might decide his employer (HMRC) should treat him as an employee. How do employers avoid this? They insist that the contractor supplies their services through the medium of a personal service company. Employers cannot be obliged to apply PAYE or to pay employers' NICs in such cases.

The IR35 rules do NOT apply to the 'employer' (HMRC in this case). IR35 is focused on the contractor's personal service company. The rules are intended to prevent the contractor from taking dividends from his company and thus avoiding the tax and NICs that would be payable on his 'salary'.

So I would agree there is some irony in this story. And HMRC (like so many other Government departments) are avoiding liability for employers' NICs on payments to this contractor - who used to be their employee. BUT IR35 is not relevant as such.

Then again, maybe the contractor is working on terms that mean IR35 is applicable to the sums billed to HMRC by his personal service company. Will HMRC be checking and arguing the point. Did anyone in HMRC think to tell the contractor he will need to tick the relevant box on his tax return? Is anyone in that part of HMRC who engaged his services even aware of IR35?

What do you think?

Friday, July 23, 2010

What a difference. Should mean less mistakes in new tax law.

I rather anticipated that the Budget day promise of a new approach to tax policy making was the start of a revolution.

Well, the proof of the pudding is here and we now have draft legislation and an informal consultation on 32 separate technical tax measures which the coalition Government inherited from the previous government. The tax measures are to be legislated for in Finance (No2) Bill 2010 which is expected to be introduced to Parliament in the autumn.

The Government is inviting comments by 3 September on whether the draft legislation now published will work as intended. They are not seeking comments on the policy behind the measures.

In effect what is being sought is free consultancy and input from the professional bodies, retired tax geeks and any other informed commentators who might otherwise complain about poorly drafted new tax law. And we've had plenty of that in recent years - largely I suspect because of the speed with which the then Government wanted to introduce changes. "Fast even if wrong" seemed to be the mantra. Now we have a more collegiate approach intended to get it right first time. It should make life easier for everyone and reduce the frustrations and time wasted when poorly drafted law comes into effect.

The draft legislation now published includes the following measures:
  1. Capital gains tax private residence relief adult placement carers
  2. Collection of income tax where sum deducted by payer
  3. Company distributions
  4. Consortium claims for group relief
  5. Enterprise management incentives
  6. Film tax credit - unused losses
  7. Financing costs and income of group companies
  8. First-year allowances for zero-emission goods vehicles
  9. Landfill tax criteria for determining material to be subject to lower rate
  10. Long cigarettes
  11. Non-business use of business assets etc.
  12. Payments to special guardians and those in receipt of residence orders
  13. Penalties for failure to make returns etc.
  14. Penalty for failure to make payments on time
  15. R&D relief for SMEs - removal of intellectual property condition
  16. Real estate investment trusts - stock dividends
  17. Recovery of overpaid tax stamp duty land tax and petroleum revenue tax
  18. Settlor to return excess repayment to trustees etc.
  19. Venture capital schemes

Definition of SME: Bet you didn't know what it means

Maybe it's just me. I get a little frustrated by constant references to SMEs as if this were somehow shorthand for small businesses. Indeed, SME is commonly used to reference the smallest of businesses. (And don't get me started on those people who say they specialise in helping SMEs).

Few people, other than some accountants, seem to be aware that 99.9%* of ALL UK businesses fit the official definition of a Small or Medium sized Entity (SME). This is clear from the statistics for SMEs published by the Department for Business Innovation and Skills* (previously the DTI and BERR). These reference a total of almost 4.8 million UK businesses.

The EU definitions for distinguishing businesses of different sizes, and which are used for many official purposes in the UK are effectively:

= upto 50 employees and upto £6.5m turnover.
Medium sized = upto 250 employees and upto £25.9m turnover.

I'm sure very few people realise that businesses with multi-million pound turnovers fall within the official definition of SMEs.

The term 'micro' business also derives from EU definitions but is less common in UK official statistics etc. The EU definition of micro entities covers those with fewer than ten employees and both turnover and balance sheet totals of less than 2m euros.

I suspect that when most people reference SMEs they are really thinking about micro businesses. Some people may also assume that the smaller 'small' companies are also included.

The previous Government often made reference to tax reliefs and exemptions intended to help SMEs. Perhaps the coalition Government will do the same thing. When the smallest (micro) businesses really can benefit that's fine. In the past however frequently the real beneficiaries were only the 27,000 'medium' sized companies rather than the 4.6 million micro entities. These figures come from the most recently published statistics* which also suggest that there are only around 170,000 'small' (rather than micro) and 6,000 'big' companies in the UK.

Perhaps we need a new term, phrase or abbreviation that better describes such businesses. My contribution would be to talk about MiBiz - and we could then refer to the MiBiz community.

* The latest stats from the BIS relate to 2008 and were published on 14 October 2009. They can be accessed through this link.

Tuesday, July 20, 2010

Caprice asks the taxman to enquire into her tax affairs

My attention has been drawn to the Weekend FT - money section - which contains an interview with Caprice. Frankly she might just as well have written an open letter to the taxman asking them to open an enquiry into her tax affairs.

Caprice Bourret, 38, is a well known 'super-model', actress and businesswoman. She claims to have a full-time accountant in her office who is very pedantic and a great help. However - either the accountant is also very naive or they were unaware of the interview in which Caprice proudly announced:
"I have been interested in property since my mid-20s, when I invested in government repossessions both here and in the US. After careful research, I would select a place, hold on to it for two years – so I did not have to pay capital gains tax – then I would fix it up and flip it. I made a lot of money doing this, sometimes doubling my original outlay."
Is this just what MPs were caught doing last year as part of the expenses scandal? Er no. Caprice claims to have been buying repossessed properties, doing them up and electing for them to be her main residence for CGT purposes. Almost by definition she has not been living in any of them. As an image conscious 'super-model' it's hardly likely is it? And yet residence of some sort is required to qualify for main RESIDENCE relief.

Residence is not defined in the legislation , but the, not unreasonable, HMRC view is that the person must live there for at least some of the time. So if Caprice never actually slept at these places nor ever treated them as any sort of home, then none qualified for the main residence exemption and the elections she made were inappropriate. You don't have to live in an elected property full time, but you must live in it for some of the time - as did each of the MPs who were flipping their properties before selling them for a profit.

HMRC's help sheet 283 makes a similar point:
Your period of ownership begins on the date you first acquired the dwellinghouse, or on 31 March 1982 if that is later. It ends when you dispose of it. The final 36 months of your period of ownership always qualify for relief, regardless of how you use the property in that time, as long as the dwelling-house has been your only or main residence at some point.
There is another related point here that is often overlooked too. Buying properties with the intention of selling them at a profit (and then doing so without ever making them your home) makes the profits subject to income tax - not capital gains tax.

I would be surprised if HMRC ignored such a high-profile interview. It is quite likely to be included as evidence that feeds into the risk assessment which determines whether an investigation should be opened. This has long been part of their strategy for identifying high profile targets for investigations.

About the only thing that could save Caprice is the falling HMRC staff numbers that may mean there are insufficient resources available to pursue such a public confession.

Monday, July 19, 2010

Would a GAAR mean less work for accountants?

A General Anti-Avoidance Rule (GAAR) is identified as a possible way forward in the June Budget document: 'Tax Policy Making - A New Approach' - which I have referenced previously on the TaxBuzz blog. I also suggested here last October that "we are likely to see a draft General Anti-Avoidance Rule (GAAR) emerging in the not too distant future".

The Government say that they will be consulting with 'interested parties' over the summer to consider the case for developing a GAAR. The last time this was proposed (in 1999) HMRC and the profession concluded that it would be unworkable. Much has changed in the interim, In particular we now have a number of Targetted Anti-Avoidance Rules (TAARs). Adapting the wording used in TAARs could lead to a GAAR and would potentially lead to the removal of TAARs.

I was intrigued by the views of a Tax Director with whom I was discussing this issue recently. He is responsible for the tax affairs of a large property company that now operates as a Real Estate Investment Trust (REIT). This means the business is 'transparent' for tax purposes. It pays no corporation tax or capital gains tax. Instead the investors pay tax on their share of profits and gains.

The Tax Director pointed out that REITs are, effectively, subject to a GAAR which applies if HMRC considers that the REIT has taken any action in an effort to obtain a tax advantage as a REIT, either for itself, or another person. In such cases HMRC may, by notice to the company, counteract the advantage and assess the company to an additional amount of corporation tax, and impose a tax penalty.

The Tax Director with whom I was speaking suggested that the existence of this GAAR for REITs provides them with GREATER certainty as it leads to them having closer dialogue with HMRC. Such dialogue occurs directly between the Tax Director and the REIT's CRM in HMRC. The auditors rarely get a look in. The Tax Director was quite clear that a GAAR is not to be feared. In his view it simplifies things AS LONG AS HMRC IS ADEQUATELY RESOURCED to discuss those issues that require 'debates around the edges'.

The Tax Director suggested that maybe one reason the profession is anti-GAARs is that they fear it will lead to less advisory work. Personally I doubt this outcome - other than perhaps as regards the largest of companies. What do you think?

Friday, July 16, 2010

Pensions liberation scheme decimates modest pension pot

It's not just the super rich who get tempted into dubious tax avoidance schemes.

The first tier tribunal recently decided a case that involved, what was described as, a ‘pensions liberation scheme’. The taxpayer concerned had a very modest pension pot of just £55,000 in two approved pension schemes.

In 2001, after he was cold called by promoters of the tax avoidance ploy, his accrued pension benefits of around £55,000 were transferred into the Holme Limited Pension Plan (HLPP). This was administered by a company named Holme Limited, which had been set up by a third party.

The promise here was that the taxpayer could get his hands on 80% of his £55,000 accrued pension benefits. The financial cost of doing so was a 20% commission (about £11,000) to the promoter. The taxpayer was also obliged to obtain employment with Holme Limited.

Once his pension funds were transferred the intention was that HLPP would buy an annuity which he could use as security for an interest-free loan. HMRC argued that the annuity would never be paid to the employee and the loan would never be called in.

The taxpayer argued that the employment was genuine and that he had not participated in the pension arrangements. The Tribunal considered him to be an unreliable witness and the employment contract to be a sham.

The Tribunal found that, as there was no employment contract, there was an unauthorised transfer of funds out of the authorised pension schemes. This resulted in the taxpayer being liable for tax of over £18,000 on the funds concerned together with a 30% penalty for negligently filing an incorrect tax return.

According to my maths this means that overall, having started with accrued pension benefits of £55,000 , the taxpayer was left with only £20,000 and lost the potential of any future tax free growth in his pension fund.

The promoter meanwhile secured around £18,000 and had probably shared none of the worry leading upto the Tribunal hearing. And I'll bet he assured the poor taxpayer that the scheme was all above board, fully disclosed and had been very successful for many other clients. Don't they always?

Wednesday, July 14, 2010

IR35 to be abolished - Beware son of IR35

The small business minister Mark Prisk is quoted as saying:
"We want to make sure that we could undertake a comprehensive review of small business taxation in a way that makes the need for the current IR35 legislation redundant,"
This follows on from the statement in the June Budget Red Book that the Coalition Government:
"remains committed to a review of IR35 and small business tax," and plans to "release further details shortly."
As I repeatedly tell accountants: Be careful what you wish for. Of course IR35 needs to go. BUT it will be replaced by "son of IR35" as part of the wider review of small business taxation. Related discussions have been ongoing for 2+ years as between ministers, shadow ministers (as were), Treasury, HMRC and the professional bodies.

The change of Government makes it easier to junk the rules that emanated from IR35. Many of those who comment on this subject however look at it only from one perspective. That of the genuine freelance contractor. The review however will inevitably also want to influence the following :
  • The reluctance of some employers to take on more employees - perhaps due to recruitment restraints. So instead they only want to use freelancers;
  • The preference of some employers to use freelancers (rather than employees) so that they can avoid responsibility for employers' NICs and employment regulations. Stories abound of unscrupulous employers sacking staff and then letting them continue working on similar terms. The difference being that the 'staff' have to supply their services through personal service companies;
  • The fact that many self employed contractors only set up a personal service company in order to pay less tax than they would do if they continued to operate on a self employed basis; Others become aware of this opportunity after being persuaded to set up a company at the request of their 'employer';
  • The insistence by some 'employers' that even genuine freelance contractors must provide their services via a personal service company. This approach means the 'employer' can never become liable for employers' NICs or PAYE no matter how aggressive HMRC argue the case. It also means that the 'risk' of a successful HMRC challenge moves from the employer to the personal service company (due to the IR 35 rules as they currently stand);
  • 21st century working arrangements. The fact that someone has notified HMRC that they are self employed does not prevent them from also having a part time job as an employee. Equally a freelance contractor who normally works on a self employed basis could occasionally provide their services on terms that make them an employee (either on a full time or part time basis).
The Government will also want to ensure that:
  • unscrupulous employers cannot evade their responsibilities and obligations under employment law and PAYE;
  • contractors who choose to provide their services on a self employed basis are not motivated to do so through tax advantaged personal service companies. It is this latter 'abuse' that IR35 originally sought to prevent. And the announced tax changes from April 2011 again make this attractive from a tax planning perspective; and that
  • genuinely self employed contractors do NOT become liable for the same tax as employees. This would be very unfair as contractors have no protection under employment laws and are not able to build up a contribution record for earnings related benefits.
Bottom line. We can reasonably expect the rules that emanated from the 35th Inland Revenue press release on Budget day 1999 (known as IR35) to be abolished. BUT there will be new rules to prevent undue tax avoidance. If the Coalition Government keep their promise of a new approach to tax policy making, we can expect to see a consultation over any specific new rules before they become law.

Tuesday, July 13, 2010

It's not the PBR that should be dropped. It's the Budget

The media have been reporting that George Osborne may cancel the PreBudget Report. He has already promised us that he will announce the outcome of the Departmental Spending Review on 20 October. Apparently this may be branded the 'Autumn Statement' which would be a retrograde step in my view.

We haven't had a stand alone 'Autumn Statement' in that form for almost 20 years. The last was in November 1992 when Norman Lamont was Chancellor. The following year Ken Clarke merged the Spring Budget with the Autumn Statement. Effectively he combined publication of the Government's spending plans with publication of taxation plans. This made perfect sense to me. Who else considers the income and expenditure sides of their budgets many months apart?

Ken Clarke's annual Unified Budget was delivered on the final Tuesday of November each year. It would have been better a month earlier as the following months included the xmas break of course. But we could at least consider more fully the impact of Budget proposals so that these could be finalised before they came into effect the following April. With a Spring Budget many proposals have to wait a year before they can come into effect. Others are announced to take immediate effect even though the law is not in place and is only enacted some months later. A return to such an approach would not fit well with the Coalition Government's promised 'new approach to tax policy making'.

It is clear to me that making Budget announcements in the Autumn reduces uncertainty. It means there are some months before the start of the next tax year when new rules might come into effect. It would also make it easier to provide for the promised 3 months notice of draft tax legislation.

When Labour came to power in 1997 Gordon Brown split things up. He delivered a Pre-Budget Report each autumn and a separate Budget each spring. In theory this was supposed to encourage a national debate several months in advance of the main Budget Statement. Even if that was the original motivation, after a short while, the only obvious rationale for the division was an obvious political motive. It provided Gordon Brown with two annual opportunities as Chancellor to be the centre of attention and, he hoped, to outshine Tony Blair whom he wished to succeed.

I accept that the Treasury must be under great pressure now. The Coalition Government required them to work hard to allow for the introduction of far-reaching reforms in its first 50 days. Of course it must be tempting to abandon the idea of a PBR this year. But I can think of no good practical reason for continuing the announcement of separate Budget statements each spring. Ken Clarke's logic makes as much sense today as it did in 1993. And George has a different relationship with the PM to that which Gordon Brown had with Tony Blair.

Yes, we've had 2 Budgets already this year and will see our third Finance Bill in the summer. Perhaps it is too much to expect a full Budget this Autumn. But I do hope that's what we get next year. And maybe there could be just a quickie Budget in the Spring to pave the way.....

Monday, July 5, 2010

CGT rules unlikely to change again in this Parliament

I was fortunate to have the opportunity to clarify a point about CGT policy with Edward Troup during the Oxford University Centre for Business Taxation annual conference on Friday.

Ed is Managing Director of the Budget Tax and Welfare directorate at HM Treasury.

During his talk he had reiterated the Chancellor's observation that 28% was the highest rate it was worth having if you want to maximise the CGT tax take. Ed had also suggested that there was no serious prospect of the Government making any further material changes to the CGT system during the lifetime of this Parliament. To be fair he made clear this was a personal view and that he could not speak for ministers. But it was reasonable to draw this conclusion from what ministers had said both on and off the record.

So I asked Ed why this approach made sense given that there remains an incentive to convert income to capital to save tax. And also why no reintroduction of taper to reward those who invest for the longer term (eg: more than 2 years)?

Ed explained that taper reliefs complicate the tax system both by virtue of the legislation but also because of the need to 'date-stamp' every acquisition. This Government wants to simplify rather than complicate the tax system. Whilst there remains an incentive to convert income to capital this would only disappear, Ed believes, if you had the same headline rate and had to wait 5 years before a taper came into effect. That approach had been considered and dismissed as:
a) the overall tax take from CGT would reduce (as income tax rates are higher than 28% - see above);
b) a 5 year taper would lead to distortions caused by people holding onto assets for a minimum of 5 years to qualify for the taper.

Whilst I remain skeptical about both points I do accept that the system is simpler without a taper relief. I also accept that many alternatives were considered and dismissed. I still think it likely that one reason for the new system is that it required little in the way of new legislation and could thus be introduced in the next Finance Bill without any need for consultation etc. The rate has gone from 18% to 28% and the limit for entrepreneurs relief has gone from £2m to £5m. Simples!

Freedom to abolish tax laws

Last week the Deputy PM, Nick Clegg, announced the launch of 'Your Freedom' a new Government website where British citizens can nominate laws they wish to be repealed or altered because they're unnecessary, restrict civil liberties or hinder development of business.

Already there are over 700 suggestions for changes to the tax system. I'm not convinced that any will ever make their way into a Finance Bill or that contributing to this site will prove more effective than making representations through the professional accountancy and tax bodies.

But, if you have strong views about any aspects of tax legislation that you think should be repealed, you may want to record your views on this website. You can do so anonymously although why anyone with a serious idea would choose not to be identified with it is beyond me.

As is suggested on the home page of the site, you should first do a quick search using key words to see if someone else has already identified your chosen law for prospective abolition. Sadly the majority of tax related ideas to date are rather ill informed, too generic or simply mad. Maybe the site will be enhanced to require the identification of the specific laws to which contributors are referring.

I managed to identify a couple of suggestions with which readers may wish to identify:
If you spot (or post) any others by all means add links to them in the comments against this blog post.

Oxford University Centre for Business Taxation annual conference

On 2nd and 3rd July the Centre for Business Taxation held it's annual conference. It was the first time I had attended but I'll certainly be back.

Many of the attendees are clearly regulars and the event had a special feel about it. Certainly it was unlike any more conventional tax conference I have attended - and I must have attended hundreds over the last 25 years or so. The different atmosphere may have been due to the location (a lecture theatre at the Said Business School), the presence of a relaxed Exchequer secretary, David Gauke who took questions for 30 minutes after finishing his prepared talk, or the way that 5 experts each addressed a key point in quick succession towards the end of the day.

I became aware of the conference through the Tax Director Network which has an association with the Centre for Business Taxation. (The Centre is one of the Network's Technical Partners).
It was good to see a number of members of the Network at the conference on Friday. Sadly I was unable to stay for the remainder of the event on Saturday.

There is no charge for attending this conference which I would certainly recommend to anyone with an interest in business taxation. As and when I become aware of future events hosted by the Centre I will publicise them on this blog.

Sunday, July 4, 2010

Second Finance Bill has just 11 clauses

The Second of this year's three Finance Bills was published on 30 June.

In just 11 clauses and 5 schedules it covers key elements of the June Budget regarding:
  • new rates of CT, CGT, VAT and IPT
  • simplification of the rules to remove tax relief from pension contributions by those earning more than £150k
  • the rule requiring anyone aged 75 to use their pension fund to buy an annuity
  • the exemption from tax of MPs' expenses and allowances
  • the corporation tax rules on loan relationships and derivative contracts
  • An anti-avoidance rule affecting insurance companies
The Finance Bill will receive Royal Assent before the end of the month when Parliament goes into recess. In addition to the Finance Bill, the Government has also published Explanatory Notes and Lobby Notes.

What is worse? To be a tax cheat or a benefit cheat?

Three issues conspired to prompt this post.

The first was a few months back when I was working from home. It seemed that commercial radio was full of adverts encouraging tax credit claimants to notify HMRC whenever their circumstances changed. In effect to voluntarily admit they their tax credits should be cut. "Some chance" I thought. These were not the equivalent of the adverts encouraging the prompt submission of tax returns, which are the only vaguely related tax advert I can recall.

Then, on last week's 'Now Show' on Radio 4, which I have already flagged on the Accountant jokes and fun blog, came reference to the different ways in which the public are encouraged to report tax evasion and 'benefit thieves'.

And finally I have just read a posting on the Tax Research blog: Benefit fraud is 624 times more serious than tax evasion. Leaving aside the admitted hyperbole in that post there is a serious point with which I would concur.

Of course there are differences between those who deliberately claim benefits to which they are not entitled and those who deliberately fail to notify their liability to pay tax or who lie on their tax returns. There is also the confusion caused by describing these tax evaders as tax avoiders. This lumps them in with otherwise law abiding taxpayers who have chosen to adopt what they are advised are strategies they can pursue to reduce their tax liabilities whilst staying within the letter of the law. (I'm no fan of such schemes but the taxpayers involved at least have grounds for believing they are within the law).

I suspect it is far easier to identify, track, catch and prosecute benefit cheats than it is to do the same with tax cheats. Are sufficient resources allocated to the latter however? I think not and the last Government's constant reduction in manpower within HMRC makes such prosecutions even less likely. I think that's a shame as more people perceive they are getting away with their tax fraud. They tell their friends who may choose to copy them and so the level of tax fraud grows. I know our tax system is complicated and that some people get caught out by unfair tax laws. That's again quite different to the deliberate evasion of taxes. And more resources should be applied to stop it. Do you agree?