Tuesday, February 22, 2011

NO. The Revenue do NOT approve Disclosed tax schemes

I was at a business networking event last week and found myself talking to 'Bill' from 'XYZ Capital management'. He will have seen my name badge referenced the 'Tax Advice Network'.
This is pretty much how the conversation went:

Me: And what do you do at XYZ capital management?
Bill: We help wealthy people manage their capital.
Me: Are you financial advisers?
Bill: More than that. We can help people reduce the tax they pay down to zero, using approved tax schemes.
Me: Approved by whom?
Bill: HMRC. We only use approved schemes that have been fully disclosed under DOTAS
Me: Sorry. HMRC never approve tax schemes. The Spotlights page of their website was recently updated to make this clear as they are fed up of promoters telling people that a disclosed scheme has been approved - when it hasn't.
Bill: Well, once they've been disclosed HMRC don't seem to have a problem with them.
Me: Sorry. I know a bit about all this. But I think it's best I keep off my soapbox and simply say I have no interest in such schemes.

I resisted the temptation to give 'Bill' a full lecture. He asked for my card - which I gave him and suggested that if he wanted to know more about HMRC's Spotlights page he could check out the references to it on this blog. I said I had also addressed the way that tax schemes are, in my view, frequently mis-sold.

If you're reading this 'Bill', do let me know what you think.

Monday, February 21, 2011

Barclays paid 1% in apples of tax on its pears of profits

Another day, another spurious tax statistic enters common parlance. I have heard three separate references today to the 'fact' that Barclays paid "only one per cent in corporation tax on its 2009 profits of £11.6 billion". The People, for example, are fanning the flames here.

According to the Guardian, the 1% rate was first disclosed by Chief Executive Bob Diamond in a letter sent to Labour MP Chuka Umunna. This seems unlikely as the letter was less than clear as it referenced all of the tax paid by Barclays, including PAYE and NIC deducted from staff salaries.

I am indebted to Christie Malry, who has explained on the FCAblog, five reasons why the 1% tax rate is a misnomer. It involves comparing apples and pears. Most obvious is the fact that corporation tax paid in 2009 does not relate to the profits earned in 2009. It largely relates to the profits of 2008. And the profits figure of £11.6b is a worldwide figure so of course UK corporation tax will not come to anything close to 28% of that sum. Only profits arising in the UK are subject to tax here.

Barclays 2009 accounts by the way show (PBT) profits of £4.5b and a tax charge of just over £1b - a rate of 23.4% NOT 1%. Not even close. Mind you I have yet to trace the origin of the figure of £113m corporation tax being quoted by the press.

Oh - and lest anyone should forget, profits made in 2008 (and 2009) were subject to tax in accordance with the tax regime put in place by the last Labour Government.

Sunday, February 20, 2011

Actor Edward Fox asks Taxman to chase him for more tax

Maybe not intentionally but this was reported in the London Evening Standard last week:
Fox revealed that he had walked off with many of the clothes he wore during the [making of the Day of the Jackal film]. “It’s an actor’s trick,” Fox said. “There the clothes are and you just take them off the peg. There are some lovely jackets and cravats in the Jackal, which I still wear.”
Whether he paid tax on these 'perks' is not mentioned. We know the taxman picks up on media references to untaxed benefits and perks so Mr Fox can expect a call...

Last July I referenced a more serious public admission of tax avoidance by supermodel Caprice re her property portfolio: Caprice asks the taxman to enquire into her tax affairs

Friday, February 18, 2011

Catching up....

After a record breaking batch of posts on the Tax Buzz blog in January I took a short holiday and have since struggled to get back into the swing of regular posts here.

I have drafted some items that will appear over the next few days debunking recent tax stories in the press. Then when we're more uptodate I'll return to posting pieces on a more timely basis as I have done for most of the last three years.

As ever, if you are aware of any tax stories in the press/news that you would like me to debunk, do get in touch.

Many thanks for your patience.