So Prague, how do you pay yourself from these companies? A regular salary, dividends, or a combination of both?
Salary only now. No dividends,nowadays, they've all disappeared to pay for the global banking fraud :-(. I really don't earn much but I don't lose any sleep over it, since fortunately I kept my house in SW London on. Most important financial decision of my life.
I hope you've budgeted for the mansion tax this year.....
I see Prague touched upon double taxation, that is, being taxed twice on the same income. He was I think referring to being taxed by two different nations on the same income stream, but since this is a Politics of Tax thread, where do people stand on this? Should the tax-man be able to tax your money that you have already paid your fair share of tax on?
I see Prague touched upon double taxation, that is, being taxed twice on the same income. He was I think referring to being taxed by two different nations on the same income stream, but since this is a Politics of Tax thread, where do people stand on this? Should the tax-man be able to tax your money that you have already paid your fair share of tax on?
No certainly not, but isn't the point of double taxation agreements to try and avoid that happening?
I apologise for interrupting your highly intellectual debate, I am Pensioner earning a moderate salary, with three private pensions and the old age pension. I have not been asked to supply a tax return for some time, and have happily accepted whatever they do without comment. Suddenly out of the blue, last week I received a letter from HMRC telling me that for the past three years I have underpaid my tax to the tune of £1,500 and issuing my two different tax codes. As a result I composed a letter which I sent asking a number of questions such as ' if you have seen me underpaying for three consecutive years, why did you not adjust my tax codes to cover the amount, also why have I got two different tax codes ? ' Having read this thread, it seems that I can expect my letter to be ignored. Does anyone have any suggestions for my next action ?
I apologise for interrupting your highly intellectual debate, I am Pensioner earning a moderate salary, with three private pensions and the old age pension. I have not been asked to supply a tax return for some time, and have happily accepted whatever they do without comment. Suddenly out of the blue, last week I received a letter from HMRC telling me that for the past three years I have underpaid my tax to the tune of £1,500 and issuing my two different tax codes. As a result I composed a letter which I sent asking a number of questions such as ' if you have seen me underpaying for three consecutive years, why did you not adjust my tax codes to cover the amount, also why have I got two different tax codes ? ' Having read this thread, it seems that I can expect my letter to be ignored. Does anyone have any suggestions for my next action ?
Jesus, they are crap.
This might help if you think they are either wrong or have failed to act on information provided. It's from the Gov web site.
5. If HMRC don't act on information
You can ask HM Revenue and Customs (HMRC) to cancel your tax arrears if you think they’ve made a mistake because they failed to act on information they had.
You can do this by asking for an ‘extra-statutory concession’ (‘ESC A19’) if you owe:
Income Tax, eg because you were on the wrong tax code Capital Gains Tax (CGT) Class 4 National Insurance contributions Eligibility You can make a request if all of the following apply:
HMRC haven’t used tax information provided to them, eg about a change of income or job HMRC told you about the arrears more than 12 months after the end of the tax year in which they received your information you have a reasonable belief that your tax affairs are up to date.
Tax information could come from:
you your employer the Department for Work and Pensions (DWP)
I see Prague touched upon double taxation, that is, being taxed twice on the same income. He was I think referring to being taxed by two different nations on the same income stream, but since this is a Politics of Tax thread, where do people stand on this? Should the tax-man be able to tax your money that you have already paid your fair share of tax on?
No certainly not, but isn't the point of double taxation agreements to try and avoid that happening?
I was referring to double taxation in a single country (for example, dividends being taxed even though the profits from which dividends are derived are already net of tax).
Regarding the tax code, I presume they came in two separate letters. If so, then it would be the one on the most recent letter (based on the date on the letter). It seems very late in the tax year to be changing tax code to pick up underpaid tax from previous years. Unless you have £1500 lying around, I'd probably call HMRC and ask that they apply it on a non-cumulative basis and recover the bulk of the tax in the next tax year.
I see Prague touched upon double taxation, that is, being taxed twice on the same income. He was I think referring to being taxed by two different nations on the same income stream, but since this is a Politics of Tax thread, where do people stand on this? Should the tax-man be able to tax your money that you have already paid your fair share of tax on?
No certainly not, but isn't the point of double taxation agreements to try and avoid that happening?
I was referring to double taxation in a single country (for example, dividends being taxed even though the profits from which dividends are derived are already net of tax).
Ah ok. But personally I don't have a problem with that, as one is a tax on individuals the other a tax on companies, and in the case of a company such as Vodafone they actually haven't paid the UK tax they should have paid
CAFCFAN Much obliged for that, having read on here about the state that HMRC are in, I fancy my chances if I make a well chosen approach to them. I am so small that it might be easier for them to agree to cancel any claim they have. It was interesting that their letters were not signed, and in my letter I suggested that all the paper they sent had spewed out of the computer without being touched by human hand.
I see Prague touched upon double taxation, that is, being taxed twice on the same income. He was I think referring to being taxed by two different nations on the same income stream, but since this is a Politics of Tax thread, where do people stand on this? Should the tax-man be able to tax your money that you have already paid your fair share of tax on?
No certainly not, but isn't the point of double taxation agreements to try and avoid that happening?
I was referring to double taxation in a single country (for example, dividends being taxed even though the profits from which dividends are derived are already net of tax).
Ah ok. But personally I don't have a problem with that, as one is a tax on individuals the other a tax on companies, and in the case of a company such as Vodafone they actually haven't paid the UK tax they should have paid
They haven't paid the tax they should've paid according to who, you?
A bit like you not paying the tax you "should" have paid when you used to take money out of your company through dividends you mean? It's far from black and White and that's the point - not that I am defending the likes of Vodafone for one minute.
CAFCFAN Much obliged for that, having read on here about the state that HMRC are in, I fancy my chances if I make a well chosen approach to them. I am so small that it might be easier for them to agree to cancel any claim they have. It was interesting that their letters were not signed, and in my letter I suggested that all the paper they sent had spewed out of the computer without being touched by human hand.
I'd also ask them to check that they've got their sums right first, or get someone to help you with that. Wouldn't be the first time they royally fuck up their own calculations and send out an incorrect bill.
I see Prague touched upon double taxation, that is, being taxed twice on the same income. He was I think referring to being taxed by two different nations on the same income stream, but since this is a Politics of Tax thread, where do people stand on this? Should the tax-man be able to tax your money that you have already paid your fair share of tax on?
No certainly not, but isn't the point of double taxation agreements to try and avoid that happening?
I was referring to double taxation in a single country (for example, dividends being taxed even though the profits from which dividends are derived are already net of tax).
Ah ok. But personally I don't have a problem with that, as one is a tax on individuals the other a tax on companies, and in the case of a company such as Vodafone they actually haven't paid the UK tax they should have paid
They haven't paid the tax they should've paid according to who, you?
A bit like you not paying the tax you "should" have paid when you used to take money out of your company through dividends you mean? It's far from black and White and that's the point - not that I am defending the likes of Vodafone for one minute.
I see you are still not quite match-fit after your long layoff from CL :-)
No of course it's not me who assessed Vodafone for £7bn, but HMRC. And then that Harkness bloke took it upon himself to let them off most of it. I don't think it is even a bit like me taking a dividend. Whether from the Czech or the British company, it was all inspected by the relevant tax authority and declared to be absolutely fine. Sadly, unlike the Vodafone chaps, I did not think it would do me much good to invite Harkness to dinner and offer to pay 20% of what HMRC assessed me for.
And of course we all know that HMRC are always entirely accurate with their assessments, don't we? Notice how the link says it was a "potential tax bill". In the end both parties agreed the liability to be lower.
But as I said, im not defending the likes of Vodaphone one little bit and am entirely familiar with the case, and others like it.
However, I am interested, and slightly surprised given some of your previous statements, that you taking a dividend from your company rather than a salary is "absolutely fine", when actually isn't it that you deliberately arranged your affairs in a way that means you paid a lower amout of tax?
Personally I think it actually is absolutely fine myself. But some people might see it as a form of tax avoidance and the fact that it is perfectly legal and hasn't been challenged by the tax authorities doesn't avoid the "moral" question which some people have raised.
But it all just goes to show that it isn't quite as black and white and straightforward an issue as some people might have us believe. It's much more complex than that.
Grandpa let me tell you that a) you probably do have a good case for ESC A 19 to be applied and b) it is very likely that HMRC will turn this down and c) if so you will need to be prepared to follow this through by lodging a complaint in order to force the issue.
The complaints procedure is such that your complaint may well be turned down at the first attempt. You should be told you have the right to complain again and if you do eventually there is a chance that they will accept it. It takes strength and determination as well as knowledge of your rights which is why so many older people In your position end up paying something they needn't.
Morally this is just as bad if not worse than most things that the public call tax avoidance it's the wilful withholding of a published concession in the knowledge that the people affected are more likely than not going to give up or accept they must be wrong when they aren't. I am afraid to say that it does look as though HMRC do this routinely.
And of course we all know that HMRC are always entirely accurate with their assessments, don't we? Notice how the link says it was a "potential tax bill". In the end both parties agreed the liability to be lower.
But as I said, im not defending the likes of Vodaphone one little bit and am entirely familiar with the case, and others like it.
However, I am interested, and slightly surprised given some of your previous statements, that you taking a dividend from your company rather than a salary is "absolutely fine", when actually isn't it that you deliberately arranged your affairs in a way that means you paid a lower amout of tax?
Personally I think it actually is absolutely fine myself. But some people might see it as a form of tax avoidance and the fact that it is perfectly legal and hasn't been challenged by the tax authorities doesn't avoid the "moral" question which some people have raised.
But it all just goes to show that it isn't quite as black and white and straightforward an issue as some people might have us believe. It's much more complex than that.
The business is a consultancy which has a maximum of two employees apart from me. In the good years it ends up with some profit. This profit is very closely related to my personal work effort. So the money should go to me, my employees would definitely not argue with that, given that they have their own bonus system. What is the moral issue in taking it as a dividend (which is taxed at 15%) rather than a salary bonus?
And of course we all know that HMRC are always entirely accurate with their assessments, don't we? Notice how the link says it was a "potential tax bill". In the end both parties agreed the liability to be lower.
But as I said, im not defending the likes of Vodaphone one little bit and am entirely familiar with the case, and others like it.
However, I am interested, and slightly surprised given some of your previous statements, that you taking a dividend from your company rather than a salary is "absolutely fine", when actually isn't it that you deliberately arranged your affairs in a way that means you paid a lower amout of tax?
Personally I think it actually is absolutely fine myself. But some people might see it as a form of tax avoidance and the fact that it is perfectly legal and hasn't been challenged by the tax authorities doesn't avoid the "moral" question which some people have raised.
But it all just goes to show that it isn't quite as black and white and straightforward an issue as some people might have us believe. It's much more complex than that.
The business is a consultancy which has a maximum of two employees apart from me. In the good years it ends up with some profit. This profit is very closely related to my personal work effort. So the money should go to me, my employees would definitely not argue with that, given that they have their own bonus system. What is the moral issue in taking it as a dividend (which is taxed at 15%) rather than a salary bonus?
You don't pay employees or employers national insurance on dividends whereas you do on salaries assuming an income above both the national insurance and personal allowance thresholds.
One could argue therefore that morally taking a dividend rather than a salary is tax avoidance.
Tax avoidance is legal tax evasion is not legal but what is the moral position?
And of course we all know that HMRC are always entirely accurate with their assessments, don't we? Notice how the link says it was a "potential tax bill". In the end both parties agreed the liability to be lower.
But as I said, im not defending the likes of Vodaphone one little bit and am entirely familiar with the case, and others like it.
However, I am interested, and slightly surprised given some of your previous statements, that you taking a dividend from your company rather than a salary is "absolutely fine", when actually isn't it that you deliberately arranged your affairs in a way that means you paid a lower amout of tax?
Personally I think it actually is absolutely fine myself. But some people might see it as a form of tax avoidance and the fact that it is perfectly legal and hasn't been challenged by the tax authorities doesn't avoid the "moral" question which some people have raised.
But it all just goes to show that it isn't quite as black and white and straightforward an issue as some people might have us believe. It's much more complex than that.
The business is a consultancy which has a maximum of two employees apart from me. In the good years it ends up with some profit. This profit is very closely related to my personal work effort. So the money should go to me, my employees would definitely not argue with that, given that they have their own bonus system. What is the moral issue in taking it as a dividend (which is taxed at 15%) rather than a salary bonus?
You don't pay employees or employers national insurance on dividends whereas you do on salaries assuming an income above both the national insurance and personal allowance thresholds.
One could argue therefore that morally taking a dividend rather than a salary is tax avoidance.
Tax avoidance is legal tax evasion is not legal but what is the moral position?
To be clear, I have always paid myself a salary from both companies, but only sometimes a dividend as well, and certainly not since before the crisis. On the basis of yours and @Off_it's argument, a company owner would never pay himself a dividend. When would it be "morally OK" to do so, in your book? The position that you both seem to be taking (probably accidentally) is that dividends are only for "Big" companies.
And of course we all know that HMRC are always entirely accurate with their assessments, don't we? Notice how the link says it was a "potential tax bill". In the end both parties agreed the liability to be lower.
But as I said, im not defending the likes of Vodaphone one little bit and am entirely familiar with the case, and others like it.
However, I am interested, and slightly surprised given some of your previous statements, that you taking a dividend from your company rather than a salary is "absolutely fine", when actually isn't it that you deliberately arranged your affairs in a way that means you paid a lower amout of tax?
Personally I think it actually is absolutely fine myself. But some people might see it as a form of tax avoidance and the fact that it is perfectly legal and hasn't been challenged by the tax authorities doesn't avoid the "moral" question which some people have raised.
But it all just goes to show that it isn't quite as black and white and straightforward an issue as some people might have us believe. It's much more complex than that.
The business is a consultancy which has a maximum of two employees apart from me. In the good years it ends up with some profit. This profit is very closely related to my personal work effort. So the money should go to me, my employees would definitely not argue with that, given that they have their own bonus system. What is the moral issue in taking it as a dividend (which is taxed at 15%) rather than a salary bonus?
You don't pay employees or employers national insurance on dividends whereas you do on salaries assuming an income above both the national insurance and personal allowance thresholds.
One could argue therefore that morally taking a dividend rather than a salary is tax avoidance.
Tax avoidance is legal tax evasion is not legal but what is the moral position?
To be clear, I have always paid myself a salary from both companies, but only sometimes a dividend as well, and certainly not since before the crisis. On the basis of yours and @Off_it's argument, a company owner would never pay himself a dividend. When would it be "morally OK" to do so, in your book? The position that you both seem to be taking (probably accidentally) is that dividends are only for "Big" companies.
I should state at the outset that there are two strands to this. My personal view which I have not clearly stated and an abstract answer to the question you raised namely:......" What is the moral issue in taking it as a dividend (which is taxed at 15%) rather than a salary bonus?"........
To continue the abstract theme and answer your second question: ......"When would it be "morally OK" to do so, in your book? The position that you both seem to be taking (probably accidentally) is that dividends are only for "Big" companies."......... "Big" companies have shareholders who are not employees therefore dividends are a morally acceptable return on the capital employed in a company for those people. Employees (and proprietary directors are employees of their company) morally, arguably, should take a salary thus paying both employees and employers national insurance since otherwise they are guilty of tax avoidance. As I said before all legal but is it moral?
And of course we all know that HMRC are always entirely accurate with their assessments, don't we? Notice how the link says it was a "potential tax bill". In the end both parties agreed the liability to be lower.
But as I said, im not defending the likes of Vodaphone one little bit and am entirely familiar with the case, and others like it.
However, I am interested, and slightly surprised given some of your previous statements, that you taking a dividend from your company rather than a salary is "absolutely fine", when actually isn't it that you deliberately arranged your affairs in a way that means you paid a lower amout of tax?
Personally I think it actually is absolutely fine myself. But some people might see it as a form of tax avoidance and the fact that it is perfectly legal and hasn't been challenged by the tax authorities doesn't avoid the "moral" question which some people have raised.
But it all just goes to show that it isn't quite as black and white and straightforward an issue as some people might have us believe. It's much more complex than that.
The business is a consultancy which has a maximum of two employees apart from me. In the good years it ends up with some profit. This profit is very closely related to my personal work effort. So the money should go to me, my employees would definitely not argue with that, given that they have their own bonus system. What is the moral issue in taking it as a dividend (which is taxed at 15%) rather than a salary bonus?
You don't pay employees or employers national insurance on dividends whereas you do on salaries assuming an income above both the national insurance and personal allowance thresholds.
One could argue therefore that morally taking a dividend rather than a salary is tax avoidance.
Tax avoidance is legal tax evasion is not legal but what is the moral position?
Thanks Len, that's exactly it. Some could indeed argue that point, and they do. The Ken Livingstone episode, for example.
Prague, for the avoidance (see what I did there?) of doubt I don't think there is anything wrong with choosing to pay yourself a dividend rather than a salary. Nothing at all. It's perfectly above board and legal.
But say you reduced your salary payments and increased your dividend payments. At what level would that move from acceptable to unacceptable? This is where it all becomes a bit more grey. It will still all be legal, but some might say it's not moral - but when you start bringing morals into things you quickly find out that everyone has different values - as this thread proves.
And also I'm aware that dividends don't just relate to "big" businesses as have dealt with many businesses over the years of all sizes. Some people take money out through dividends and some not. Size doesn't matter as it's all about who owns the shares.
So, in summary. It seems as though you legitimately avoided tax in the past and would still be doing so if it weren't for the current financial state of your business. Based on what you have said I personally don't have a problem as it's all pretty vanilla, to coin a phrase. But some people no doubt would have a problem with it.
And of course we all know that HMRC are always entirely accurate with their assessments, don't we? Notice how the link says it was a "potential tax bill". In the end both parties agreed the liability to be lower.
But as I said, im not defending the likes of Vodaphone one little bit and am entirely familiar with the case, and others like it.
However, I am interested, and slightly surprised given some of your previous statements, that you taking a dividend from your company rather than a salary is "absolutely fine", when actually isn't it that you deliberately arranged your affairs in a way that means you paid a lower amout of tax?
Personally I think it actually is absolutely fine myself. But some people might see it as a form of tax avoidance and the fact that it is perfectly legal and hasn't been challenged by the tax authorities doesn't avoid the "moral" question which some people have raised.
But it all just goes to show that it isn't quite as black and white and straightforward an issue as some people might have us believe. It's much more complex than that.
The business is a consultancy which has a maximum of two employees apart from me. In the good years it ends up with some profit. This profit is very closely related to my personal work effort. So the money should go to me, my employees would definitely not argue with that, given that they have their own bonus system. What is the moral issue in taking it as a dividend (which is taxed at 15%) rather than a salary bonus?
You don't pay employees or employers national insurance on dividends whereas you do on salaries assuming an income above both the national insurance and personal allowance thresholds.
One could argue therefore that morally taking a dividend rather than a salary is tax avoidance.
Tax avoidance is legal tax evasion is not legal but what is the moral position?
To be clear, I have always paid myself a salary from both companies, but only sometimes a dividend as well, and certainly not since before the crisis. On the basis of yours and @Off_it's argument, a company owner would never pay himself a dividend. When would it be "morally OK" to do so, in your book? The position that you both seem to be taking (probably accidentally) is that dividends are only for "Big" companies.
I should state at the outset that there are two strands to this. My personal view which I have not clearly stated and an abstract answer to the question you raised namely:......" What is the moral issue in taking it as a dividend (which is taxed at 15%) rather than a salary bonus?"........
To continue the abstract theme and answer your second question: ......"When would it be "morally OK" to do so, in your book? The position that you both seem to be taking (probably accidentally) is that dividends are only for "Big" companies."......... "Big" companies have shareholders who are not employees therefore dividends are a morally acceptable return on the capital employed in a company for those people. Employees (and proprietary directors are employees of their company) morally, arguably, should take a salary thus paying both employees and employers national insurance since otherwise they are guilty of tax avoidance. As I said before all legal but is it moral?
Sorry Len, it still doesn't hold water. I know plenty of people running consultancy type businesses, some of them as small as mine, some a fair bit bigger (up to fifty employees), who choose to be paid only via dividend. Following your line of thinking, those guys are morally fine because they are not "employees". Whereas I am not because I am an "employee" (albeit hired by and reporting to myself)? You say people like me "should" take a salary. Really? What level of salary? Is that also a matter of "should"? What happens if the company's revenue falls below the level where what you might regard as a director's salary cannot be afforded (certainly my case now).
By the way Prague, thanks for your concern earlier in the thread.
Please do let me know when you thinking I am approaching "match fitness" as I do take my performance very seriously, very seriously indeed! ;o)
Well I would say that, as you ease yourself back to match fitness, you are certainly doing better than the Lepointe cameo, but not yet showing the assurance of the Diarra cameo (not that I saw either, I have to confess).
However at your best you resembled Jose Semedo at his best, snapping and snarling on every thread going, with admirable consistency; and showing the odd touch of skill too, lifting you above the level of the average journeyman troll such as PL54.
By the way Prague, thanks for your concern earlier in the thread.
Please do let me know when you thinking I am approaching "match fitness" as I do take my performance very seriously, very seriously indeed! ;o)
Well I would say that, as you ease yourself back to match fitness, you are certainly doing better than the Lepointe cameo, but not yet showing the assurance of the Diarra cameo (not that I saw either, I have to confess).
However at your best you resembled Jose Semedo at his best, snapping and snarling on every thread going, with admirable consistency; and showing the odd touch of skill too, lifting you above the level of the average journeyman troll such as PL54.
Hope that helps :-)
I do believe that's the nicest thing you've ever said to me. *stifling a tear
Who cares what the moral position is? Not everyone holds the same morals and a majority of people holding one set of morals doesn't automatically make them 'right'. For example, 30 years ago this country's record on gay rights and tolerance was absolutely appalling by today's standards and that was only enabled by the fact a majority of people were of the opinion homosexuality was wrong.
Clearly there are outliers who may not be committing any crime but are clearly abusing the system, e.g. Vodafone. But that's not a 'morals of tax' issue, that's the issue of the rich and powerful getting away with things the little guy would get the book thrown at them for. What Vodafone do is the equivalent of a rich person in power willingly driving a bulldozer through a playground, killing dozens of kids and then only being charged with driving without due care because they had a drink with the attorney-general. Legally everything is sound, in which case the law clearly is set up to deliver a terrible and unintended outcome.
Pretty much anyone who has some kind of disposable income worth the time to take care of will be looking avoid tax or lower their exposure to tax in one way or another. Likewise businesses will take all available steps to reduce their tax bill because every other business they're competing with is doing the same thing. It is, essentially, a level playing field. The argument that tax avoidance means we can't hire more teachers or nurses is a nonsense - no politician or Treasury official has in the history of anything has ever cited tax avoidance as a reason to not increase spending. If they want to increase spending, they'll either borrow more or print more money.
The issue isn't really about tax avoidance, it's that there is legal provision for the rich and powerful to get away with evading tax by wining and dining with the taxman and getting a slap on the wrist afterwards, whereas everyone else would be hauled in front of a judge and publicly shamed as well as financially destroyed. Our corruption laws need to be stronger and both those at Vodafone and HMRC involved in this wheeze should have been given custodial sentences for what is quite clearly a case of corruption.
I was a consultant for 20 years operating through a limited company of which I was one of 2 shareholders. It's a route open to anyone in my profession, but it's not for everyone. There are many risks: you only get paid when you work - hence you have to allow for the fact that there will be periods when you cannot find work or when you are ill. Then there are rewards: when I was working, my company got paid 2, 3 or 4 times in some instances, what you could expect to earn in a permanent job. You can take that money out of the company as salary or dividend or pay some of it into a pension. Your choice. If you take salary, as has been said above, you pay employee and employer NI. Dividends are taxed less, so it evens out. The pension is up to the individual - I paid a lot in but annuities are so poor these days I won't be well off when I retire.
I was a consultant for 20 years operating through a limited company of which I was one of 2 shareholders. It's a route open to anyone in my profession, but it's not for everyone. There are many risks: you only get paid when you work - hence you have to allow for the fact that there will be periods when you cannot find work or when you are ill. Then there are rewards: when I was working, my company got paid 2, 3 or 4 times in some instances, what you could expect to earn in a permanent job. You can take that money out of the company as salary or dividend or pay some of it into a pension. Your choice. If you take salary, as has been said above, you pay employee and employer NI. Dividends are taxed less, so it evens out. The pension is up to the individual - I paid a lot in but annuities are so poor these days I won't be well off when I retire.
Absolutely. And the main reason some people operate through limited companies is because it gives the protection of limited liability if things go tits up, so it makes sound commercial sense in many cases before you even start thinking about tax.
As I said earlier, it's not an entirely black and white issue.
Of course the arguments will now begin about whose victory it is, Osbourne will claim it, but others will credit Margaret Hodge and tax campaigners like Richard Murphy. But that's not as important as the central one that public pressure via the political channels does still work in the UK. It's a reason to be pleased, and a little bit proud to be British.
Right then, Google and Facebook...what do you have to say for yourselves? Hmmm?
The likes of Hodge can ask as many questions as they like but the diverted profits tax is the main reason, although Luxembourg is also a slightly less attractive place to be based than before.
Comments
As a result I composed a letter which I sent asking a number of questions such as ' if you have seen me underpaying for three consecutive years, why did you not adjust my tax codes to cover the amount, also why have I got two different tax codes ? '
Having read this thread, it seems that I can expect my letter to be ignored. Does anyone have any suggestions for my next action ?
This might help if you think they are either wrong or have failed to act on information provided. It's from the Gov web site.
5. If HMRC don't act on information
You can ask HM Revenue and Customs (HMRC) to cancel your tax arrears if you think they’ve made a mistake because they failed to act on information they had.
You can do this by asking for an ‘extra-statutory concession’ (‘ESC A19’) if you owe:
Income Tax, eg because you were on the wrong tax code
Capital Gains Tax (CGT)
Class 4 National Insurance contributions
Eligibility
You can make a request if all of the following apply:
HMRC haven’t used tax information provided to them, eg about a change of income or job
HMRC told you about the arrears more than 12 months after the end of the tax year in which they received your information
you have a reasonable belief that your tax affairs are up to date.
Tax information could come from:
you
your employer
the Department for Work and Pensions (DWP)
Much obliged for that, having read on here about the state that HMRC are in, I fancy my chances if I make a well chosen approach to them. I am so small that it might be easier for them to agree to cancel any claim they have. It was interesting that their letters were not signed, and in my letter I suggested that all the paper they sent had spewed out of the computer without being touched by human hand.
A bit like you not paying the tax you "should" have paid when you used to take money out of your company through dividends you mean? It's far from black and White and that's the point - not that I am defending the likes of Vodafone for one minute.
Good luck.
No of course it's not me who assessed Vodafone for £7bn, but HMRC. And then that Harkness bloke took it upon himself to let them off most of it. I don't think it is even a bit like me taking a dividend. Whether from the Czech or the British company, it was all inspected by the relevant tax authority and declared to be absolutely fine. Sadly, unlike the Vodafone chaps, I did not think it would do me much good to invite Harkness to dinner and offer to pay 20% of what HMRC assessed me for.
But as I said, im not defending the likes of Vodaphone one little bit and am entirely familiar with the case, and others like it.
However, I am interested, and slightly surprised given some of your previous statements, that you taking a dividend from your company rather than a salary is "absolutely fine", when actually isn't it that you deliberately arranged your affairs in a way that means you paid a lower amout of tax?
Personally I think it actually is absolutely fine myself. But some people might see it as a form of tax avoidance and the fact that it is perfectly legal and hasn't been challenged by the tax authorities doesn't avoid the "moral" question which some people have raised.
But it all just goes to show that it isn't quite as black and white and straightforward an issue as some people might have us believe. It's much more complex than that.
The complaints procedure is such that your complaint may well be turned down at the first attempt. You should be told you have the right to complain again and if you do eventually there is a chance that they will accept it. It takes strength and determination as well as knowledge of your rights which is why so many older people In your position end up paying something they needn't.
Morally this is just as bad if not worse than most things that the public call tax avoidance it's the wilful withholding of a published concession in the knowledge that the people affected are more likely than not going to give up or accept they must be wrong when they aren't. I am afraid to say that it does look as though HMRC do this routinely.
One could argue therefore that morally taking a dividend rather than a salary is tax avoidance.
Tax avoidance is legal tax evasion is not legal but what is the moral position?
To continue the abstract theme and answer your second question: ......"When would it be "morally OK" to do so, in your book? The position that you both seem to be taking (probably accidentally) is that dividends are only for "Big" companies."......... "Big" companies have shareholders who are not employees therefore dividends are a morally acceptable return on the capital employed in a company for those people. Employees (and proprietary directors are employees of their company) morally, arguably, should take a salary thus paying both employees and employers national insurance since otherwise they are guilty of tax avoidance. As I said before all legal but is it moral?
Prague, for the avoidance (see what I did there?) of doubt I don't think there is anything wrong with choosing to pay yourself a dividend rather than a salary. Nothing at all. It's perfectly above board and legal.
But say you reduced your salary payments and increased your dividend payments. At what level would that move from acceptable to unacceptable? This is where it all becomes a bit more grey. It will still all be legal, but some might say it's not moral - but when you start bringing morals into things you quickly find out that everyone has different values - as this thread proves.
And also I'm aware that dividends don't just relate to "big" businesses as have dealt with many businesses over the years of all sizes. Some people take money out through dividends and some not. Size doesn't matter as it's all about who owns the shares.
So, in summary. It seems as though you legitimately avoided tax in the past and would still be doing so if it weren't for the current financial state of your business. Based on what you have said I personally don't have a problem as it's all pretty vanilla, to coin a phrase. But some people no doubt would have a problem with it.
Please do let me know when you thinking I am approaching "match fitness" as I do take my performance very seriously, very seriously indeed!
;o)
However at your best you resembled Jose Semedo at his best, snapping and snarling on every thread going, with admirable consistency; and showing the odd touch of skill too, lifting you above the level of the average journeyman troll such as PL54.
Hope that helps :-)
*stifling a tear
Clearly there are outliers who may not be committing any crime but are clearly abusing the system, e.g. Vodafone. But that's not a 'morals of tax' issue, that's the issue of the rich and powerful getting away with things the little guy would get the book thrown at them for. What Vodafone do is the equivalent of a rich person in power willingly driving a bulldozer through a playground, killing dozens of kids and then only being charged with driving without due care because they had a drink with the attorney-general. Legally everything is sound, in which case the law clearly is set up to deliver a terrible and unintended outcome.
Pretty much anyone who has some kind of disposable income worth the time to take care of will be looking avoid tax or lower their exposure to tax in one way or another. Likewise businesses will take all available steps to reduce their tax bill because every other business they're competing with is doing the same thing. It is, essentially, a level playing field. The argument that tax avoidance means we can't hire more teachers or nurses is a nonsense - no politician or Treasury official has in the history of anything has ever cited tax avoidance as a reason to not increase spending. If they want to increase spending, they'll either borrow more or print more money.
The issue isn't really about tax avoidance, it's that there is legal provision for the rich and powerful to get away with evading tax by wining and dining with the taxman and getting a slap on the wrist afterwards, whereas everyone else would be hauled in front of a judge and publicly shamed as well as financially destroyed. Our corruption laws need to be stronger and both those at Vodafone and HMRC involved in this wheeze should have been given custodial sentences for what is quite clearly a case of corruption.
As I said earlier, it's not an entirely black and white issue.
Amazon to begin paying corporation tax on UK retail sales
Of course the arguments will now begin about whose victory it is, Osbourne will claim it, but others will credit Margaret Hodge and tax campaigners like Richard Murphy. But that's not as important as the central one that public pressure via the political channels does still work in the UK. It's a reason to be pleased, and a little bit proud to be British.
Right then, Google and Facebook...what do you have to say for yourselves? Hmmm?
The likes of Hodge can ask as many questions as they like but the diverted profits tax is the main reason, although Luxembourg is also a slightly less attractive place to be based than before.