A Taxing Problem

Do you have something on your mind? A subject you would like to discuss? 

If it is suitable for public consumption, let me know and you too could write something for the blog!

...ok, perhaps the exclamation mark is overselling it. 

I hope this will be the first of many contributions from readers of the blog. 

Please welcome my first guest, Kitey:

Britain used to have a progressive tax system but those quaint ideas are a thing of the past. In modern Britain it seems that big business and our wealthiest 'citizens' are getting away with highway robbery.

An HMRC whistleblower was quoted on a recent Panorama programme that HMRC used to have a team dedicated to dealing with the top 40,000 earners in the country but this has recently been cut to the top 5,000. This means that the other 35,000, and some of the wealthiest people in the country will have the same checks on their tax returns as you
and me.

I would suspect that a significant proportion of the 40,000 employ very clever tax advisors to reduce their tax liability. It’s an unequal battle and HRMC are losing. Richard Murphy, a director of Tax Research UK, was recently commissioned by the TUC to write a study on tax loss. He estimates some £25bn is lost to the exchequer each year as a result of avoidance and planning, including £13bn attributed to individuals.

A good example of this is the man who the current government turned to in order to identify waste within Whitehall, Sir Philip Green. It has been widely reported that Green banked the biggest pay cheque in corporate history in 2005 when his Arcadia fashion business paid a £1.2bn dividend. The record-breaking sum was paid to his wife, Tina, who lives in Monaco and is the direct owner of Arcadia. As a result no UK income tax was due. Murphy estimates that Green saved £285m by paying the dividend to his wife. I may be doing Mrs Green a great disservice. After all she may have landed herself a Saturday job at Topshop
(Monaco branch).

In the last week you may have noticed that Vodafone shops have had some irregular opening hours. This might possibly have something to do with the angry mobs gathering outside to protest about their alleged avoidance of a £6 billion tax bill. Vodafone’s head of tax, John Connors, struck a deal between HMRC and Vodafone which meant they paid only £800 million in tax, with a further £450 million to pay over the next
five years.

Is it the case that there are two sets of rules at play here? Public services are cut whilst the dividends of big companies are effectively subsidised by the tax-payer?