Fact File: Tax Avoidance
Thursday 21 June 2012
As any first-year accountancy student will tell you, there’s a big difference between tax evasion and tax avoidance. While the former could land you in prison for seven years, the latter is the perfectly legal use of loopholes by celebrities, big business, and anyone else who can afford a financial advisor.
Or that was the pre-recession consensus, at least. With public coffers emptying faster than a leaky bucket and “benefit scrounger” rhetoric losing steam, tax avoidance has become moral outrage magnet for both left and right. In 2010 protest group UKUncut mounted a campaign against high street tax avoiders and by 2012 Conservative Chancellor George Osborne was also on board, promising to crackdown on "aggressive tax avoidance" in his Budget speech.
Since then, the press have outed high-profile tax avoiders at regular intervals including top level civil servants, mayoral candidate Ken Livingstone, musician-turned-activist Bob Geldof and comedian Jimmy Carr, whose K2 tax scheme David Cameron branded “morally wrong”. But if everyone agrees these schemes are wrong, why are they still legal?
1% - Income tax rate reportedly available to members of the legal K2 tax scheme used by Jimmy Carr. Source: The Independent
98 – Number of FTSE 100 companies operating out of tax havens. Source: ActionAid
£25bn – Estimated annual cost of tax avoidance, according to 2008 research. £13billion of this is lost to individuals and £12billion to the 700 largest corporations. Source: Tax Research UK and the TUC
10% - Average rate of tax paid by top earners, according to a confidential HMRC study seen by George Osborne. Source: The Telegraph
HMRC goes on £1bn retro warpath, David Jetuah, AccountancyAge, 2010
Your Money and How They Spend It: Tax Avoidance, BBC Two, 2011
Tax avoidance – it’s not what you earn that counts, it’s what you pay. Mary Dejevsky, The Independent, 2010
Let Jimmy Carr’s hypocrisy be a timely lesson to the Chancellor, Matthew Norman, The Independent, 2012
How Apple Sidesteps Billions in Taxes, Charles Duhigg, The New York Times, 2012
1696 – Windows are bricked up to avoid the window tax. It is eventually repealed in 1851.
March 2010 – The Government sets out plans to raise £1.6bn by allowing HMRC to crack down on tax avoidance retrospectively
Feb 2011 – Barclays reveals its UK corporation tax bill for 2009 was £113m, amounting to around 2.4 per cent of its £4.6bn annual profit.
May 2011 – Robert Field, the head of tax at Farrer & Co, the Queen’s lawyers, advocates tackling corporate tax avoidance by switching from a “legal certainty” approach to a principles-based approach.
Nov 2011 – HMRC officials are criticised over deals with Vodafone and investment bank Goldman Sachs, which allowed them to pay less tax than they'd otherwise be liable for.
Feb 2012 – Following the revelation that head of the Student Loans Company avoids tax by having his salary paid into a limited company, the practice is revealed to be common throughout Whitehall
June 2012 – Comedian Jimmy Carr and members of the pop group Take That are outed as beneficiaries of tax avoidance schemes.
- 1 Universities aren't working us hard enough, say undergraduates
- 2 Lego letter from the 1970s still offers a powerful message to parents 40 years later
- 3 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 4 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 5 Grayson Perry: London needs affordable housing because 'rich people don't create culture'
Oscar Pistorius terrorised Reeva before he shot her dead, says June Steenkamp
Audacious North Korean kidnap plot foiled at Paris airport as 'Asian men' attempted to bundle student onto plane
Heroin to be prescribed to Canadian addicts by doctors
Tower Bridge glass walkway 'smashed' by night-time visitor dropping bottle of beer
Revealed: the case against Bill Cosby – through the stories of his accusers
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Rochester aftermath: Sacking of Emily Thornberry will make work of Labour MPs '10 times harder'
Exclusive: UK approved £7m Israeli arms sales in six months before Gaza conflict
£17000 - £19000 per annum: Recruitment Genius: This fragrance store are lookin...
£20000 - £23000 per annum: Langley James : Desktop Support Analyst; 1st Line; ...
Negotiable: Recruitment Genius: This fragrance store are looking for enthusias...
£35000 - £40000 per annum: Recruitment Genius: An exciting and rewarding role ...