Man imprisoned for two years for not declaring ebay income

[flecc]

I bet that made a few sit up!

In his case he had made a considerable amount of money of course to get that sentence. However, it raises an important point for anyone who buys to sell, wishing to make a profit, since that make them a trader. Contrary to what some believe, the declaration of income when trading still has to be made even when a loss results.

Of course those who merely sell to shift stuff they've previously bought for personal use can do so anonymously, it doesn't concern HMRC.
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[Cyclezee]

If the HMRC had the resources and could catch all the people not declaring income from online auction sites, car boot sales, cash in hand jobs etc., as well as clamping down on import duty and VAT evasion then tax rates could be reduced significantly.

Or is that cloud cuckoo thinking

 

[axolotl]

If the HMRC had the resources and could catch all the people not declaring income from online auction sites, car boot sales, cash in hand jobs etc., as well as clamping down on import duty and VAT evasion then tax rates could be reduced significantly.

Or is that cloud cuckoo thinking

The problem is, chasing up all those small evaders comes at a cost - a massive cost. HMRC's tactics are to target one or two of the bigger offenders (like the gentleman mentioned in the OP) and make an example of them in the hope that it'll deter everyone else. This works to a certain degree.

It's a drop in the ocean compared to the big offenders though: the richest 1% and the big corporations, who have teams of the finest accountants and lawyers that money can buy to go head to head with HMRC, and teams of lobbyists to cajole and bribe politicians not to implement laws that would make it easier to extract the taxes they owe. By some estimates, taxes avoided and evaded by the very rich and the big corporations could fund most of the NHS (>£100bn per annum).

 

[flecc]

If the HMRC had the resources and could catch all the people not declaring income from online auction sites, car boot sales, cash in hand jobs etc., as well as clamping down on import duty and VAT evasion then tax rates could be reduced significantly.

Or is that cloud cuckoo thinking

Maybe, but as you say, the potential from the whole of the black economy is immense. It's certainly been allowed to get completely out of hand in the last thirty years.

Probably too expensive now to get the situation under control by management and detection, but perhaps truly draconian punishments would help to limit the evasion.

N.B. Crossed with Axolotl's post
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[trex]

How about going after the high flying contractors in the city of London who earn £1000+ a day and their fees paid to their limited companies?

 

[flecc]

R

the richest 1% and the big corporations, who have teams of the finest accountants and lawyers that money can buy to go head to head with HMRC, and teams of lobbyists to cajole and bribe politicians not to implement laws that would make it easier to extract the taxes they owe. By some estimates, taxes avoided and evaded by the very rich and the big corporations could fund most of the NHS (>£100bn per annum).

Maybe an answer to this could be all large multi-nationals being centrally taxed at a standard rate by international agreement, the World Bank administering and distributing the income to countries traded in according to relative turnovers. That would wipe out the tax havens at a stroke, and there would be nothing to be gained by juggling the returns.
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[Cyclezee]

I think we all agree the problem is vast and there is no easy solution, in the mean time the honest majority foot the bill

Please tell me the majority are honest?

 

[axolotl]

I think we all agree the problem is vast and there is no easy solution, in the mean time the honest majority foot the bill

There is no *easy* solution, but there is a simple one: close the tax loopholes instead of creating them (yes, I'm looking at your Osborne). Of course, as flecc rightly points out, this would require international cooperation because the rich, like the big corporations, are international entities.

As for whether the majority are honest, the answer is yes: they have no choice. Anyone on PAYE (which is nearly all of us) have little or no opportunity to evade or avoid tax.

 

[flecc]

Please tell me the majority are honest?

Yes they are as Axolotl says, and I think the great majority of middle size companies are too.

The problem with taxing companies as I see it is at the small and large company ends.

The smallest companies, sometimes one man bands, can easily under declare in the same way that the self-employed often can. Many small outfits lurk under the threshold for VAT, currently £81,000 per annum, while actually turning over much larger amounts, the excess commonly disguised by many transactions being in cash never banked but spent with other avoiders. Thus quite large avoidance rings can build up.

And the largest company problem is too well known to need detailed explanation. Basically it's the use of clever accounting techniques coupled with shifting incomes to low tax domains.
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[axolotl]

The problem with taxing companies as I see it is at the small and large company ends.

Kind of. The big corporations are brazen about it, with the likes of Vodafone "offering" to pay half their tax bill and HMRC taking it and running. It's disgusting. There are small businesses at it too though, but mainly in the building trade. Most other small businesses are closely monitored through real-time-accounting and since most transactions these days go through PDQs, practically everything is traceable. The building trade is last big (non black market) industry where lots of transactions are still done with cash, so there's the opportunity for easy tax evasion. HMRC know it but there's really very little they can do about it. Even the government don't want to crack down too hard because, as a nation, we're so dependent on the building trade.

 

[JohnCade]

There is no *easy* solution, but there is a simple one: close the tax loopholes instead of creating them (yes, I'm looking at your Osborne). Of course, as flecc rightly points out, this would require international cooperation because the rich, like the big corporations, are international entities.

As for whether the majority are honest, the answer is yes: they have no choice. Anyone on PAYE (which is nearly all of us) have little or no opportunity to evade or avoid tax.

Might actually happen now the US has started to be worried about its own multinationals moving headquarters to lower tax territories.

http://www.theguardian.com/money/2014/sep/16/international-tax-rule-updates-g20-countries

 

[Pete Keeffe]

The more folk who dodge paying tax the more tax we have to find to make up the difference.
Have been watching a series on TV about SW Trains and their revenue collection inspectors bring in a lot more every week than ever they cost the firm in wages.
Maybe there should be more HMRC tax dodge investigators or let them sub contract the job out on commission.
Everyone wins apart from tax dodgers.

 

[flecc]

The building trade is last big (non black market) industry where lots of transactions are still done with cash, so there's the opportunity for easy tax evasion.

As I know only too well, having supplied the construction industry for 18 years.

Huge numbers of very small businesses and the self-employed do much of their work on a cash basis whenever they can, often offering favourable quotes for cash. As mentioned there are whole chains of individuals circulating cash which the HMRC never see. Much of it is used for paying transactions of a few hundred pounds, but in total nationally the amount involved in avoidance is huge.
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