Last year HMRC queried more than 10,000 estate valuations, according to figures obtained by UHY Hacker Young. The average challenge netted extra tax of £27,000.

More on this from IFA Online can be found here.

Let’s start with the latest UK coalition Government spat.  This time on Nick Clegg’s call for a “wealth tax”.  An article on this from the Herald can be found here.

The Deputy Prime Minister said: “If we are going to ask people for more sacrifices over a longer period of time, a longer period of belt tightening as a country, then we just have to make sure that people see it is being done as fairly and as progressively as possible.”  George Osborne’s response was as expected and criticised Nick Clegg’s proposal claiming that a wealth tax would drive away Britain’s wealth creators.    

There has been lots of commentary on this.  My favourite piece was by Iain MacWhirter in the Herald.  This article can be found here.  The following is from his article:

“It is astonishing that anyone still subscribes to the myth that the enrichment of the few leads to the prosperity of the many.  It just doesn’t happen.  Wealth does not “trickle down” to the rest of society from the troughs of the very rich – if anything the reverse is the case.  It is sucked up through the concentrations of asset wealth held by the top 1% in property, shares and bonds. The story of the last three decades is that the wealthy have become immensely, shockingly, incomprehensibly richer while the middle has been squeezed and the poor remain pretty much as they always have – at the bottom of the heap struggling to hold their lives together.”

The UK Government is reportedly considering creating a scheme of “mini-jobs” which would allow employees to take on work without paying tax or national insurance, in a bid to boost employment.  The scheme is modelled on a German programme under which employees can earn up to €400 a month before any tax is paid.  An article on this from the Guardian can be found here.

Now to an old favourite, MPs’ expenses.  HMRC is reportedly in a dispute with the Westminster’s expenses watchdog, the Independent Parliamentary Standards Authority, with the latter defending the right of MPs to employ accountants to fill in their expenses forms and tax returns and insisting that the cost should be tax deductible.  An article from the Guardian on this can be found here.  The article quotes some of the correspondence between the parties which makes interesting reading and suggests that MPs, or at least IPSA, has a short memory.  Taxpayers are not generally permitted a tax deduction for the costs of complying with tax law.

UK public sector borrowing reached £600m last month, leading to further criticism of the UK Government’s economic strategy.  Borrowing in the first four months of the year was £9.3bn higher than the equivalent period last year whilst there was a 20% drop in the corporation tax take, according to official figures.  An article from the Scotsman on this issue can be found here.  This is an issue which is not going away anytime soon.

“The war on the motorist is a myth and fuel taxes should be raised without delay”.  A report by the Institute of Public Policy Research, a think tank, has recommended that fuel taxes be raised and congestion charging extended.  An article on this challenging proposal from the Telegraph can be found here. 

The Scottish Daily Express claims that Scotland’s local authorities are set to write off more than £320m of unpaid poll tax.  For a more balanced view of what is actually happening read the article all the way through.  The article can be found here.

The UK Public Accounts Committee has urged HMRC to prosecute more people for alcohol smuggling.  HMRC estimate that £1.2bn in tax is left uncollected each year on smuggled beer and spirits, yet there have been no more than six successful prosecutions each year, in the four years to 2009-10.  An article on this from the BBC news website can be found here. Another argument for devolving control over alcohol duty to the Scottish Parliament? 

Some Italian tax inspectors are disguising themselves as holidaymakers to detect tax evaders on the crowded beaches, while others are questioning the owners of luxury yachts.  Great work if you can find it.  An article on this from the Telegraph can be found here. 

Riots erupted on the tranquil Greek island of Hydra after tax inspectors arrived in force to arrest shopkeepers for not issuing receipts.  Angry crowds stoned the inspectors and besieged the building in which they took refuge until riot police arrived to restore order.  An article on this from the Athens News can be found here. 

Now to the USA.  The US media continues to analyse the tax-planning methods used by Republican presidential candidate Mitt Romney.  More on this from the STEP Journal can be found here.    

Have a good weekend.

Let’s start with Gordon Brown’s comments and in particular his claim that devolving tax and fiscal powers to the Scottish Parliament automatically means a “race to the bottom” for tax rates and in particular business tax rates.  There are a number of problems with this statement.  I will simply point out two.  Tax competition already exists.  Not just within the European Union but throughout the world.  Then there is the fact that the underlying law, for example tax reliefs, are just as important as tax rates to business.  Creating a Scottish tax system is also a once in a generation chance to create a simpler and more progressive tax system.  This opportunity is not available to the UK.  Evidence that the present Scottish Government is already putting this opportunity into practice is shown by its excellent consultation on a Land and Buildings Transaction Tax.  My earlier blog on this can be found here. 

Again on tax powers for the Scottish Parliament.  I was disappointed, but sadly not surprised, to see another patronising picture accompanying an article in Tax Adviser on the subject of the tax powers being devolved to the Scottish Parliament.  First we had a man in a kilt holding a whisky bottle and this month a scene from the movie Braveheart.    

Now to some incredible news.  HM Treasury is going to employ someone in Scotland.  I wonder if this has anything to with a certain referendum.  Of course it does.  An article on this from the BBC news website can be found here.  I did find it amusing that the position ends shortly after the proposed referendum date.  I should not be so cynical.  It is good that HM Treasury is going to try and find someone to appease the natives.  I suspect they have run out of gunboats. 

Now to HMRC.  HMRC is clearly under strain.  In addition to having to deal with numerous devolution issues its budget is being reduced by 15% whilst having to increase tax revenues brought in by compliance activity by £7bn per year by 2014/15.  Not surprisingly HMRC staff have begun “working to rule” to highlight ‘problems caused by the job and budget cuts. 

I was also interested to see that HMRC has published a draft code of governance for resolving tax disputes.  This follows the controversy surrounding some corporate tax disputes of which it was accused of agreeing over-generous resolutions.  An article on this issue can be found here.  

Clearly the UK Government is keen to show it is clamping down on tax evasion.  HMRC has paid out more than £1m in rewards to tax evasion informants since the start of the financial crisis.  An article on this can be found here.  And just to reinforce the point HMRC has published its rogues gallery of tax evaders and fraudsters.  An article on this from the BBC news website can be found here.

Now to an issue I have blogged on recently.  The Office of the Scottish Charity Regulator is reportedly to investigate 50 private schools to see if they meet the “benefit to the public” criteria in order to maintain their charitable status.  An article on this from the Sunday Herald can be found here.  This is an issue that still needs to properly debated.     

Now to the strange world of caravans and an article from the Herald.  It seems that a little-known tax loophole is set to cost Scotland’s councils millions of pounds a year in revenue.  Each caravan in a caravan park can apply for rates relief, which in turn cuts the overall bill for the park considerably.  It seems that few people knew about this loophole until the owners of caravans in the Rosneath Castle Caravan Park, near Helensburgh, first began using it. The 300 caravan owners at the park have now bombarded the Clydebank business ratings assessors’ office with letters and phone calls, each seeking to save a few hundred pounds per year in council rates.  The article from the Herald can be found here. 

Now to the USA and news that the Democrats are split over estate tax reform.  Democratic Party members of the US Senate have rejected President Obama’s proposal for a 45% top rate of federal estate tax on individual estates worth more than $3.5m.  The tax will rise sharply at the end of this year if Congress fails to agree on reform.  An article on this from Bloomberg can be found here.

Tax is also an issue in the Presidential election.  The Democrats have succeeded in turning the finances of Republican presidential candidate Mitt Romney into a lead news story.  Pressure is growing on Romney to reveal tax returns.  There are accusations that he failed to disclose a Swiss bank account, and even that he participated in the US Internal Revenue Service’s 2009 offshore tax amnesty.  An article on this from Forbes can be found here.

Let’s finish with an old favourite.  It seems that there have been some financial transaction tax stirrings in both Korea and France.  In order to bring the taxation of derivatives in line with other earned income and introduce another revenue source, the Korean Government has announced plans to impose a transaction tax on index options and futures.  France has also partially implanted its own financial transaction tax.  Although a small start, covering only shares in larger companies, and at 0.2%, it’s still lower than UK stamp duty on which it is modelled. Articles on the Korean proposal can be found here and the French proposal here.

Have a good weekend.

Let’s start with “Land Reform”.  The First Minister has set up a group of experts to look at this issue.  The First Minister wants the group “to deliver radical change” for both rural and urban areas.  It will be chaired by former Moderator of the General Assembly of the Church of Scotland, Dr Alison Elliot.  More information on the review can be found here.  One factor that is noticeable by its absence is taxation.  This should also be a review of how we tax our land and property.  If not included this is an opportunity missed.

Who is to blame for the state of the economy?  You would have though bankers might be high up on any list.  However, it seems there is another favoured suspect, tradesmen.  David Gauke, Exchequer Secretary at the UK Treasury, called people who pay tradesmen in cash “morally wrong”.  He has also claimed that the UK Government has missed out on about £2bn on taxes on these “off the books” transactions.

In response the regularly excellent Ian Bell wrote an article titled “Plumbers dodging VAT aren’t to blame for economic mess”.  His article in the Herald article can be found here.  This is one of the best articles I have read recently.

Gauke was also not helped when it transpired that Boris Johnson, David Cameron and Nick Clegg have engaged in the practice of paying tradesmen cash.  Gauke’s full speech can be found here.

The tradesmen issue aside, there were many good things in Gauke’s speech.  This includes a new UK Treasury consultation paper on giving HMRC new powers to force tax firms to disclose clients who are using tax avoidance schemes.  A report on this from the BBC news website can be found here.  More information on this consultation can be found here.  It is though still surprising that the UK Treasury has taken so long to even consider measures such as this.

It is always worth putting figures in context.  A new study for the lobbying group Tax Justice Network claims that wealthy individuals worldwide are holding at least $21 trillion in bank accounts in low-tax jurisdictions.  This dwarfs the £2bn figure mentioned above.  A report on this from the STEP Journal can be found here.

Now to the Scottish Government’s consultation on its proposed Land and Buildings Transaction Tax.  The consultation can be found here.  The Land and Buildings Transaction Tax will replace the current UK Stamp Duty Land Tax from April 2015.  This is important as it is effectively the beginning of a Scottish tax system.  The consultation is also of a standard that we will now expect.   Previous papers on corporation tax and excise duty, although not consultations, were simply not good enough.  Lessons clearly have been learned.  The consultation ends on 30 August 2012.

Now to the North Sea.  George Osborne has pledged £500m in tax breaks for companies developing the Cygnus gas field in the North Sea.  In addition two Chinese firms announced major acquisitions worth over £10bn in North Sea oil firms.  More on these stories can be found on BBC news website here and the Press & Journal here.  It seems that there is a great deal of life left in the North Sea and not just in Scottish waters.

One of the most important art objects ever donated to Scotland’s national collection in lieu of inheritance tax has gone on display. The Hamilton-Rothschild Tazza, a Byzantine sardonyx bowl mounted on a 16th-century gold stand, came from the estate of Edmund de Rothschild, who died in 2009, under the “Acceptance in Lieu scheme”.  A report on this from the STV website can be found here.

Now to an issue I have blogged about before.  An investigation for the Sunday Herald has shown that due to the charitable status of fee-paying schools in Scotland, while local authority schools have to pay full non-domestic rates, because many fee-paying schools are charities they receive an 80 per cent discount on their rates.  The investigation suggests the discount has saved private schools in the six local authority areas investigated £10m over three years. An article on this issue from the Sunday Herald article can be found here.

This issue shows how complicated devolution can be.  Non-domestic rates and charitable status are devolved matters.  Tax relief for charities is a reserved matter even under the provisions of the 2012 Scotland Act. 

Interestingly in the same week Stephen Twigg, Shadow UK Education Secretary, has said that Labour may remove the charitable status of some private schools.  Twigg warned that a UK Labour Government could enact legislation so that private schools not serving the community would lose their charitable status.

The UK Government has finally confirmed that fuel duty, air passenger duty and road tax are not environmental taxes.  This means that they are “revenue raisers” pure and simple.  The UK Treasury now defines an environmental tax as a charge which is explicitly linked to Westminster’s environmental aims, aimed at promoting behaviour change and is structured so that people pay more based on the potential damage caused to the environment.  An article on this from Holyrood can be found here.

I think I will finish with China and its attempt to attract more foreign investment.  China has slashed from 10% to 5% the withholding taxes it levies on profits repatriated by foreign companies, and on dividends paid to foreign shareholders of Chinese-quoted shares. The concessions apply only to companies based in double tax treaty partner countries, excluding the US.  A FT China article on this can be found here.

Have a good weekend.

Where to start?  I think I will start with the Scottish Futures Trust.  I remember well the negative reaction to the SFT when it was first proposed.  The coverage the SFT has received this week shows how much things have changed.  The fact that the long term costs of PFI are now widely known also shows how good an idea the SFT was.  A report on this from the BBC news website can be found here.

This raises another issue.  Notwithstanding the fiscal powers debate it is clear Scotland is increasingly doing things its own way.  On areas such as health or education the differences are well documented.  Now Scotland is to have its own food standards agency and a new governing body for the Scottish canals.  This is not because of Calman or the Scotland Act but because of the actions of the UK Government.  Add to this the Revenue Scotland announcement and you see the direction in which things are moving.

Now to a subject I have written about before, the Crown Estate.  It is now difficult to find someone against devolving control over the Crown Estate in Scotland to the Scottish Parliament other than the present UK Government.  If the UK Government is not even willing to cede control over this body to the Scottish Parliament then it is easy to accuse them of not seriously engaging in the fiscal powers debate.  A report on the latest ploy by the UK Government to not devolve control of the Crown Estate to the Scottish Parliament can be found here.

Now to the UK Government’s so called “Heritage tax”.  “The Heritage Alliance is disappointed that the UK Government has refused – despite widespread opposition and strong challenges to the rigour of its evidence base – to reconsider its Budget proposal to remove zero rating of VAT on approved alterations to listed buildings.”  No sign yet of a u-turn on this proposal.  More on this can be found here.

The Sunday Times recently reported that Scottish Government advisor Dr Andrew Cameron has advised that a tax break, which would allow wealthy landowners and investors to plant trees in exchange for tax offsets, would help Scotland meet its forest coverage goals. That would of course require further tax powers to be devolved if this was to be just a Scottish tax relief.  Let’s also not forget that the last attempt at something like this was a complete shambles.  Hopefully if this idea is revisited lessons will have been learned.  A story on this issue from 2002 can be found here.

Now to the “shared services” debate.  The House of Commons Public Accounts Committee has found that a Whitehall scheme to share resources across departments has cost hundreds of millions of pounds more than it saved.  The scheme ran £500 million over budget, costing £1.4 billion, and of the five departments that took part, only one broke even.  A report on this from the Telegraph can be found here.  Sadly I am not surprised with this report.

Aggregates Levy is one of two other miscellaneous taxes recommended for devolving to the Scottish Parliament under the Calman Commission.  The other being Air Passenger Duty.  The UK Government has so far resisted devolving Aggregates Levy due to a European Court action by the British Aggregates Association.  An update on this from HMRC can be found here.  The UK Government are fast running out of excuses for not devolving Aggregates Levy.

I was not surprised to read that many elderly farmers are working long past retirement age because they fear losing agricultural property relief (APR).  APR is likely to reduce their liability to inheritance tax.  Their worries have been prompted by HMRC’s tactics of challenging APR on farmhouses at every opportunity.  A report on this from the STEP journal can be found here.

Now to matters slightly further afield.

The European Commission’s Brussels IV proposal to simplify the settlement of international successions has received the final backing of the European Union’s Council of Justice Ministers.  The regulation will come into force in 2015 and will apply directly in all member states, other than Denmark and the opting-out members UK and Ireland.  Hopefully this is something that the UK and Ireland will consider again in the near future.  A report on this from the European Commission can be found here.

Now to France.  As expected, France’s new Socialist government has announced a series of increases in personal and business taxation.  They include new wealth taxes and a tax on foreign owners of holiday homes.  A similar idea was floated last year by the Sarkozy administration but it was dropped when the French Government was advised that such a tax would not survive a challenge under European Union anti-discrimination legislation. Hollande may believe he can avoid this by calling the levy a “social charge” rather than a tax.  A report on this from the STEP journal can be found here.

The New York Times has published an article describing just how easy it is to set up a Delaware shell company without disclosing its beneficial ownership.  This is something that the US Government has regularly pilloried many other countries for.  Apparently Delaware has more corporate entities than people.  The article from the New York Times can be found here.

A Berkshire man has been convicted of evading £430,000 inheritance tax on a Swiss bank account he held jointly with his mother.  HMRC obtained Michael Shanly’s account details from the French authorities, who had bought them from a former employee of HSBC Geneva, who had stolen them from the bank.  This is a good example of the increasing co-operation between European countries and the increasing effectiveness of HMRC.  A report on this from the BBC news website can be found here.

Australia has introduced its highly controversial carbon tax, after years of bitter political wrangling.  The law forces about 300 of the worst-polluting firms to pay a A$23 (£15; $24) levy for every tonne of greenhouse gases they produce.  The Australian Government says the tax is needed to meet climate-change obligations of Australia – the highest emitter per-head in the developed world.  A report on this from the BBC news website can be found here.  The environmental taxation debate in the UK, in contrast, has slipped down the political agenda over the last few years.

I think I will end with Cyprus.  The Cyprus government will not agree to cut its 10% corporation tax rate in order to secure a European rescue of its banking sector and public finances.  Cyprus may though have to agree to a further VAT increase as part of these negotiations.  Cyprus is taking a similar stance to the one taken by Ireland over the last couple of years.  A report on this can be found here.

Have a good weekend.

Time for another “tax land”.

Where to start?  Jersey seems as good a place as any.  Jersey is also considering its constitutional options.  This is not new news.  I was in Jersey a couple of years ago and independence was also being discussed amongst the lawyers I was meeting.  Jersey is in a different position to Scotland as it is for all intents and purposes already fiscally autonomous and is a British Crown dependency.  An article on this from the Guardian can be found here.  This is from the Guardian article:

“A barrage of regulatory clampdowns and political attacks on the Channel Islands’ controversial financial industry has prompted one of Jersey’s most senior politicians to call for preparations to be made to break the “thrall of Whitehall” and declare independence from the UK.  Sir Philip Bailhache, the island’s assistant chief minister, said: “I feel that we get a raw deal. I feel it’s not fair.  I think that the duty of Jersey politicians now is to try to explain what the island is doing and not to take things lying down.  The island should be prepared to stand up for itself and should be ready to become independent if it were necessary in Jersey’s interest to do so.”

It seems that the constitutional genie is well and truly out: Scotland, Falkland Islands, Jersey and now it seems on UK membership of the European Union.

Now to the announcement by the Scottish Government of its intention to create its own tax administration and collection agency, to be called Revenue Scotland.  Its main job initially will be to administer the two new Scottish taxes devolved under the Scotland Act.  The fact that it is to work closely with Registers of Scotland and the Scottish Environment Protection Agency, also makes sense.  These new taxes, a Scottish Stamp Duty Land Tax and a Landfill Tax, will be directly linked to the work done by these organisations.  A press release from the Scottish Government on this can be found here.

As regular readers of this blog will know I have been writing about this issue for many years now.  Whilst I welcome this announcement I still think we need to be more radical.  We need to review all government tax, law and registration services.

I was not surprised to see some negative comments about the Revenue Scotland announcement. However, if Scotland has its own tax system it needs its own tax administration and collection agency.  That applies just as much under the Scotland Act as independence.  That though is not the only reason.

Let’s not forget the fact that UK tax law is based on English legal principles, or how HMRC and HM Treasury dealt with the introduction of Stamp Duty Land Tax in Scotland, or the inheritance tax changes to trusts, or the proposed planning-gain supplement, or the Scottish Government’s local income tax proposal or VAT and the new Scottish police and fire services.  All good reasons for welcoming Revenue Scotland.

The Scottish Government is in no doubt that Revenue Scotland will be able to administer the new Scottish taxes at a lower cost than HMRC.  I agree with that.  I have also noticed that no-one seems to remember one of the more ridiculous claims made when the Calman Commission proposals were being debated.  The Scotland Office claimed that the cost of administering a separate Scottish tax system would be the same as the present UK system.   Complete and utter nonsense.  The Scotland Office paper can be found here.

One last point on Revenue Scotland.  I met with a number of Scottish Government officials just before the 2011 Scottish election on this issue.  It was quite clear that they wanted nothing to do with this idea and only met with me at the insistence of a Scottish Minister.  Thank you Jim Mather.  I wonder if their attitude has changed in any way?  Let’s hope so as this is just the start.

The Scottish Government has also published its consultation on a Land and Buildings Transaction Tax.  This will replace Stamp Duty Land Tax.  The consultation for Scotland’s replacement to Landfill tax will follow later this year.  I use the word “summer” advisedly.  The consultation can be found here.

And there’s more.  The Scottish Government has finally published its consultation in a “plastic bag tax”.  The consultation can be found here and a press release from the Scottish Government here.

Even the UK Government is playing its part.  The UK Government is consulting on whether to allow the Scottish Government the power to issue its own bonds.  The move would potentially allow Scottish Ministers to raise hundreds of millions of pounds.  A provision in the Scotland Act 2012 has already enabled the UK government to amend the way in which Scottish Ministers can borrow from 2015-16.  An article on this from the BBC news website can be found here.  The consultation can be found here.

One last point on fiscal powers.  The UK government is reportedly considering proposals to devolve complete control of income tax if Scotland votes ‘no’ in the independence referendum.  This sums up nicely what is wrong with the UK Government’s approach to this debate.  If the UK Government has a serious proposal to make, make it.  If not be quiet.

Now to tax and morality.  David Cameron branded comedian Jimmy Carr “morally wrong” for seeking to avoid paying his fair share of tax.  Mr Carr is understood to use an aggressive, though legal, tax avoidance scheme which enables members to pay income tax as low as 1%.  This is dangerous territory for David Cameron.  Already the press have published the names of many others who are involved in similar schemes.  If David Cameron seriously wants to tackle this issue he must act against all those who seek to evade tax.  Has he considered the public disclosure of all tax returns or a minimum percentage of tax that must be paid?  I suspect not.

This is not just a UK Government issue.  The Herald discovered that Transport Initiatives Edinburgh used tax loopholes to allow directors to avoid paying income tax rates on £1 million in fees and bonuses. The company, which closed last year due to its handling of the trams project, paid directors and consultants through their firms.  As a result, they were subject to 20% corporation tax rather than 40% income tax.  The article from the Herald can be found here.

The evidence that the “rules” do not apply to everyone is growing.  Whether it is the 3,000 UK civil servants being paid through a company, or the payments made to those who were partially responsible for the trams fiasco in Edinburgh or the celebrities avoiding tax.  I am resisting the urge to say it was ever thus but in times such as this it does seem even more reprehensible.

One last point.  I often am quite critical of HMRC.  I would argue for good reason.  That said, is it really time to cut 10,000 jobs?  An article on this and the proposed strike by HMRC staff can be found on the BBC news website here.

Have a good week.

Not a great week for the UK Government and in particular George Gideon Oliver Osborne.  The problem here for the coalition government is not just the fact that there has been three U-turns in one week, it is the feeling that the March Budget was a bit of a shambles.  I would not go as far as that but it does seem a bit odd to me that so much was made of the so called “pasty” and “caravan” taxes and not that the UK Government did not even consider reducing VAT on repairs and renovations on residential property. 

As suspected the proposed cap on tax relief for charitable donations has been dead in the water for a number of weeks.  All we heard this week was  confirmation of that fact.  One final point on this.  These three U-turns come at a cost of approximately £150m.  Where is that revenue now to come from?   

“Flat rate” taxes were all the rage a few years ago.  Personally I have not been persuaded by the arguments put forward.  That said, as we start to think about how a Scottish tax system might look flat rate taxes should also be considered.  The latest call again came from those generally regarded to be on the political “right”, the TaxPayers’ Alliance and Institute of Directors.  In addition to arguing for a single rate of income tax the usual noises were made for the tax system to be simplified.  No-one is likely to argue against a simpler tax system until specific proposals are made.  For example, recent changes to the amount of personal allowance for those aged over 65.  This change has been termed the “granny tax”.  I did though like the idea of abolishing certain taxes although not necessarily those listed in this report.  It is claimed that the cost of these proposals would be met by prolonging the UK Coalition’s spending cuts by an extra five years.  More on this can be found here.  The report also claims that these changes would increase gross domestic product by 8.4% over 15 years.

Again on tax rates.  According to City A.M. the UK has continued to raise taxes while most other European Union countries tax rates have fallen.  The European Union average top rate of income tax decreased from 44.8 to 38.1% between 2000 and 2012.  In this same period, the UK’s average rose from 40 to 50% although the top rate is to fall from April 2013.  Unless of course we see another U-Turn.  The UK has though followed the European Union wide trend for raising VAT.  The average rate has risen from 19.2 to 21%, with the UK’s up from 17.5 to 20%.  The report from City A.M. can be found here.

Some stories do not surprise you in any way.  This is one of them.  Taxpayers are spending more than £1 million every month on the rent and upkeep of empty fire service control rooms that have never been used.  Details revealed under Freedom of Information legislation show that only one of the nine Fire Control centres is operational, despite the fact that taxpayers will continue to pay for their upkeep for up to 20 years.  This was reported in the Times on 24 May. 

Then there are stories that do surprise you but shouldn’t.  This is one of them and is also a story I have covered recently.  3,000 civil servants are employed by private firms in order to keep their tax bills down.  By remaining off the UK Government’s payroll, thousands of officials are avoiding paying national insurance contributions and are able minimise their overall tax contributions.  The report from HM Treasury can be found here.    

Good news that could have been even better news.  HMRC collected an extra £4.32bn during the last five years.  This is 11 times greater than the investment made for collecting this extra revenue.  However, a House of Commons Public Accounts Committee report claims that another £1.1bn could have been collected without job losses at HMRC.  A report on this from the BBC news website can be found here.

The International Monetary Fund (IMF) and in particular its managing director Christine Lagarde, is rarely out of the news these days.  Lagarde has said said that the UK economy had underperformed and unemployment remained much too high.  The IMF urged the UK Government to consider cutting interest rates and a further round of quantitative easing.  Ms Lagarde also said that UK ministers should prepare a plan for a worse economic environment which could include a cut in VAT.  However, the IMF also said that the UK Government should not divert from its aim of deficit reduction.  A report from the BBC news website can be found here.    

How to win friends and influence people.  Political parties in Greece have criticised Christine Lagarde for suggesting that Greeks were avoiding paying taxes.  Socialist leader Evangelos Venizelos accused Ms Lagarde of “insulting the Greek people”.  A report, again from the BBC news website, on this can be found here. 

There may be trouble ahead.  The UK Supreme Court has ruled that HM Treasury breached European Union law by retrospectively blocking tax refund claims.  The amount involved could be as much as £5bn.  Not surprisingly, HMRC has said that it is “considering the implications of this complex judgement carefully.”   A report on this from City A.M. can be found here. 
 
Now to what some might consider an overreaction.  Some US politicians are so irked at the idea that Americans are renouncing their citizenship to avoid tax, that they are introducing a new Senate bill to tax them forever.  A report on this from ABC news can be found here.  In addition, Congress is close to approving a law under which the Internal Revenue Service will be able to revoke the passports of Americans who owe substantial unpaid taxes.  An article from the Wall Street Journal on the passport claim can be found here. 

I think I will finish with fiscal powers.  HMRC is under no obligation to implement any tax proposal made by the Scottish Government under the Scotland Act.  HMRC can effectively veto any proposal if it differs too greatly from the UK system.  A report on this from the Herald can be found here.  I find it worrying that anyone is at all surprised about this.  I would be even more worried if I thought that anyone actually believes that HMRC and HM Treasury are happy to see tax powers being devolved.  I suspect that there are very few people in HMRC and HM Treasury who are happy to see the beginning of the end for a unified UK tax system.  An earlier blog on this point can be found here.     

Also on fiscal powers.  I still think it is unlikely that the so called “second question” will be asked as part of the independence referendum.  What will those who are arguing for “devo plus” and/or “devo max” do?  Will they vote for independence or the status quo and the hope of something more in the future?  This is an issue I will come back to after my well deserved holiday.  

Have a good weekend.

This calculator can be used to estimate the amount of Income Tax (not other taxes such as Capital Gains Tax) and National Insurance contributions you can expect to pay on your income – and find out how this money gets spent by the UK Government.  It is aimed at people who pay tax through Pay As You Earn (the system used by employers and pension providers to deduct tax from your wages or pension). 

More on this can be found here.

Let’s start with the recent local government election.  I was disappointed that none of the main parties, of which Scotland now only appears to have three, put forward any serious proposals for reforming how we pay for our local services.  There is though one body actively campaigning on this issue and that is the think tank, Reform Scotland.  An article in the Scotsman on this can be found here.  Reform Scotland want our local authorities to have the power to decide whether to adopt a property tax such as the Council Tax or a land value tax or instead opt for an income tax, a consumption tax or a number of different local taxes.

Now to fiscal powers and the fact that National Insurance turns 100 in July.  100 not out but for how much longer?  The idea of combining income tax and National Insurance was considered by a working party as long ago as 1993.  The main reason for this is the erosion of the link between National Insurance contributions and welfare benefits.  This issue is again being looked at.  Do I think we will see a complete merger?  No, unless both income tax and National Insurance are controlled by the Scottish Parliament.  This is an example of how a Scottish tax system could create a more simplified system.

Again on fiscal powers.  I was not surprised to see a number of Conservative MPs arguing for a “Devo Plus Bill” as part of an “alternative Queen’s Speech”.  This was published on the Conservative Home website.  Conservative Home support the Reform Scotland proposal which would devolve all taxes to Scotland except VAT and National Insurance.  More on this can be found here.

Now to a group of people termed “High Net Worth”.  HMRC has announced that its High Net Worth Unit’s tougher approach on wealthy taxpayers has resulted in an extra £200m of tax revenue.  David Gauke, Exchequer Secretary to HM Treasury, said: “The Unit’s approach ensures that HMRC is working as effectively as possible with the very wealthy and that they are contributing a fair share”.  This was reported in the Financial Times on 6 May.  The article also claims that the amount collected by this Unit has doubled since it began operations in 2009-10.  The aim is for £560m by 2014-15.  This does though beg the question: why was this Unit only set up in 2009?

Now to a claim that the UK Government Minister for Civil Society, Nick Hurd, was never consulted about the cap on charitable tax relief announced by HM Treasury in March.  More on this from the STEP journal can be found here.  The UK Government has been at sixes and sevens on this policy.  I will be surprised if it survives the summer.  Unless of course summer is already behind us.

Again from the STEP Journal.  1.6 million people should have received letters by now from HMRC warning them that they have been undercharged tax under the PAYE system and will have to pay extra.  Another 3.5 million people will be given a tax refund.  The STEP article can be found here.  An example of the sheer scale of the UK tax system and the problems it faces.

Good to see that the Scottish Government’s prosecution service has passed 20 cases of large scale tax avoidance to HMRC for investigation.  An article on this from the Scotsman can be found here.  The referencing of Al Capone must be compulsory when journalists write about this subject.

Sometimes an argument just makes you shake your head.  The Scottish Government has announced that the minimum price for alcohol will be 50p.  Although this proposal has received a huge amount of support, the leader of the CBI in Scotland has warned that supermarkets are likely to receive millions in extra revenue from drink sales.  That of course is true.  So why is this organisation against the devolving of control of alcohol duty to the Scottish Parliament and the Scottish Government’s Public Health Levy (also known as the “Tesco tax”)?  There is of course no need to answer that question.  An article from the Scotsman on this can be found here.

It seems that top rates of personal income tax across the Organisation for Economic Cooperation and Development (OECD) countries have begun to rise again in recent years after three decades of steady reductions.  The OECD press release can be found here.  Let’s not forget one of the main reasons for the reduction.  Politicians decided that “stealth taxes” were a better option.  For “better option” read “will help me get elected”.  The economic crisis put paid to that “cunning plan”.

“A serial killer is stalking the wealthy suburbs of Athens with an idiosyncratic choice of victims. They are all rich Greeks who have failed to pay their taxes, and their corpses have been left scattered among the ruins of the ancient city, dead of hemlock poisoning, the means of Socrates’ execution.”  This is the plot of the latest bestselling novel by Petros Markaris, who has combined the roles of thriller writer and social commentator in Greece to such an extent that he has become one of the most widely quoted voices in the crisis.  The article on this from Business insider can be found here.

Now to a story that combines sport, tax and the financial crisis.  Diego Maradona is suing the Italian government for £40m, despite owing it £32m in unpaid taxes.  Only in Italy!  The article from the Metro can be found here.

Lastly, an update on an issue I wrote about recently.  Co-founder of Facebook, Eduardo Saverin, is one of the thousands of wealthy Americans to have renounced his citizenship recently in order to avoid the country’s international taxation regime.  An issue for those planning a Scottish tax system to ponder.  An article on this from the STEP journal can be found here.

Have a good week.

A reminder to charities and Community Amateur Sports Clubs (CASC) from HMRC to use form R68(i) to claim tax repayments on Gift Aid donations.  More information on this from HMRC can be found here.