So there I was, catching up with an old friend when our conversation once again turned to tax related matters (much to my personal glee). Not the tax conversations of recent times however, which normally take the path of ‘grumble grumble Google grumble’. My friend had recently received a letter from HMRC, and upon opening it, somewhat timidly at the sheer horror of what might lie within, she noted two words that she was certainly not expecting.
As Britain grinds its way out of a near triple-dip recession, most analysis has focused on the use of monetary policy and quantitative easing (QE) as a means of economic stimulant, rather than the effects of fiscal policy on economic recovery. Eyes will be on Mark Carney, the new Governor of the Bank of England, as he puts an end to Britain’s ever expanding QE stimulus.
The Dolce and Gabbana case highlighted the recent crackdown on tax evasion schemes and the subsequent negative publicity attached to it. It has also exposed a number of companies with complicated tax structures who have successfully managed to ‘avoid’ paying tax over a number of years.
Starting a new company or starting to provide goods or services in a new jurisdiction, if you are setting up in the UK from overseas, is a daunting prospect. Whether you have £2,000 or £2 million to invest in your start-up you can still be faced with the problem of where to start and who to go to first for help.
Yesterday, news of Domenico Dolce and Stefano Gabbana’s crimes rocked the fashion world: the famous duo have each been sentenced to one year and eight months in prison by the Italian Supreme court and were fined just under half a billion euros between them. The Internal Revenue Service has, independently of the courts, fined the pair €343m and their accountant has been sentenced to two years imprisonment.
This April saw the introduction of the biggest overhaul to the Pay As You Earn (PAYE) system of income tax since its introduction nearly 70 years ago. In simple terms, employers are no longer able to wait until the end of the year before telling the taxman how much they have paid their staff, but must do so whenever a payment is made.
I can't help but feel conflicted after hearing the results of the Mehjoo case last week...
On the one hand, we have HMRC heavily cracking down on tax avoidance; and on the other, a High Court judge is ruling that practitioners have a duty to advise their clients how to avoid tax...