Here at 1st Contact we aim to provide you with news stories that will be relevant to current tax issues, especially during this economic downturn in our economy.
There has been much tension in the business tax world for the past year and this has made it difficult to tell the players from the coach. Some players believe that the failure of the HMRC to enforce the corporate tax and collect from it has led to a house of cards, just ready to tumble. The scheme is now called tax avoidance at any cost according to the investigators. Since the government has failed to enforce any disclosure rules about off-shore subsidiaries, no taxes can be collected from them and they are used for tax avoidance.
According to the latest report, there are five major companies which make use of this type of corporate tax evasion. They include the HBOS bank, Tesco, UBM, BAE and finally HSBC. Offshore investing and setting up industry elsewhere into which to filter the company’s money is taking place all over Europe. These other countries are flourishing somewhat due to new industry, compliments of the UK government, and new jobs. Money that is intended for Britain’s coffers is being routed elsewhere in a bid to evade paying corporate taxes.
HBOS did not even post its list of subsidiaries, which would make it easier to identify whether or not it was running an offshore tax avoidance scheme. The same happened with BAE which flows its multi-millions into the British Virgin Islands and the Channel Islands. However, after much legal haranguing they have agreed to disclose their information. In a sub-section of the 1985 Companies Act, any corporation does not have to list their offshore holdings in its annual accounts but may do so on a separate return to Companies House.
This is a bit of a trick because once that information gets to Companies House there is little if no effort to enforce the tax payment. The registry in Cardiff admitted that they never check this information and no one has ever been prosecuted in court. So where is the clout to this legislation and collection system? That is why large corporations are heading off shore to do business, especially to Switzerland, where there is a very low tax rate.
The rich get richer because they can afford highly qualified tax lawyers to find the loopholes in such legislation. One example is that they are allowed to conceal their property ownership in the UK. They can proudly list their mansions and winter homes in the books of their offshore holdings but not in the UK books, which is a mockery of the public records system. It baffles the mind thinking that the UK needs and should have the corporations’ tax monies but the government makes it so easy to open up an offshore industry or account into which they siphon the money. Tax evasion at its finest!
1st Contact believes that all companies will have a good chance of enduring this current recession and extends this to smaller and local businesses. Visit our ‘home page’ where you will find the details to contact us and start to sort out any relevant company financial affairs.
1st Contact Tax offers specialist tax services to contracting professionals.
These services include: Contractor Accounting, Contractor Umbrella payroll, Personal Tax for Contractors, Limited Companies for Contractors and Contractor Financial Advice.