K2 Tax Avoidance – Alternative

Retain More Of Your Self Employed/Contractor Earnings

Can anybody explain to me what law Jimmy Carr broke? Can anybody explain to me what he did that justified the Prime Minister getting involved into what are the private financial circumstances of a UK citizen? Anybody who keeps money in an ISA is avoiding tax. Anybody paying into a pension is avoiding tax. Tax avoidance is not illegal, some see it as morally suspect but nobody can say it is illegal. Everybody has the right to limit the amount of tax they pay to that which is defined by law, as long as you are not breaking any laws you are not obliged to pay any more tax than you need to. I only wish that the UK government would acknowledge the number of EU citizens who use the UK to avoid paying tax but I suspect they’d prefer to keep quite about that one. The only time the avoidance issue becomes an issue for the papers in the UK is when the any mention of “offshore” is made, much as the case with Jimmy Carr and his use of the K2 scheme.

Just for the record there are many other alternative tax avoidance schemes in operation that have been devised by UK based tax experts and are for the most part UK onshore operations. If you want to come down hard on the offshores as the UK government seems to want to do then they need to look at exactly WHO has offshore dealings and even more importantly WHY they are looking offshore. Only the rich look offshore? Yes, not out of cost but because they are the ones being asked to prop up a failing country. The UK is an extremely high tax environment, not for your average run of the mill worker (20% isn’t high) but for those earning a lot, or some would argue those that have put in the hard work, the current UK tax regime is punishing. When you then factor in that many high earners are self employed or running their own companies and have to cover their own sick, holiday and pension costs it’s not hard to see why people look to pay as little in tax as they are legally required to. I know I would.

Boo hoo I hear you say. They are earning enough to pay their “fair share” of tax? Fair share? The “average” UK citizen does not pay much into the tax pot (there is a current obsession with taking work shy and feckless people out of the tax system altogether), the top earners are paying way above their fair share. The highest rate of tax payable in the UK is 50%. For every pound you earn 50 pence is taken off you. Then consider national insurance. Then whenever you do choose to buy something with that money in the UK you are paying 20% VAT. If you have worked your way to the top you are actually keeping less than half what you earn and if you spend in the UK the actual value you get is less than a third! How is this fair? Success shouldn’t be punished. Keeping less than half of what you earn whilst the rest is used in your name for any number of worthwhile (Health, Education) and less worthwhile (public sector pension bill..cough) causes is not fair.

If anything the case of Jimmy Carr and K2 has highlighted that the UK has another two faced government. On one hand they talk about encouraging small business, entrepreneurs and the “wealth creators” to power through their own bloated wasteful spending and then on the other they look to create an environment than punishes the intelligent and successful people for breaking exactly 0% of any laws. In simple terms, make a fair and robust tax system to fund a fair public sector and you’ll find people not needing to look at offshore tax avoidance schemes…until that happens, pigs fly and hell freezes over you are going to be forever chasing your tail.

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