HMRC demands £250 million from tax avoiders

MILDREWREBORN Since UKIP could feasibly get a parliamentary majority on as little as 35% of the popular vote, it would hardly give them a mandate to leave (especially since 56% of people want to stay in the EU). If they tried to withdraw without putting it to a referendum it would be greatest crime against democracy this country has ever seen. (Sorry if this is off topic, I didn't start it)

Old Henry and Reality Wins: No, it's not "extortion", or "making any tax avoidance it doesn't like, illegal". Here's a typical structure. An individual invests £1 million into a partnership, but only £200,000 is cash from his own resources. The remaining £800,000 is by way of loan finance as part of the scheme. Unfortunately the partnership loses all its money by investing in an unsuccessful business venture like (say) an unsuccessful film. And luckily the loan is non-recourse, that is, it's never called in so the investor isn't liable. The objective is to claim loss relief of £1 million. At a tax rate of 40% this equates to £400,000. So the net result is that although the investor has lost £200,000, they've claimed £400,000 back from the taxman - i.e. you and me. Nice. The technical points are, first, whether the investment project was designed to fail in order to create a tax loss (naturally the scheme promoters say not) and, second, whether the investor was really at risk for £1 million or only for the £200,000 they actually contributed. HMRC's current position is that they'll accept a claim against £200,000 (in this example) but not for £1 million. I find it hard to argue against that view, especially as some of these schemes were so outrageous that they are currently subject to criminal prosecution. I have no idea what UKIP has to do with any of this.

These schemes were used by high net worth individuals to artificially lower their tax bills to the detriment of all other UK taxpayers. Do I feel sorry for them at all? No, not one bit. I think That in general those with high incomes are able to accumulate excessive amounts of wealth because the tax regime is a tad too generous to them. Now obviously if tax rates are pushed too high the rich will leave these shores and flee to a safe tax regime where their wealth will be protected. So no return to the days of 98% tax rates. But more tax payable by the highest incomes yes, more tax payable by the highest net wealth people yes. Of course this is the beauty of the mansion tax - property is easy to spot and easy to tax and it can't flee these shores. And gains in one's prime property is currently CGT free. UKIP: Their stance on leaving the EU is not shared by any other party. Therefore, if that is an important thing to voters, and controlling immigration is a key part of the debate, UKIP is the only place to go. And if they can garner all of the anti EU vote they could well be a force to be reckoned with. I don't think they would be worried by the Mori poll - as its not a policy of their to offer a referendum on leaving the EU- their mandate would be from getting elected.