Very rarely does one venture into the “personal finance” section of
the business papers. Maybe it is because advice on how to invest your
million pounds fortune doesn’t seem that relevant to your life
situation. Sometimes, however, it pays off.
Photo: ToabiIn the October 1st edition of City AM,
Juliet Samuel offers kind advice on how to avoid paying taxes on your
“untaxed funds” (that is, money that you’ve lied to the tax authorities
about). It turns out that HMRC [Her Majesty’s Revenue & Customs]
have offered an amnesty for precisely this crime.
Apparently, it is very expensive to prosecute tax evaders and very
rarely do successful prosecutions land significant amounts of money, so
the HMRC has simply decided to ask for volunteers to come clean and
declare their previously undeclared earnings.
City AM, gracefully provides an example of how anyone with
£10 million undeclared income in Lichtenstein could benefit from this.
If you, in June 1990 deposited £10 million in Lichtenstein from some
undeclared source and this money today is worth £20 million, you would
normally have to pay around £14 million in taxes on interest and of
course the original 40% income tax, plus a fine of around £3.2 million.
However, with the amnesty, if you agree to pay £3.2 million in taxes
plus a penalty of £0.2 million, you can now have amnesty from future
prosecution. Thus, you can save about £14 million and sleep easier at
night in your million pound mansion knowing that the HMRC is not after
you.
Not everything is song and dance in tax dodger land, however. In
spite of this generous offer, only 419 people registered in the first
six months of the offer (the number in the past six months is rumoured
to be around twice that), as opposed to the around 5,000 British
investors holding £2-3 billion between them in accounts there (that is,
half a million each on average). Law firm DLA Piper partner Simon Airey
thinks that this might be because the deal has not been publicised
enough by the HMRC. So, we can presume that City AM is lending a hand now.
It is not hard to understand why the HMRC has kept quiet about their
offer of amnesty for rich tax dodgers with million pound tax accounts
in tax havens. At a time when the government is introducing austerity
measures in the public sector and benefits, giving tax breaks for the
rich squares badly with the idea that “we are all in this together”. It
exposes who really will have to pay for the bank-bailouts. If you are
rich and fiddle the books to hide millions from the tax authorities,
you get amnesty. If you are poor and unemployed, you get your benefits
taken off you. Suddenly, socialism seems like a pretty good idea.
