Saturday, 6 October 2012


UK media hysteria over the alleged 25,000 BBC off-payroll contracts alongside 2,000 or so tax-minimizing senior civil servants, is, for once, fully justified. Twenty-seven thousand Tax-Back-Duty-Cases is a heavy load for any administration. But the Treasury could collect £26 billion.

For tax-collectors the work could be worthwhile. Assuming the dodgers are mostly full-time BIG players, at a nice round average £100,000 a year per pot per person, who are redfined as Employees, the employer BBC or Government Department should have deducted from them Pay as You Earn taxes and National Insurance and probably Pension Contributions of about 50% - or £50,000, say, £45,000 to go to the Treasury. With open-handed ex-tax chief Dodgy Dave Hartnett consigned to a hot pink chair in his retirement home, Her Majesty's Revenue and Customs HMRC have the powers to go back as many decades as they like, say 20 years, and raise assessments for the missing taxes - (20 years x £45K x 27,000 = £24.3 billion). In addition, HMRC can claim compound interest and fines for evasion which would usually amount to another £24 billion. So, say £48 billion in all. That is worth having. Plus of course the Employers' share of National Insurance.

BUT, the poor souls who have been lured into these questionable habits will have paid some tax on their £100K per year; unless, Heaven Forfend, they have fabricated a tax-haven company and made up silly invoices to divert the income. But such illicit foolishness will be rare. Taking the financial press view that they have paid 21% tax, that is £21K a year, saving £24K a year  - for 20 years = £480,000 x 27,000 Avoiders = £13 billion. ...Still worth collecting, and HMRC might double it to £26 billion.

So, if you are personally faced with a £480,000 tax bill, which might double with compound interest and fines to £960K - worth about an average London executive house - what happens next? If it lands on your doorstep and is unavoidable - who pays? To fight the good fight will cost a lot in fees (electronically tag your now complicit terrified tax accountant) and will take years of your time. The staff and stars could blame the BBC /employers and get them to cough up. The BBC could blame the dodgers. And they could all blame their tax-planners and send them the bills - who will pass them on to Lloyds of London underwriters.

Will HMRC make a generic ruling and settlement? Will Dave Hartnett arise from his hot pink chair and let everyone off - or will some dodgy British judges with off-shore family trusts forgive all the debts?

Each case will most likely be prosecuted alone, as tax affairs are so complex. It will pay the pursued to do their own sums and consider their options. In the meantime "Marry a Tax Inspector".

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