Saturday, May 12, 2012

A Taxing Situation

There's a saying I use over and again: "You never see the future as it rushes past you".

News that the UK Government's tax authority, HMRC, has, by its own estimations, taxed one in six people in the UK wrongly in the past year is seriously worrying (although better than not collecting taxes at all, as seems to have happened in Greece and Italy).

But that's the least of their worries. A few years ago HMRC ran an 'investigation' into my tax affairs (which were complex): these resulted in them claiming £5k and a public humiliation off me (yes, the UK tax authorities require a statement of contrition if you're seen to have dodged the system which would make Maoist China or Pol Pot's Cambodia blush). When I examined what they were claiming I appealed and they ended up paying me £1,500.

This took a fair amount of my time over five years and it must have done the same at HMRC.

In the meantime, companies like Vodafone were earning billion pound tax write offs, and since then companies such as Apple, Amazon, Dell, eBay/Paypal and especially Google have contrived to pay no tax at all in the UK.

You see the problem. And I'm sure, like me, you see the solution. Why aren't the guys we elect to serve us that clever ?

But the problem is actually far worse. We live in a global marketplace where one retailer after another is going out of business, and their business is going to the likes of Amazon and other untaxed retailers.

So, the future is a real problem in tax terms, unless the UK moves to taxing at expenditure point, a simple move that would raise several billions every year and get us out of our current recession, and make sure that we're fit for the future that's rushing by us.