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Non-enforcement is mad. I wonder if it's happening here? There's been a massive increase in enforcement on most tax here.

Of course that's compared to the time where pretty much everyone who could was dodging tax because the marginal income rate was as high as 65%.

by Colman (colman at eurotrib.com) on Thu Apr 6th, 2006 at 09:52:51 AM EST
One of the big problems in the UK is that there is a huge disparity between enforcement on two groups.

Group 1

Typical individuals, SMEs, etc.


Group 2

Large corporations, politically and otherwise connected individuals

Group 1 come under enormous scrutiny and given the powers that the revenue has this can be a ruinous process, which we all fear. (Thus, there's a large business in selling "audit insurance" to SME's to cover the business disaster that is a Revenue audit.)

Group 2 get very little real scrutiny.
It's partially just that the richer you are, the more you can afford fancy tax lawyers to find loopholes in the first place and partly a matter of political will.
But a big issue is simply that compared to a large transnational, the Revenue is up against it. Some big corporation (e.g. Vauxhall/GM at one point) employed more tax experts and lawyers than the Inland Revenue had in the whole region where the headquarters were.

by Metatone (metatone [a|t] gmail (dot) com) on Thu Apr 6th, 2006 at 10:13:20 AM EST
[ Parent ]
Against that trend, I've read also that it's much easier to collect taxes from large companies - they are better organised, provide information in the form you ask for it, know what you're talking about, etc...

I think I remember that the 400 tax collectors in charge of large companies in France collect as much money for the State than the other 160,000 employees of the Ministry's other tax divisions.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Apr 6th, 2006 at 10:19:34 AM EST
[ Parent ]
If there is any corporate fiscalist over here, feel free to correct me but I believe a lot of Group 2 entities don't follow the normal tax code because they have specific agreements with local govs outside of the common law. The idea is that the companies tell the govs "either we pay a lot of lawyers to avoid taxes and you get zilch and you can't do anything about it or we agree in advance on a small sum for you and you leave us alone."

If you want to get rid of that, you need to get rid completely of tax havens and to heavily regulate intangible transfers across subsidiaries of a same multinational (a shell game that moves profits and losses from one subsidiary to another, depending on which local tax codes are the most profitable for each cases). For the little I understand, neither task is technically easy, not to say a word of political will.
by Francois in Paris on Thu Apr 6th, 2006 at 11:36:46 AM EST
[ Parent ]
I'm not a fiscal specialist but I know a thing or two about the topic and I think your description is pretty accurate.

It can get sleazier since with enough tax paying clout and and a decent payroll (ie jobs thank can be relocated) a company can still cut a deal after being caught paying insufficient taxes.  Once the auditor has told you how much back taxes you owe, the haggling can begin in earnest and there's now way in hell the big players ante up the full amount penalty and all.

by Guillaume on Thu Apr 6th, 2006 at 12:08:05 PM EST
[ Parent ]
Prem Sikka, a professor in accounting and suchlike has written some good articles on tax avoidance and corporations.

Some were in the Guardian.

I'd google for a link or two, but I'm rushing out now.
Maybe later.

by Metatone (metatone [a|t] gmail (dot) com) on Thu Apr 6th, 2006 at 10:14:45 AM EST
[ Parent ]


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