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Why are UK tax laws so open to loopholes?

http://www.bbc.co.uk/news/business-34504474

Can somebody with a better knowledge please explain to me why tax loopholes are so easily exploited?

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Original post by JD1lla
http://www.bbc.co.uk/news/business-34504474

Can somebody with a better knowledge please explain to me why tax loopholes are so easily exploited?


http://www.bbc.co.uk/news/business-31942639
The UK's tax rules are some of the most complicated out there. However it means that big companies hire expensive accountants and tax advisers to find ways to manipulate the intent of the rules (these are always changing too) to avoid paying tax.

It's not even as simple as having better rules.

For example, if the tax rules say a company must pay 20% corporate tax on profits - a lot of companies pay fees or licence costs to another group company which is based in a low tax country and then claim not to have profits in the UK.

You also can't forget that every country has their own tax rules so often big companies use different sets to best manipulate them into paying little tax.

http://www.theguardian.com/business/shortcuts/2012/nov/13/starbucks-your-tax-questions-answered

A better explanation in this Guardian article.
The UK legal system is famed for its commercial certainty. The only way you avoid having loopholes is by creating a 'spirit of the rules' provision, and that goes against the principles which make the UK legal system so good.
Original post by JD1lla
http://www.bbc.co.uk/news/business-34504474

Can somebody with a better knowledge please explain to me why tax loopholes are so easily exploited?

Tax breaks in many cases are created to promote growth.
Reply 5
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Gears265
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Original post by JD1lla
http://www.bbc.co.uk/news/business-34504474

Can somebody with a better knowledge please explain to me why tax loopholes are so easily exploited?


Because the EU law is open to loop holes and EU law dictates most of our laws so there you go. This is what happens when you try to mix national law with law from a political union. It does not work.
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JD1lla
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Original post by MatureStudent36
Tax breaks in many cases are created to promote growth.


explain?
Original post by Gears265
Because the EU law is open to loop holes and EU law dictates most of our laws so there you go. This is what happens when you try to mix national law with law from a political union. It does not work.


lol, this has nothing to do with the EU which has next to no control over domestic fiscal policy.
Original post by JD1lla
explain?


We'll use energy as an example.

The government will make a strategic decision for the uk to energy self reliant as possible.

Therefore it will give tax breaks to the renewables, nuclear and fracking industry to promote growth in those areas. Companies that may have originally been put off by the financial implications of a higher tax bracket may be more open to investing in those sectors in the uk.
Original post by TheDefiniteArticle
lol, this has nothing to do with the EU which has next to no control over domestic fiscal policy.


The Eu is attempting to harmonise tax rates.
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JD1lla
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Original post by MatureStudent36
We'll use energy as an example.

The government will make a strategic decision for the uk to energy self reliant as possible.

Therefore it will give tax breaks to the renewables, nuclear and fracking industry to promote growth in those areas. Companies that may have originally been put off by the financial implications of a higher tax bracket may be more open to investing in those sectors in the uk.



ANd if they don't give them tax breaks....they'll relocate to where exactly?
Original post by MatureStudent36
The Eu is attempting to harmonise tax rates.


Source? I don't believe that for a second but it could change my mind on the EU if it's true.
Original post by JD1lla
ANd if they don't give them tax breaks....they'll relocate to where exactly?


Other country's with tax breaks.

Ireland for example undercut a lot of other European country's on corporation tax and got the likes of Google headquartered there.
Original post by TheDefiniteArticle
Source? I don't believe that for a second but it could change my mind on the EU if it's true.


https://en.m.wikipedia.org/wiki/Tax_harmonization
The eu never do sweeping changes. They always do little baby steps.
It's the same with an eu wide defence and foreign policy.

The removal of trade tariffs is the reduction in tax.
(edited 8 years ago)
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JD1lla
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Original post by MatureStudent36
Other country's with tax breaks.

Ireland for example undercut a lot of other European country's on corporation tax and got the likes of Google headquartered there.


Surely they'd be set up there anyway?
Original post by JD1lla
Surely they'd be set up there anyway?


Why did they? Why not the uk? In googles case they acknowledged that low taxation was a key factor. Ireland has now hooked Google so by default, other similar organ soaring to Google will follow to build on the skill set that Google will develop in Ireland.

Why is Europeas centre of excellence for wind turbine development and production in Denmark.

Companies will make rather complex decisions on where to set up. Tax is only one reason. Available skilled labour and labour productivity are others. So some companies will take the hit on high tax rates if the available skilled labour with the required labour productivity is available.

Here's a good book to read. Global shift by peter Dickens.
Original post by TheDefiniteArticle
lol, this has nothing to do with the EU which has next to no control over domestic fiscal policy.


You are foolish then, and that is ironic with you Corbyn picture when not long ago he would of agreed with me. What was it- "The EU imposes an austerity driven market and abuse of workers rights across the EU" or something along those lines. I take it you are a Corbyn supporter right?

The fact is our laws are regulated and dictated by EU law and regulation. I could give 1000s of examples but I will give just one so as not to take up too much of your time. The EU law on migrants rights means we can not by national law restrict the tax benefits to newly arriving migrants until they have payed into the system for a certain number of years. This is why Cameron is trying to change the EU law on the issue.

You seriously need to seek urgent medical help if you believe the EU does not have power over our laws. I guess the 1000s pages of EU regulation does not apply to us eh? Is that what you are saying, because Corbyn not long ago would of agreed with me ironically.
Original post by MatureStudent36
https://en.m.wikipedia.org/wiki/Tax_harmonization
The eu never do sweeping changes. They always do little baby steps.
It's the same with an eu wide defence and foreign policy.

The removal of trade tariffs is the reduction in tax.


So what you mean is in fact they're not harmonising tax at all, but simply removing trade tariffs which is the single biggest purpose for which the EU was initially established?

Original post by Gears265
You are foolish then, and that is ironic with you Corbyn picture when not long ago he would of agreed with me. What was it- "The EU imposes an austerity driven market and abuse of workers rights across the EU" or something along those lines. I take it you are a Corbyn supporter right?

The fact is our laws are regulated and dictated by EU law and regulation. I could give 1000s of examples but I will give just one so as not to take up too much of your time. The EU law on migrants rights means we can not by national law restrict the tax benefits to newly arriving migrants until they have payed into the system for a certain number of years. This is why Cameron is trying to change the EU law on the issue.

You seriously need to seek urgent medical help if you believe the EU does not have power over our laws. I guess the 1000s pages of EU regulation does not apply to us eh? Is that what you are saying, because Corbyn not long ago would of agreed with me ironically.


I am a Corbyn supporter but I don't agree with a lot of what he says. I just think he's by far the best option.

I do not deny that the EU does not have certain legislative power (with the consent of our Parliament, therefore posing no issue for sovereignty), but it is, and has always been very clear that the EU does not have fiscal powers beyond the bare minimum necessary to establish the internal market.

Power to legislate in certain circumstances is completely different from the power to levy taxes.
1. Not all taxes are harmonized (this always leaves room for loopholes)
2. HMRC is scared of going after the big boys since they have excellent solicitors
3. Corporations can afford the best tax advisors
4. The "rights" of corporations can be used to counter any action taken by government in most cases

How to counter this?
1. More global agreements on paying taxes
2. More powers to HMRC to go after large corporations (highly unlikely as corporations pay large lobbying funds). HMRC will happily go after bob the painter though.
3. Less rights for corporations to be perceived to be individuals.
4. Regulation of accountancy practices.
Original post by TheDefiniteArticle
So what you mean is in fact they're not harmonising tax at all, but simply removing trade tariffs which is the single biggest purpose for which the EU was initially established?



I am a Corbyn supporter but I don't agree with a lot of what he says. I just think he's by far the best option.

I do not deny that the EU does not have certain legislative power (with the consent of our Parliament, therefore posing no issue for sovereignty), but it is, and has always been very clear that the EU does not have fiscal powers beyond the bare minimum necessary to establish the internal market.

Power to legislate in certain circumstances is completely different from the power to levy taxes.


Removal of tax is the same as harmonising tax.

Here's an example of a Europe wide tax that was pushed through against HMGs wishes.

https://en.m.wikipedia.org/wiki/European_Union_financial_transaction_tax

But of course, being a Cornyn supporter, you won't let fact get in the way of ideology.

Incidentally, although trade tariffs have been removed within the eu, we trade with nine runs nations and those trade tariffs (taxes) are set by brussels.

You see, the eu can be considrted a federal system. Within that system in the US there's federal taxes and state taxes.

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