Tuesday 18 November 2014

The Squeaking of the Pips

Rather worrying for many people is this latest report into the ongoing heavy handedness of HMRC. They are increasingly picking on professionals, people living in the South East and the self-employed to investigate. It seems from the Telegraph's FOI request that they are looking at over 100,000 people extra per annum.

Mainly thanks to their fancy new computer system, Connect. My worry is that Connect actually allows the fishing expeditions that the Government and Revenue say are illegal. After all they get bank statements and Land Registry information, decide that a person cannot afford their house purchase and then begin an investigation.

How is that not a fishing expedition?

I am not sat here saying people should not pay tax; after all I personally handover eye-watering sums PAYE every month. Still once a year I get asked for more for some spurious reason post handing in a self-assessment form; it always feels like a stick-up as the process and reasoning are Byzantine but failure to comply ends in a court summons and CCJ in short order.

What to make of this in the medium term though, HMRC is desperate for revenues now, what is it going to be like in the UK after the next election? The Government will be very short of money and stuck with a massive structural deficit that will require big tax rises and a larger tax take from the taxpayers.

But I fear that as you try to make the pips squeak as Labour and Conservatives are want to do, you drive away the desire for wealth creation. After all, if you can't hold on to it what was the point? The situation, for doubters, is similar to pensions today - with the State pension much safer, albeit a lower level, than the Private sector pensions which have been taxed to death, people are saving LESS for their retirement and pushing the burden more onto the state - which can be seen in our deteriorating public finance and vast increases in pensions payments over the past 4 years.

I don't know where this ends, but the future is not rosy for taxpayers or the Government.


Sebastian Weetabix said...

Unless we do actually cut government spending pdq - and contrary to propaganda we have not - we will end up cap-in-hand to the IMF combined with simultaneous tax hikes and a 20% real terms cut in spending. That means skoolz-n-'ospitals closing, reduced benefits and pensions, no dementia care for the elderly and so forth.

All the parties have been criminal in their fuckwitted negligence and their witless propaganda about the non-existent cuts. Only in the oublic sector is a reduction in the rate of increase a "cut". Cunts, the lot of them.

andrew said...

They are going for low-hanging fruit.
I cannot afford to fight HMRC - and would just pay up as well.
It is left to a few people with deep principles and the lawyers of the truly dodgy.
This undermines the legitimacy of taxation and I don't want to end up like Italy.

Someone in one of the business orgs noticed this.
On R4 Today this AM some woman said that UK Business Rates (that are pretty much impossible to dodge as based on land and equipment) are 10x what they are on the continent - and this impacts investment in the UK.

Shot over the bows there.

In every other sense, if you are a multinational, the corporation tax you pay seems to be more a matter of negotation than application of rules (again undermining the legitimacy of taxation)

To close up a 100 Billion per annum deficit in public spending between now and 2019 (if we want to balance books by then) you need to get all the low hanging fruit and a bit more.

This means

(a) another 30% spending cut in non-nhs areas
(b) massive tax rises
(c) both

100bn pa is not far off the whole education budget, or two-thirds of the NHS or twice the defense budget

The only silver lining I see is that there looks to be a mass decentralisation effort, not ofr good reasons, but because the complaints about lack of money will be driven to the regions.

MyThisShitAgainName said...

@Andrew - Sorry, I'm not having this.
For the bazillion-and-ninth-time business rates in the UK are derived from rents paid.

If business owners want rates down then they should negotiate their rents down. They're in business so it shouldnt be too hard for them, right?

Unfortunately, because rents in turn are largely dictated by property valuations (and borrowings against same)dropping rents would see many buyers from the past 10 years go under. Certainly banks would rush to repo as property owners (commercial) would be underwater with their loans suddenly being multiples of the properties valuation.

Alas this is exactly what needs to happen. If not the sole then the major cause of this hole we are in is a decade of ludicrous property speculation fuelled by free credit. Every asshole with a signature thought they could borrow (interest only, natch) their way to prosperity by investing in bricks and mortar. I saw it myself. Some of the dumbest fucks I have ever had the displeasure to know were buying BTLs, investing in blocks of flats, buying shares in retail developments etc... etc... etc...

Next year, when UKIP get to power, the immigration will dry up and the attempt to 'pressure cooker' the population into housing that is smaller and smaller and more and more expensive will collapse.

As it is the market is close to collapse with sales volumes at multi-decade lows and average multiples at similar highs. All of this is done to flatter the banks valuations of assets held against their gigantic loan books.

The comm prop market is 'healthy' only because middle-class 'professionals' pension funds have run out of money and now need to liquidate the business property. They are 'selling' it to their own pension fund, which can borrow a certain amount.

These people are fucked, basically.

@andrew - we need huge cuts and tax increases and to avoid all this tax dodging malarkey. HMRC are indeed going after low-hanging fruit but in fairness, if they put themselves in this position.....

I am not willing to have my childrens schooling cut to subsidise some old fuckers 'investment'. If you cant run a business without a handout you dont have a fucking business, do you?

A more fruitful endeavour might be to speculate on where these cuts and rise should come from.

Jer said...

Why not just close the NHS?

It's utter shit, nothing at all wouldn't be much worse.

Electro-Kevin said...

Jer - The NHS is our biggest employer.

Not saying that this isn't a money-go-round of non-wealth-producing activity but there would be a lot of unemployment which would impact on the private sector.

The private sector is driven a lot by state wages. We are far more state funded than official figures show. Anything that is not an exporting business is state funded even if it's in the private sector.

Labour's Mansion Tax. How long before this becomes something ordinary householders pay - like CGT and inheritance tax ?

Socialism needs a never ending stream of new taxes.

Leading celebrity socialists should be forced to pay 90% tax forthwith and not be allowed to have an estate worth more than £250k. Their kids must be forced to attend the local comps.

Otherwise they should be allowed no airtime from the state funded broadcaster the BBC.

CityUnslicker said...

MSNA - That is the best argument against rates complaints I have read for a while. My issue though is that proeprty price increases as you say have caused this - but you are blaming the business owners - these are the tenants not the landlords. It is the latter, as you say who are greedy - but this is not one and the same set of entities.

Electro-Kevin said...

Such a tax on celebrities would raise some money and test their beliefs. They are never asked how much they would be prepared to pay or what the would be prepared to put up with when they are allowed to tell the rest of us how to live.

MyThisShitAgainNameAgain said...

@CU - are we coming to an understanding here?
Or at least a Mexican standoff?

Do I blame 'business owners'?
Well..... yes and no.

You cannot be so naive as to believe than many peoples business is purely to extract rent from other businesses? Surely you can see that ramping property values is a business in itself?

Am I attacking 'business owners'?
That all depends on what type of 'business' you think I'm attacking.

I'm all for small and medium enterprises. Local and personal business growing, employing and ploughing profits and taxes into the locality. Absolutely.

But the scenario whereby firms can move in and buy and develop on a huge scale, pricing out locals and driving decades old businesses to the wall is intolerable. Planning laws (and local corruption) that prevent expansion of current townlands for spurious political purposes must be utterly broken.

Cars parked on 3/4 sized streets and local services falling under the weight of high density housing must be stopped. Developers must pay and develop adequate electricity and water/sewage facilities and not just park their developments - cost free - on the local infrastructure.#

Corrupt local politicians who approve 3/4 size houses with no driveways, no parking, no facilities and communal areas/no play areas for children must be given the ISIS treatment.

You heard it here first....

CityUnslicker said...

MSNA - You raise another important point. If left to lovalism them the boundary for corruption is lowered as councils help their mates out and require small section 106 bribes.

However, on a macro scale the central government can impose ludicrous schemes against the will and benefit of the local people.

There is not much of an easy solution here - and we do need to expand housing and development of that.

Not so much business though - there is plenty of empty space on the high streets - which is where we come back to the pernicious power of the rates to destory the infrastracture that we already have.

Jer said...

EK - Employment is a bit of a red herring.

If people still get sick, they'll still need repairing.

If people get sick less now that there is a financial downside- surely that's a good thing?

Are you really saying the NHS is TBTF, like the banks? Maybe that's actually a bad thing?

Anonymous said...

Cu: "it always feels like a stick-up"

That's because it is. "Give us that, or else!"

There is no other way to describe it.