NOT ON GEORGE’S RADAR...

Across the other side of the pond tax evasion remains an important issue, on this side of the pond you get the impression that the Conservative part of the Con Dem Westminster government just hopes it will quietly go away. As a direct result of the US government’s pursuit if tax evaders Switzerland's oldest bank is to close permanently after pleading guilty in a New York court to helping US citizens evade paying their taxes. The Swiss bank, Wegelin (established in 1741) will pay $57.8 million dollars (£36 million pounds or 44 million euros) in fines to US authorities.

Once the fine has been paid then Wegelin will cease to operate as a bank. The bank had accepted that it had allowed more than 100 American citizens to hide something close to $1.2 billion dollars from the Internal Revenue Service for nearly 10 years. Wegelin, based in the small Swiss town of St Gallen, was started 35 years prior to the US declaration of independence. It is the first foreign bank to plead guilty to tax evasion charges in the USA. In recent year other Swiss banks have taken steps to prevent US citizens from opening offshore accounts to avoid paying tax.

US President Obama was 100% right to suggest that the governments of the world should jointly tackle the issue of tax evasion and tax havens. The problem is that successive Westminster Governments are involved in tax evasion and indirectly support tax evaders, as a significant proportion of tax evasive activities revolve around the UK Crown Dependent territories. By tackling the tax havens, the tax avoidance and the questionable dealings of the derivative traders, hedge funds and the off balance sheet trading then we might go so way towards dealing with the consequences of the worldwide financial crash.

I am shocked to discover that there is tax evasion here?

However, I suspect that nice Mr Cameron and the other 18 millionaires in the cabinet will do nothing to close the tax loopholes – so much for all of us being in it together? Perhaps it's just that we are ordinary taxpaying citizens just expect too much from government.

As the UK Government continues to be heavily involved in aiding and abetting tax evasion worldwide via British Overseas territories (including the Cayman Islands) and will actively fight in Europe to prevent open and transparent accountability and regulation for the City of London but won't chase up tax evaders.

Expecting the Tories or the party formerly known as New Labour to seriously tackle tax evasion is perhaps a little naive as they are part of the problem. The Lib Dems might deliver on electoral reform or any of the three Westminster parities to have an honest debate about Party funding before tax evasion is dealt with. Westminster helps to hide some £ 1.6 trillion pounds from various nations’ tax authorities, and some of the city banks are hand in wallet with drug dealers, dictators and terrorists when it comes to money laundering. Hmmm...Over to you then George...

THE CONTENTS OF GEORGE’S IN-TRAY?

Tax evasion! Surely not!

One way or another, tax evasion and tax avoidance is rarely out of the headlines especially as many heavily indebted governments are increasingly keen to hunt down every tax dollar / euro or pound that is owed. Considering that the Conservative elements of the Con Dem coalition government continues to looks slightly uneasy whenever tax avoidance and tax evasion comes up I cannot help wondering whether or not the National Audit Office report on tax evasion will make it out of George Osborne’s in tray.

A National Audit Office report has revealed that of HM Revenue and Customs (HMRC) is struggling to curb aggressive tax avoidance schemes is costing the UK billions of pounds in lost tax.  HMRC is faced with a backlog of 41,000 cases with potentially up to £10.2 billion pounds worth of evaded tax at stake. The National Audit Office (NAO) said tackling tax avoidance was difficult but HMRC had to do better. In the last two years HMRC has successfully challenged 40 tax avoidance schemes.

The NAO revealed that between 2004 and 2011 some 2,300 avoidance schemes were disclosed to the tax authorities, but as around 100 new schemes have emerge every each year. It has been estimated that there are potentially some 30,000 users of what are known as employment intermediary schemes and partnership loss schemes - where partnerships that make record a loss to shelter their other income from tax. The loss is artificially inflated via "circular loans" (or deferred expenditure) which are never actually incurred to exceed the amount actually invested in the partnership.

HMRC has tried to tackle the practice with enforcement action in a few “lead" cases, but investigations can take years to resolve and any rulings cannot always be applied successfully elsewhere.  Despite this since April 2010, HMRC has been started 110 avoidance cases and despite being successful in the vast majority of cases where judgements have been reached the NAO suggested that there was no evidence that litigation was proving an effective deterrent to tax evasion and avoidance.

Tax evasion is only part of the problem, as Tax Research UK estimated that the Exchequer loses out to the tune of £64 billion pounds per year through shadow economic activity, which is 16 times larger than the estimated £ 4 billion pounds that the UK Government misses out on due to tax evasion. That works out at roughly about £1 pound out of every £8 in the economy.

Despite this the Con Dem Government continues to pursue a reckless slash and burn (cut) approach to the public sector. They have reduced the number of staff in Revenue and Customs from around 100,000 to 65,000 and there are further plans to reduce the numbers to around 50,000 by 2015.

To expect the Tories or New Labour for that matter to seriously tackle tax evasion is perhaps a little naive as they are part of the problem. It would be a bit like expecting the Lib Dems to deliver on electoral reform or any of the three Westminster parities to have an honest debate about Party funding.

Perhaps the ordinary tax paying citizens just expect too much, I mean the UK Government continues to be heavily involved in aiding and abetting tax evasion worldwide via British Overseas territories (including the Cayman Islands). They help to hide some £ 1.6 trillion pounds from various nations’ tax authorities, and some of the city banks remain hand in glove with drug dealers, dictators and terrorists when it comes to money laundering. So clearly we are not all in it together.