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back to article 'WikiLeaks of financial data' prompts worldwide hunt for tax evaders

A cache of data amounting to a whopping 400 gigabytes of information leaked by bank insiders has triggered an offshore tax evasion investigation across the United States, the UK and Australia. Tax authorities in the the three countries are examining the leaked data, which reveals the complex offshore vehicles used to stash …

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Anonymous Coward

As a contractor...

I've been offered various schemes over the years to minimise my tax.

Some were perfectly open, legal and have been around forever and I believe no one could ever question them.

Others were presented as legal but struck me as being at the extreme edges.

I've personally never got involved in them - my way of looking at it was thus: I may save 3k this year and every year for the next decade...but would I have 30k plus penalties etc when the laws are retrospectively changed and the tax office come a knockin'

Ok I'm showing some naivete here I admit - I have no idea how far back, for example, they can come asking for it back etc.

Put simply...pay your damn taxes.

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Re: As a contractor...

I was in the same boat when I was contracting, I paid my taxes. I know colleagues that have massive daily tax deductions for lunch, transport, client drinks etc and pay very little tax every year.

I also know someone that was involved in a tax scheme that involved them being payed in rubles every quarter etc. They ended up getting audited and received a very nasty back tax payment request from HMRC that they almost lost their house over.

I used to view it as the more tax you pay the less likely HMRC would ever bother investigating; low hanging fruit and all.

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Silver badge

Re: As a contractor...

When I first contracted I went into a scheme where money was paid by employers into an account on the Isle of Man through an umbrella company and then accessed through an international account. As far as I'm aware it was legal but god was it a pain in the arse to use and expensive to administer and I still had to file tax returns which meant paying for an accountant.

So as soon as the contract was up I just found a contracting firm to do it - all the billing, processing, tax returns, expenses etc. for a flat fee. Much easier.

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Stop

We need more people like the Lannisters.....

We had a run-in with this last year when buying our first house. Our solicitors rang me up and said they could save us the stamp duty on the purchase for a cut of it themselves by using some complicated loophole involving the transfer of deeds when we purchased.

My first thought was "I can save almost 8 grand! Yipeee!" closely followed by "Hmm, I should consult a solicitor. Hang on, these are the only solicitors I've ever had to deal with, who am i going to ask?".

In the end a combination of morals and realising it wasn't worth fucking about with the purchase of a bloody house meant I didn't go through with it, but these solicitors were apparently quite a big company, so I'm sure a hell of a lot of people did. It's amazing how widespread tax-avoidance has become.

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Anonymous Coward

Re: As a contractor...

And that sounds *exactly* like paying protection money to the mob. Pay us a lot of money and we'll leave you alone, if we don't think you've paid us enough, we'll come break your legs/audit you.

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Anonymous Coward

Re: As a contractor...

You seem to chime with my ideas about Tax: If you avoid tax by a government supported and advertised product/system (premium bonds, ISAs, etc) it's great, if you have to do something which requires specialists to implement for you and funnels money all over the place, it's probably not morally justifiable.

(To anyone wanting to comment, please note I said moral, not legal.)

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Re: As a contractor...

... and unless you did everything by the book, and documented everything, and kept all receipts an audit is a nightmare even for the most honest operator.

I don't cheat (I can't be arsed and the gov is pretty good to me, really) but my weakness is not bothering keeping very good books. I'm a technician, not an accountant and I don't give a crap. I just want to make enough money to live on.

But that's the way I feel about it... I don't even claim a lot of stuff that I could be claiming, because I'd rather pay some tax and stay under the radar.

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Anonymous Coward

However...

We were invited to a scheme abroad, and although it sounded good I took the precaution to have it analysed by two separate accountants - both of which came to the conclusion that it was a time bomb (we could get away with this for a while, provided we packed it up in 2 years). That translated as "it's at best grey", so we told the rep to take a hike. Of all the entities that you can get into trouble with, ye olde taxman is worth avoiding because they have all the opportunity and resources in the world to make your life hell - even if you're innocent. All they need is a suspicion, and if you live in a country with a clearly insane tax rate (say, Germany) you best move instead of playing games..

I have, however, a remark: it's all jolly well to have data on people who are so rich that it is apparently OK to let jealousy override justice, but I note that there is NOT A SINGLE WORD about the crimes that make amassing this data possible. To me, that isn't right either. As admitted by teh various parties, there are plenty of people in that package who pay their dues properly - I find it interesting that nobody seems to consider it a problem that their right to privacy has been royally screwed over in the interest of jealousy and mismanaging governments trying to balance the books with chasing those who formerly sponsored them.

No doubt this will generate a gazillion downvotes, but have we sunk so deep that we skip over certain crimes because other ones make us feel better?

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Anonymous Coward

Oh and...

...I will say I have no major issue with a company reducing their tax burden but it's come too far, is too aggressive and is too immoral.

But then perhaps...just perhaps...we should try to have simpler (and with it, fairer?) tax systems?

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Re: Oh and...

Agreed. It is sensible to pay as little tax as is legal, so the blame is squarely with the politicians that wrote (or, more likely, nodded though) the relevant laws and regulations permitting the extreme forms of avoidance.

Sometimes I think a small tax (say 1p or 1% - whichever is higher) on every transaction (capital gains, income, trades, purchases, loans) would be the way to go - it might even shorten supply chains...

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Holmes

Re: Oh and...

Georgism http://en.wikipedia.org/wiki/Georgism

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Anonymous Coward

Re: Oh and...

"a small tax (say 1p or 1% - whichever is higher) on every transaction (capital gains, income, trades, purchases, loans) would be the way to go"

I like that idea a bit, especially if the "financial services" sector are used as the collections department (they already take a couple of percent or more on card transactions, they already know who's shifting large quantities of money around, and it would for a change give them something constructive to do).

OK it would likely motivate more "informal" transactions in certain sectors, more use of the cash economy between local outfits for example, but I don't personally have a problem with that (see e.g. LETS schemes).

Being so much simpler, it might also mean whole shiploads of tax lawyers and tax-dodging consultancies would need to find proper work, or join the ranks of the unemployed.

What's not to like?

As soon as this pub closes...

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Anonymous Coward

Re: Oh and...

You do realise that one of the areas hit the hardest by a levy on each transaction would be the Pension schemes, you have a pension?

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Devil

Re: Oh and...

"we should try to have simpler (and with it, fairer?) tax systems"

I remember reading an article where a former tax inspector proposed switching instead to (a higher rate of) VAT on everything and abolishing all other taxes.

His argument was that it is far easier to collect tax on what people spend than on what they earn. Purchase taxes are much harder to evade.

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Anonymous Coward

Re: Oh and...

"one of the areas hit the hardest by a levy on each transaction would be the Pension schemes, you have a pension?"

Explain.

Pension funds are supposed to be making long term investments.

Why would a transaction tax significantly affect pension funds?

I can see, on the other hand, how the high frequency trading market might be less interesting for the existing players. And I'm comfortable with that, as would be most people outside the City, and quite a few inside too.

I can also see that many (most?) pension funds have been unable to deliver on their promises even without a transaction tax, hence the current extinction of defined benefit schemes, but that's another City story for another day.

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Anonymous Coward

Re: Oh and...

Pension funds spread their investments in short term, long term, property, stock, art, everywhere. Every month as you pay into your pension there is a transaction, to you in your pay (of course that's a transaction that will be taxed) from you to your pension provider, then as they split up the money and distribute it. There are further charges are they move your money in and out of varying investments. Also, how much would the infrastructure to make the charges on the transactions and move them to government cost to implement?

Basically what I'm saying is that a flat transaction tax sounds nice - And I do think that something should be done about high frequency trading, in particular - but it's often not as easy as you might think and there are nu-foreseen consequences.

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Thumb Up

Re: Oh and...

it's called a Tobin tax. Might be worth investigating. But then, what will the surplus bean counters do ? Soylent green anyone ?

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Anonymous Coward

Re: Oh and...

"Every month as you pay into your pension there is a transaction, to you in your pay (of course that's a transaction that will be taxed) from you to your pension provider, then as they split up the money and distribute it. There are further charges are they move your money in and out of varying investments. "

Use your imagination a bit, puhlease.

Individual transactions smaller than a relatively low threshold are completely ignored for tax purposes. Transactions over that threshold are recorded but not immediately taxable unless they are big enough to class as Big Transactions in which case they are immediately taxable. If an individual recipient (person, organisation) has enough income via the "recorded but not big" transaction route, that's taxable too. Choose the "below this is invisible" and "above this is immediately taxable" thresholds sensibly to maintain a sensible balance between income and inconvenience.

Hey look, something like that might even be beneficial to smaller organisations (e.g. contractors?) whilst reducing the opportunities for corporate kleptocrats and the 1% to rip off the rest of us.

Will that do as a starter for 10? I realise much more thought is needed, and it would never get the approval of the tax lawyers and tax accountants, but today's current system is clearly unfit for purpose, and a radical simplification is long overdue.

"how much would the infrastructure to make the charges on the transactions and move them to government cost to implement?"

It would be simpler, and therefore it ought to cost a lot less than the infrastructure that supports (sometimes badly) the current chaos. Of course if Crapita, EDS, Fujitsu, etc get the job, all bets are off.

I don't think anyone with a clue thinks a flat rate tax would be easy. But it might be easier than the current collection of loopholes.

Anyway, has anyone mentioned Land Value Tax yet?

That's another one which ought to be relatively simple to implement and hard to dodge. You can't move land via Luxembourg (etc), and if you don't want to be seen owning it, well, maybe you don't get the benefits of owning it, e.g. rent, or any gains from buying and selling it.

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Meh

Re: Oh and...

it's quite possible that if vat was kept at the current rate and everything else was abolished, the net tax take would increase.

The reason for this is that the current byzantine tax structure has enormous compliance and collection costs. Simplfying them could easily result in more than half the HMRC staff being declared surplus to requirements.

Oh hang on, that means poutting civil servants out of a job and we can't have that, can we?

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Anonymous Coward

"We don't pay taxes. Only the little people pay taxes."

Even the Daily Mail thinks it's gone too far.

http://www.dailymail.co.uk/news/article-2232532/There-profoundly-wrong-Britain-little-people-pay-taxes.html

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Bronze badge

- Publish private data about the authorities that the public is interested in: get hounded half way round the world and have your financial support cut off.

- Publish private data about the public that the authorities are interested in: Well, let's just say that the reaction seems to be very different - but if EE and the police are anything to go by then they think that 'attacking ethics' involves invading a 3rd world country somewhere and not trying to define what is moral or not (reminds me of a quote from Terry Pratchett's 'Small Gods')

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wikileaks

So the same governments that want drone strikes on Mr Assange for reavealing super-ultra-top-secret classified info (like Isreal and the palestinians don't get on, or some people in Pakistan don't like the US) - are quite happy to use use this illegally obtained info to claw back money

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EXACTLY

The sheer hypocrisy of these institutions of Government in agreeing to 'share' information which came from the same source just the other day the same Governments were saying was evil.

Hypocrites. The lot of them.

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I hope they gut these buggers like carp. Disgusting how much tax these prats avoid paying.

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Unhappy

How Long

Until 'The Global Fight on Tax Evasion' becomes the 'Global War on Tax Evasion'? As soon as we declare another war on a thing then any real hope of sorting out the issues is lost in back room spending deals & the creation and/or expansion of bureaucracy. Maybe we should just skip to the bombing part & save a lot of paperwork.

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Easier

Presumably it's far easier to go after individuals whose tax affairs are, shall we say, slightly suspect than to go after large corporations with lots of accountants and lawyers which help the corporations to pay minimal amounts of tax...

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Anonymous Coward

So no one finds it ironic that Wikileaks is a reputable source of information for the various governments when it is to their advantage?

Hmmmm?

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But has this data

anything to do with wikileaks? The only mention I can see is in the headline.

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Silver badge

Re: But has this data

>anything to do with wikileaks? The only mention I can see is in the headline.

The linked article only says the data "was obtained by the International Consortium of Investigative Journalists". Their only reference to Wikileaks is: "The total size of the ICIJ files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010."

Logistically, how did the inside source get that much data out? I'm just imagining a pallet truck loaded with HDDs.

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Anonymous Coward

@Dave 126

400GB will comfortably fit on one hard disk. You are living in the past!

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Trollface

Re: But has this data

Where's your imagination?

..I'm just imagining a pallet truck loaded with a quarter of a million 3.5" floppies, weighing a bit over four tons

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Re: But has this data

>@Dave 126

>400GB will comfortably fit on one hard disk. You are living in the past!

Ooops! Silly me. Cheers AC, I was having a funny five minutes and had my GBs and TBs confused!

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Devil

Tax evasion

If politicians started treating our tax money with respect instead of dabbling in derivatives and spotty mortgage plans, maybe they would not be so desperate about having to get funds.

Five gets you a tenner that they will mismanage any funds they do track down.

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Big Brother

Re: Tax evasion

But they will vote themselves a pay increase to offset inflation and their meticulous work.

Then start a war or two or continue to aggravate the greenfagging bubble.

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Happy

Re: Tax evasion

The law (in the U.S. anyway) says that tax money does not belong to the individual and you are in effect acting as the collection agency on their behalf. Until that changes expect no respect for the funds.

I do think it would be funny to fight back using their own terminology: Cut back on their 'entitlements'.

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Oh, the HMRC

aren't they the government body who work in buildings owned by a company based in Bermuda? Seem to recall a lot of publicity when it first happened which then rapidly went quiet. Couldn't have been to do with those that shouted loudest got the most aggressive 'investigator' could it?

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Anonymous Coward

Taxes? No thank you.

I think the last couple of years has shown that our politicians are not fit to handle money at all. I'm forced to pay more and more taxes for worse and worse service that I do not want at all. That's a pretty nice business there! Force the customer, regardless of if he wants your product or not, to buy it.

In Sweden I pay 31% payroll tax, and then 30 to 55% income tax on that. From what ever little money remains, I pay 6 to 25% of VAT depending on what I buy.

Add to that, various taxes on my house, car, tv-license fee, taxes on my retirement savings, and why not a 30% capital gains tax.

Given that background, anyone who is not avoiding as much tax as possible, is clearly insane.

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Thumb Up

Re: Taxes? No thank you.

Insane? I pay exactly the same taxes in Sweden and it's worth every penny for the fantastic life I have - all without needing to be a ruthless, money-grubbing sociopath with a humungous ideological blindspot. Epic win.

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Anonymous Coward

Re: Taxes? No thank you.

Sorry, without any motivation of your statement I cannot take you seriously. BUT I am happy that you enjoy paying more than half of what you earn in taxes. =)

Personally I'm running away within a year or two, and then I'll be happy as well, and the Swedish state will have lost yet another tax payer. =)

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Pint

Re: Taxes? No thank you.

Hej då - vi kommer nog inte att sakna en så ansvarskännande person som Du tydligen är ! Men snälle, när Du blivit riktigt gammal och vill ha bra sjukvård, kom gärna inte tillbaka hit, utan sök den i skatteparadiset som Du flyttat till ! Det räcker med en Lars Erik Einar Gustafsson....

Henri

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Re: Taxes? No thank you.

Isn't the whole point of tax that it takes money away from people who can afford it in order to pay for services for other people who cannot afford to pay for them, and also to pay for services that are considered necessary by the government, but otherwise would not be paid for. So its intrinsic that you are paying for services that you don't want...

As for simplified and flat rate taxes, I remember the last time a UK government tried for a major reform leading to a simplified flat rate tax. This was for local services, and was called the community charge. You may recall it was dropped due to a very effective propaganda campaign.

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Happy

Re: Taxes? No thank you.

No problem. I wish you all the best in your gated community surrounded by squalor abroad. Take Borg and Reinfeldt in your carry-on luggage, pretty please?

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Re: Taxes? No thank you. @JimC

We're probably never going to have a completely simple tax system - but that doesn't mean an overhaul isn't called for. You know you're in trouble when you see a copy of part a book that goes into detail on tax with a label like 'Volume 1b' on the spine and that book alone is more than an inch thick - not to mention the pages are so thin you can almost see through them and text that almost requires a magnifying glass to read.

Why are we surprised by any of this? The government has continually preferred to fiddle with the systems to accomplish short term goals rather than fix the system to reach long term ones. This inevitably ends up making things more complicated and then they have the gall to act surprised and feign anger and fury when they discover that they've actually ended up creating a number of loopholes in the process.

Also remember that those in charge of these companies are often under a legal obligation to minimise costs in order to maximise the return to investors and like it or not tax is a cost for the company. They will use every legal opportunity to pay less because they have to do so. The spirit of the law is meaningless in this regard - only the letter matters, and the government is the one responsible for defining what this should be.

Here's another Terry Pratchett quote for you (paraphrased): doing nothing in politics is one of the most difficult things to do properly. It seems that MPs and ministers here have never got the hang of it if the current complexity of tax laws are anything to go by.

That's not to say that tax dodging is always going to be acceptable by any means, but I'm always suspicious of a government that shows moral outrage - especially when they are in large part responsible for the problem they are complaining about.

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Reality check

Considering the people involved, IF the money is still there by the time the governments ACTUALLY look for it, there will be nothing done. Perhaps a little insider political blackmail but most likely you will never hear another word about it!

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HMRC

Too busy chasing hairdressers who owe a two or three grand, while letting the big tax evaders go free. Or even encouraging tax evasion with their "deals".

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Stop

RE: Contracting

An contractor friend of mine became involved in one of those contractor tax scams where the earnings are converted into some dodgy currency offshore and then loaned back at some preferential rate or something - not overly sure how it worked. Anyhow... the company running the scheme sold it to him as being legit and 100% compliant with HMRC. He believed them, and then 3 years later HE got hit with a £45k tax evasion settlement figure from HMRC - i.e. it was settle now for this much - or spend it all defending yourself in a court case you won't win - and then still pay us the £50k you owe on top.

The company running the scam obviously never returned any of his calls, and he ended up losing pretty much all of his gains, as well as his house.

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Anonymous Coward

Re: RE: Contracting

If your pay is being handled by a separate company who keep most of your money offshore and (presumably) pay you minimum wage in the UK, you have to ask yourself "Is this legit?" or probably more aptly "Am I going to end up screwed in some way?".

This is a classic example of a loophole that a law allows, they're usually closed up after a few years, when law can be changed, but it's clearly not right to do this, no matter the oft repeated argument "it's the government that make the loopholes, therefore it's ok."

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I don't foresee any great rush of income for the UK, given HMRC's track record for cutting deals which involve the guilty party paying a fraction of the evaded tax. I see Private Eye this week are suggesting that this approach works particularly well for those wanting to launder money from less reputable sources (but then the current UK financial system seems to be biassed toward providing a safe haven for such money).

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Anonymous Coward

When it comes to contracting...

There are some schemes which, whilst perfectly legal, are sailing a bit close to the wind.

Of course, it does not help that the accountants in question insist that receiving 89% of your gross earnings through dividends, tax breaks and bare minimum PAYE and NI is sooo much better than the 80% you might get back through a very sensible and practical umbrella/HMRC-approved system. When it comes to those kinds of small differences, I'm happy to take a hit and be conservative and know that when HMRC goes looking, I'm not at the sharp end.

Just reading http://www.tax-hell.co.uk/ is enough to put me off funny accounting shenanigans. Be afraid, be *VERY* afraid of the HMRC. They have more powers than they should and know very well how to abuse it.

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