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GAME ON!

...on serious topics that don't fit anywhere else at present.
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Nick
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Re: GAME ON!

#41 Postby Nick » October 30th, 2015, 12:59 am

Latest post of the previous page:

Altfish wrote: Thankyou.
You're welcome. :)

But are you not also making a lot of assumptions about what is happening?
Nope. :D

The company and the owners are two different entities and both should pay tax.
Not in the way you think. Certainly, a company is a separate legal entity, in that it can sue and be sued, for example, but it cannot exist without shareholders. And just as a firm (an unincorporated company) is linked to the proprietor or partners, a company is directly linked to its shareholders' tax affairs.

For example, suppose a firm makes a profit of £10,000. That profit is assessed on the income of its owner, who pays £2,000 in tax (at the basic rate of tax). The firm pays no tax.

Now suppose a company makes £10,000 profit. It pays corporation tax at 20% (for now...), so HMRC gets £2,000. The shareholder, having received no dividend, pays no tax. But if the company pays out its profits as a dividend, (in simple terms, at least. It's actually more complex in practice) the company pays 10% tax in the same way, giving the shareholder £9,000. But crucially, that is received with a tax credit of £1,000. The shareholder then pays £1,000 to top it up to 20%. So HMRC, receives £2,000. Which is as it should be. Why should its shareholders be subject to extra tax? That would be crazy.

You mention income tax and NI but the article focuses mainly (not exclusively) on Corporation Tax which it says hasn't been paid for 7-years, despite increasing its directors' pay significantly.
Why are you complaining that Sir Peter is paying more tax? And what would you say if Sir Peter had chosen a smaller salary? Sure, CT would have increased, but Income Tax and NI would have fallen at more than twice the rate. As I say, the two taxes are fundamentally linked. Not to realise that is a fundamental misunderstanding.

Any clearer....?

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Altfish
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Re: GAME ON!

#42 Postby Altfish » October 30th, 2015, 8:22 am

Re assumptions:
From the PE article how do we know Sir Peter pays income tax and NI? We hear about his declared salary but not the tax paid.
It is a red herring anyway. Sir Peter should be paying tax on his income and so should the company. It is not either/or.

Difference between companies and individuals
How do you know which way I'm thinking?
I understand about deferred tax payments for companies, but, in the long run, a company should still pay tax if it is trading profitably. Is 7-years not a long enough time to expect some sort of corporation tax payment

Income Tax v Corporation Tax
I think I answered this already, but Sir Peter should be paying tax, so should the company.

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Alan H
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Re: GAME ON!

#43 Postby Alan H » October 30th, 2015, 10:23 am

Altfish wrote:Re assumptions:
From the PE article how do we know Sir Peter pays income tax and NI? We hear about his declared salary but not the tax paid.
It is a red herring anyway. Sir Peter should be paying tax on his income and so should the company. It is not either/or.

Difference between companies and individuals
How do you know which way I'm thinking?
I understand about deferred tax payments for companies, but, in the long run, a company should still pay tax if it is trading profitably. Is 7-years not a long enough time to expect some sort of corporation tax payment

Income Tax v Corporation Tax
I think I answered this already, but Sir Peter should be paying tax, so should the company.

Indeed. You and I have no choice in the tax we pay (while staying within the law); what some others pay is determined by the cleverness, deviousness and audacity of their lawyers and accountants - or at least their abilities relative to HMRC and the writers of the legislation. That's where it is unequal, unjust and unfair.
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

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Nick
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Re: GAME ON!

#44 Postby Nick » October 30th, 2015, 11:51 pm

Altfish wrote:Re assumptions:
From the PE article how do we know Sir Peter pays income tax and NI? We hear about his declared salary but not the tax paid.
Careful Altfish, you are beginning to look stupid. If a company publishes in its accounts, a copy of which is sent to HMRC, the fact that it has paid Sir Peter x hundred thousand, they would be pretty bloody stupid not to pay the tax and NI due on that, wouldn't they? Especially as they have to account to HMRC for the PAYE and NI on Sir Peter's income, down to the last pound.

It is a red herring anyway. Sir Peter should be paying tax on his income and so should the company. It is not either/or.
Did you actually read my reply? If you did, did you actually grasp the point I was making? Because there is scant evidence that you did.

If the company keeps the money, they pay CT on their profits. If they pay Sir Peter the money, then that is a cost to the business, so their profits fall by a corresponding amount, so their tax liability falls too. But Sir Peter pays tax on it, because his income has risen.

Difference between companies and individuals
How do you know which way I'm thinking?
True. Very difficult to know, as I see no evidence of any thought at all. :wink:

I understand about deferred tax payments for companies,
I'm not sure you do. "Deferred tax" is altogether different from losses brought forward, which is what I think you mean. And I think you have it wrong because of your next line....

but, in the long run, a company should still pay tax if it is trading profitably.
If they trade profitably, then they do.

Is 7-years not a long enough time to expect some sort of corporation tax payment
That all depends on whether they have made a profit in the company, doesn't it? If they haven't (by paying Sir Pete large salaries, for example) then 7 years, or indeed 77 years, is not long enough to justify a tax charge on zero profits.

Income Tax v Corporation Tax
I think I answered this already, but Sir Peter should be paying tax, so should the company.
You have answered nothing. You have just made a statement. That is not an answer. A statement which either shows that you haven't understood, or that you think that the same money should be taxed twice.

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Nick
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Re: GAME ON!

#45 Postby Nick » October 31st, 2015, 12:10 am

Alan H wrote:Indeed. You and I have no choice in the tax we pay (while staying within the law);
Yes you do. In all sorts of ways. Starting with whether you want to be employed, or self-employed, or start a limited company, speedily followed by pension contributions, ISA investments etc., which are specifically encouraged by governments, even Labour ones, ending with whether you choose to spend your money on fags and booze, or lentils and the RSPCA.

what some others pay is determined by the cleverness, deviousness and audacity of their lawyers and accountants - or at least their abilities relative to HMRC and the writers of the legislation. That's where it is unequal, unjust and unfair.
LOL!! Paying Sir Peter a large salary, which cops tax and NI at the highest rate possible, is scarcely an indication of cleverness, deviousness and audacity! It would be impossible (from the evidence presented) for HMRC to extract any more money from him or the company than they already have within the current legislation.

For you to think that Sir Peter has cheated HMRC and should, in addition, be deprived of even more money, smacks of ignorance, jealously, greed and vindictiveness on a grand scale.

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Alan H
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Re: GAME ON!

#46 Postby Alan H » October 31st, 2015, 12:39 am

Nick wrote:
Alan H wrote:Indeed. You and I have no choice in the tax we pay (while staying within the law);
Yes you do. In all sorts of ways. Starting with whether you want to be employed, or self-employed, or start a limited company, speedily followed by pension contributions, ISA investments etc., which are specifically encouraged by governments, even Labour ones, ending with whether you choose to spend your money on fags and booze, or lentils and the RSPCA.
No, Nick.

what some others pay is determined by the cleverness, deviousness and audacity of their lawyers and accountants - or at least their abilities relative to HMRC and the writers of the legislation. That's where it is unequal, unjust and unfair.
LOL!! Paying Sir Peter a large salary, which cops tax and NI at the highest rate possible, is scarcely an indication of cleverness, deviousness and audacity! It would be impossible (from the evidence presented) for HMRC to extract any more money from him or the company than they already have within the current legislation.

For you to think that Sir Peter has cheated HMRC and should, in addition, be deprived of even more money, smacks of ignorance, jealously, greed and vindictiveness on a grand scale.
Who on earth accused anyone of cheating, Nick? Certainly not me.
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

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Altfish
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Re: GAME ON!

#47 Postby Altfish » October 31st, 2015, 7:32 am

What Alan says, I think you live in a parallel universe, us plebs HAVE to pay tax usually by PAYE, we do not have a choice.

Your replies are very condescending, Nick. Why do you always talk down to us?

Have you ever been wrong?

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Nick
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Re: GAME ON!

#48 Postby Nick » October 31st, 2015, 10:07 am

Altfish wrote:What Alan says, I think you live in a parallel universe, us plebs HAVE to pay tax usually by PAYE, we do not have a choice.
In what way has Sir Peter, or Osborne & Little, not been subject to tax, just like us plebs? Same universe, same tax rules. And he has paid shedloads of tax. By PAYE.

Your replies are very condescending, Nick. Why do you always talk down to us?
It is exasperation and frustration, Altfish. I try hard to explain things, but instead of an examination of the issues, the double taxation of earnings, for example, you just accuse me of condescension, or insist on maintaining your position without explanation.

Have you ever been wrong?
Never :D

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Altfish
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Re: GAME ON!

#49 Postby Altfish » November 1st, 2015, 9:14 am

I will add you to my ignore list so that I don't exasperate and frustrate you.

thundril
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Re: GAME ON!

#50 Postby thundril » November 1st, 2015, 11:22 am

Can we benefit by making some distinctions?
1. Justice is not the same as law. What is 'legal' is a matter of interpretation of written-down laws; what is 'fair' is a matter of opinion.

The distinction between justice and law in the context of taxation is (IMO) quite well expressed
HERE
"At its core tax justice demands that each person pay the right amount of tax at the right time, in the right place and at the right rate.

Right has a special meaning here. It means that not only do you comply with the law. Tax avoiders can claim they do that. It does not even mean that you comply with the spirit of the law – which is what HM Revenue & Customs expect. It is about putting this desire to do the right thing into action, so that what is declared for tax purposes reflects the economic reality of what the taxpayer has actually done."


ISTM that Nick is trying to explain what is legal, and also (incidentally) defending the 'fairness' of the tax regime. I have to take his word on the former, whilst I might disagree about the latter.

2. Osborne-Whatsit makes prettily-patterned stuff that no-one really needs. It is a medium sized, not very important company, whose tax affairs are (in the greater scheme) of no really great concern, except that it is connected very directly to the Chancellor of the Exchequer. For this reason, it's conduct ought to be exemplary, and if it isn't that is worthy of note.
The apalling damage George Osborne is doing to 'hard-working families' (and to the Tory Party FTM) is worth discussing; the Private-Eye tax story, while it may flag up something worth looking into, is tittle-tattle by comparison.

thundril
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Re: GAME ON!

#51 Postby thundril » November 1st, 2015, 11:42 am

Mistaken post. Oops!

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Nick
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Re: GAME ON!

#52 Postby Nick » November 1st, 2015, 5:43 pm

Altfish wrote:I will add you to my ignore list so that I don't exasperate and frustrate you.
That would be a great pity. I'd much rather that you actually addressed a few of the specific issues raised. So, for starters, why should a company which has not made a taxable profit in 7 years pay a profits-tax?

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animist
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Re: GAME ON!

#53 Postby animist » November 1st, 2015, 7:28 pm

Nick wrote:
Altfish wrote:I will add you to my ignore list so that I don't exasperate and frustrate you.
That would be a great pity. I'd much rather that you actually addressed a few of the specific issues raised. So, for starters, why should a company which has not made a taxable profit in 7 years pay a profits-tax?

I do think that Nick deserves a reasoned answer to his posts

thundril
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Re: GAME ON!

#54 Postby thundril » November 1st, 2015, 9:09 pm

animist wrote:I do think that Nick deserves a reasoned answer to his posts

+1

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Nick
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Re: GAME ON!

#55 Postby Nick » November 2nd, 2015, 12:01 am

thundril wrote:Can we benefit by making some distinctions?
1. Justice is not the same as law. What is 'legal' is a matter of interpretation of written-down laws; what is 'fair' is a matter of opinion.
I can go along with that, Thundril. Apartheid in south Africa was 'legal' but never (at least to us) fair.

ISTM that Nick is trying to explain what is legal, and also (incidentally) defending the 'fairness' of the tax regime. I have to take his word on the former, whilst I might disagree about the latter.
[I've moved this part of your post, Thundril, but I think it fits in here...] Yes, I am trying to explain what is legal, but also to explain some of the reasoning behind some of the legislation. I am also, specifically in this thread, trying to show that the Eye, in this case, is putting 2 and 2 together and making 5. I have tried to show that the tax example cited in the Eye is entirely fair within the current tax regime, the salient points of which (dividend tax credits, and capital allowances, losses brought forward, etc.,) have been consistent for decades, including under Labour governments.

Whether the amount of tax taken, and the use to which it is put is "fair" is a much wider question, and not one I can answer succinctly. (And not here, and not now.) But what I can do (or at least I can try) is explain why some aspects of tax stories one reads about in the press do not in fact lead to the conclusions which are drawn, and, worse, bandied about by the howling Left as conclusive proof that the lizards are feasting off the remains of the workers.....

Might I make a distinction, too? My rantings in this thread have been against the article in Private Eye, and the way is distorts the truth of the matter. I have not covered what tax policy should be, only sought to show that the Eye's claims are inconsistent and baseless, for elementary reasons.

That is distinct from your next point, and I'll try to keep the two separate:
The distinction between justice and law in the context of taxation is (IMO) quite well expressed
HERE
Ah! Our old friend Richard Murphy! Famed or claimed originator of Corbynomics. My criticisms of him are manifold, but in particular, he is dangerously ignorant, but claims otherwise, suckering in a whole raft of gullible fellow travellers. (I am not aiming this at you, Thundril; you have always been open to discussion, IRL as well as on the forum.)

Secondly, I do not think his political assertions stand up on their own merits.

Thirdly, I am appalled by the implications of many of his assertions, not least the one cited.

Fourthly, he seems very proud of the fact that he decided that the economics lecturers at his university didn't know what they were talking about, and is proud of not going to their lectures. This is somewhat ironic, as he now lectures students......

And finally, I do not think he is a nice person, not least because he bans dozens of critics from answering his posts.

For forceful, consistent, incisive, irreverent, and often rather funny, rebuttals of Richard Murphy, take a look at http://www.Timworstall.com :D

This post is getting long, so I'll come back to these points anon.

"At its core tax justice demands that each person pay the right amount of tax at the right time, in the right place and at the right rate.

Right has a special meaning here. It means that not only do you comply with the law. Tax avoiders can claim they do that. It does not even mean that you comply with the spirit of the law – which is what HM Revenue & Customs expect. It is about putting this desire to do the right thing into action, so that what is declared for tax purposes reflects the economic reality of what the taxpayer has actually done."

....and that one too.


2. Osborne-Whatsit makes prettily-patterned stuff that no-one really needs. It is a medium sized, not very important company, whose tax affairs are (in the greater scheme) of no really great concern, except that it is connected very directly to the Chancellor of the Exchequer. For this reason, it's conduct ought to be exemplary, and if it isn't that is worthy of note.
Needs...? Maybe not, but wants...? Yes, like a vast number of other businesses, supplying to people like you are I, who have wants as well as needs.

As for Osborne and Little, from the article, ISTM that its conduct is exemplary, and I bet George would have something to say to his dad if the company's financial affairs caused him political embarrassment! I do not know the company intimately, but can make that judgement based on the info the Eye provided, for all the reasons stated, rather than the fatuous conclusion they seem to draw, that somehow HMRC is being cheated out of tax that they should somehow be paying. The article in the Eye is not worthy of note, but having been bandied about the internet, rebuttal is important.


The apalling damage George Osborne is doing to 'hard-working families' (and to the Tory Party FTM) is worth discussing; the Private-Eye tax story, while it may flag up something worth looking into, is tittle-tattle by comparison.
The effects of tax credits is certainly worth examining. The Eye story would be less important, even if it were true. Which it isn't.

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Nick
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Re: GAME ON!

#56 Postby Nick » November 2nd, 2015, 11:44 am

Taking my first criticism of Murphy: his ignorance of a subject in which he claims expertise.

A sovereign government with its own currency can always create all the money it needs in order to spend in exactly the same way that commercial banks can create money for lending, which is out of thin air -

This is complete nonsense. True, a sovereign government can create money, either by printing it, as happened in interwar Germany, Zimbabwe and other places. A bank cannot. Murphy completely misunderstands fractional banking. If commercial banks can create money for lending out of thin air, why, oh why, did Northern Rock not do so? Or any other bank, for that matter. If it were true, then a credit crunch would be impossible, as each bank would have the means to get out of the problem, just by creating money.

If he wrote this in an exam paper, it would be a big, fat F.

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Re: GAME ON!

#57 Postby Nick » November 2nd, 2015, 2:12 pm

Alan H wrote:No, Nick.
Yes, Alan. :wink:

For you to think that Sir Peter has cheated HMRC and should, in addition, be deprived of even more money, smacks of ignorance, jealously, greed and vindictiveness on a grand scale.
Who on earth accused anyone of cheating, Nick? Certainly not me.


So can we agree, therefore, that Sir Peter and his company, paid the correct amount of tax, (at least on the evidence presented) and that therefore Private Eye was being (at least) mischievous?

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Re: GAME ON!

#58 Postby Nick » November 2nd, 2015, 2:19 pm

Taking my third point next:

It is a recurring theme of this blog that the money that the government spends is not ‘taxpayer’s money’ but is instead money that is the government’s rightful, and sole, property.
So, by implication, the government can take any amount of income or capital from any citizen as it never actually belonged to them. Crikey! What we have here is the complete collapse of any property rights at all, and the reduction of the citizen to a vassal of the state. We are in the same area as Stalin's purges, the Cultural Revolution under Mao, and the horrific dictatorship of North Korea. Seriously, Thundril?

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Re: GAME ON!

#59 Postby Nick » November 2nd, 2015, 2:28 pm

And now my second:

Right has a special meaning here. It means that not only do you comply with the law. Tax avoiders can claim they do that. It does not even mean that you comply with the spirit of the law – which is what HM Revenue & Customs expect. It is about putting this desire to do the right thing into action, so that what is declared for tax purposes reflects the economic reality of what the taxpayer has actually done.

Wow! We might as well be in Orwell's Animal Farm! He is now saying that any tax-payer should "do the right thing", ie ignore legislation and just hand over oodles of cash which is not even due under the legislation of the elected government! So, one must somehow ignore tax relief on pension contributions, or capital allowances, or any other allowable expenses..... Good grief! The whole rule book is effectively torn up and replaced by an arbitrary asset grab by the state. How on earth can anyone ever be sure of being tax-compliant? It's like the Spanish Inquisition insisting that you confess, even though you have no idea what you need to confess to! Except that, as previously pointed out, all income and assets, according to Murphy, belong to the state anyway, and are only given to such citizens and in such quantities as the state deems appropriate. Murphy is an evil menace!

thundril
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Re: GAME ON!

#60 Postby thundril » November 2nd, 2015, 3:55 pm

Nick wrote:Taking my third point next:

It is a recurring theme of this blog that the money that the government spends is not ‘taxpayer’s money’ but is instead money that is the government’s rightful, and sole, property.
So, by implication, the government can take any amount of income or capital from any citizen as it never actually belonged to them. Crikey! What we have here is the complete collapse of any property rights at all, and the reduction of the citizen to a vassal of the state. We are in the same area as Stalin's purges, the Cultural Revolution under Mao, and the horrific dictatorship of North Korea. Seriously, Thundril?

Oh dear, Nick. Here you go again with the Mao-Stalin nightmare, the dreaded march of the DAWN economists.
We don't need the hyperbole.
I haven't read and understood very much of Murphy's work (yet), but my impression, so far, is something like this:
He seems to be discussing money primarily in its role as a 'means of exchange'. In that sense, the State's job is issuing currency under some control, and maintaining the flow of money by various means such as redistribution and revaluing. Kind of like the lubricant pump, rather than the fuel pump, in an engine.
There may well be arguments for entrusting these responsibilities to the bankers, ( people whose sole aim in their economic life is to accumulate money for themselves and their clients). I think this job of flow-control is better exercised by our elected representatives, and AFAICS Mr Murphy's position is not very different from mine. It's hardly Stalinist, is it?

thundril
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Re: GAME ON!

#61 Postby thundril » November 2nd, 2015, 4:24 pm

Nick wrote:Taking my first criticism of Murphy: his ignorance of a subject in which he claims expertise.

A sovereign government with its own currency can always create all the money it needs in order to spend in exactly the same way that commercial banks can create money for lending, which is out of thin air -

This is complete nonsense. True, a sovereign government can create money, either by printing it, as happened in interwar Germany, Zimbabwe and other places.
Other places being all countries except those that don't 'create money by printing it'. Examples?
A bank cannot. Murphy completely misunderstands fractional banking. If commercial banks can create money for lending out of thin air, why, oh why, did Northern Rock not do so? Or any other bank, for that matter. If it were true, then a credit crunch would be impossible, as each bank would have the means to get out of the problem, just by creating money.

So if countries cannot create money, and banks cannot create money, my question is 'In what sense does fiat money actually exist?'
Proposed analogy: Faith in God exists, and the effects of that faith can be seen all around us daily. This does not mean that God exists.


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