hsbc

mrushton

Our friend Dr Fuentes has popped up in the HSBC money laundering report in the Guardian

Eufemiano Fuentes, a Spanish doctor, later to be convicted of sports doping, whose offshore funds came from illegal doping of racing cyclists, withdrew a total of €265,000 in cash in the course of the year, claiming it was to buy a boat and to pay hospital bills for his daughter.

To be fair he is one of many in the report

ben@31

HSBC helped its wealthy clients to evade UK taxes.

http://www.bbc.co.uk/news/uk-politics-31300833

plowmar

Is that the illegal one?, if not so what that's their job. The job of the government is to tighten up the regulations so that they cannot do that.

rick_chasey

For some bizarre reason the guardian answers this only for Australian law (they publish in Australia) but here's their article answering your very question plowmar.

http://www.theguardian.com/news/2015/fe ... -it-matter

1. Is it an offence to hold accounts offshore?
It’s not illegal for Australians to hold accounts or assets offshore. But in some circumstances it can be an offence to fail to disclose those assets to the ATO.

Worldwide income or assets – irrespective of where they are held – are generally subject to Australian tax law and should be declared. There are some exemptions, but law applies applies generally to offshore income, offshore company holdings, offshore share holdings, offshore trusts holding listed shares and holding assets within offshore corporate structures.

Criminal prosecutions are often based on a failure to make these declarations. The main offences relied on by prosecutors are dishonestly obtaining commonwealth property, obtaining financial advantage by deception and dishonestly causing a loss to the commonwealth.

The ATO has helpfully compiled a list of scenarios in which offshore assets or accounts should be declared to the tax office.

2. If it’s not illegal to hold accounts overseas, why does it matter?
There may be a clear intention to limit a person’s tax liability. Campaigners against tax evasion argue that citizens or residents of a country who enjoy the benefits of healthcare, infrastructure and social security should pay the tax that supports those services.

rick_chasey

We've got our own tax efficient accountant Stevo who will shed some light on it.

As I understand it, having undeclared income, assets and accounts abroad isn't allowed. You should declare them.

Obviously in theory the UK gov't will never know if they're in Switzerland.

Also, those who have access to these kinds of services typically earn a lot, so it often makes practical sense for HMRC to negotiate some tax in order to avoid losing it all to another country entirely.

Though that's what the accountant who helps them will suggest .

rick_chasey

If HSBC are knowingly helping people deliberately avoid tax, and conceal accounts, then they're breaking compliance rules.

slowmart

Rick Chasey wrote:

Obviously in theory the UK gov't will never know if they're in Switzerland.

Not so.

http://www.out-law.com/topics/tax/tax-l ... -accounts/

As you allude to mostly affluent individuals who can afford the demands without having to think about the affordability.

plowmar

Thank you. I've definitely learned something.

mamba80

Bedroom tax, benefits cheats - all these relatively poor people will go to jail/fined/made to move house/benefits stopped but if your wealthy and use HSBC and no doubt others then its all ok.
Other countries manage to drag individuals through the courts (and recover more owed tax) but not the uk/hmrc with their cosy deals and according to one whistle blower, this practice is still going on and it occurred (or first reported) under a labour Government, shameful

rick_chasey

Slowmart wrote:

Rick Chasey wrote:

Obviously in theory the UK gov't will never know if they're in Switzerland.

Not so.

http://www.out-law.com/topics/tax/tax-l ... -accounts/

As you allude to mostly affluent individuals who can afford the demands without having to think about the affordability.

Fair enough.


Look at it this way. You've got a 1 in 7000 chance to get unlucky and get criminally prosecuted if you use an HSBC swiss bank account and use it to avoid UK tax.

Let alone all the other private banks .

Stevo_666

Rick Chasey wrote:

We've got our own tax efficient accountant Stevo who will shed some light on it.

As I understand it, having undeclared income, assets and accounts abroad isn't allowed. You should declare them.

Obviously in theory the UK gov't will never know if they're in Switzerland.

Also, those who have access to these kinds of services typically earn a lot, so it often makes practical sense for HMRC to negotiate some tax in order to avoid losing it all to another country entirely.

Though that's what the accountant who helps them will suggest .

Thanks for thinking of me Rick, although I don't get involved in anything like that. I just make sure my Group doesn't get robbed blind by the legalised highwaymen that call themselves tax inspectors in certain countries (And my list doesn't currently include the UK).

At least I know you are aware of the legality of tax avoidance after our last little debate on banks and avoidance , unlike the BBC article linked above that uses the terms avoidance and evasion interchangeably.

I'm sure some more facts will eventually emerge from the mudslinging and media hype, but the main points about HSBC culpability that need to be clarified as I see it are:
- Were these HSBC clients avoiding tax or evading tax?
- To the extent that it was evasion, was HSBC actively helping them to do so?
From what little I've read on this one, it sounds like their Swiss subsidiary acquired in the late 90's was on a bit of a long leash for too long a time.

rick_chasey

If, as a bank, you're paying people in bricks of foreign currency cash, using code names etc, it's not looking good.

Stevo_666

Some of what I've seen in the press looks pretty dodgy. Lets see what happens. Although as HMRC have said, they have gone down the civil rather than criminal legal route to recover and not sure that the Swiss have a big driver to press charges against HSBC Switzerland as they have not lost the tax.

We're more likely to see the likes of Hodge and Miliband jumping up and down and trying to tar big corporates with the same brush :roll:

slowmart

Now Lord Green, he told the BBC's Panorama programme: "As a matter of principle I will not comment on the business of HSBC past or present."

But Mrs Hodge said: "Either he didn't know and he was asleep at the wheel, or he did know and he was therefore involved in dodgy tax practices.

Sounds like Mrs Hodge has her agenda laid out and is serving up a respected and able individual and hasn't mentioned the head of Compliance or Risk who had direct responsibility


As this material has been public knowledge since 2010 the sounds of mock horror from politicians of all political colours is predictable and positioning for the election and built on the bones of individuals who have been able and capable in their role.

VTech

Isn't it odd how the public are really getting behind this, reading with horror as they drink their starbucks coffee and drive to work in their shiny new Peugeot's

Please understand, almost all business in the £70,000,000+ bracket is paying less tax than they should and they are doing it with the governments blessings.
Also, holding an offshore account isn't illegal, it becomes illegal when you spend untaxed income.

Stevo_666

VTech wrote:

Please understand, almost all business in the £70,000,000+ bracket is paying less tax than they should and they are doing it with the governments blessings.

Where do you get that from and who decides how much tax a company should pay? Have a look at how much tax those big, bad multinationals aren't paying

VTech wrote:

Also, holding an offshore account isn't illegal, it becomes illegal when you spend untaxed income.

Nope, it's when you don't declare income to the tax authorities in the relevant country that it becomes tax evasion/illegal.

VTech

Stevo 666 wrote:

VTech wrote:

Please understand, almost all business in the £70,000,000+ bracket is paying less tax than they should and they are doing it with the governments blessings.

Where do you get that from and who decides how much tax a company should pay? Have a look at how much tax those big, bad multinationals aren't paying

VTech wrote:

Also, holding an offshore account isn't illegal, it becomes illegal when you spend untaxed income.

Nope, it's when you don't declare income to the tax authorities in the relevant country that it becomes tax evasion/illegal.

Not strickly otherwise anyone in a scheme would be breaking the law and susceptible to arrest for tax evasion.
I can legally sell a product from the UK to the middle east or the USA and deposit the funds in Dubai and pay no UK tax.
I am not breaking the law doing this although IMO it is morally wrong. It becomes illegal if I spend the money here or try and get the cash here with no tax paid.

As for the multinationals, many car companies don't pay any tax, instead they offer jobs which is of no benefit in some cases as the losses are still more than we would get if they paid the correct tax.

pdstsp

Not sure where you get that one from VTech. If you are a UK based business which sells overseas it does not matter where you bank the cash, the profit is taxable in the UK. If you do not account for the profit then you are breaking the law.
You may be able to reduce your profits in the UK by having a holding company in an overseas tax haven which levies management charges etc to the UK company which, effectively, wipe out the profit, but I am afraid your statement that "I can legally sell a product for the UK to the middle east...and pay no UK tax" is not correct.

Stevo_666

VTech wrote:

Not strickly otherwise anyone in a scheme would be breaking the law and susceptible to arrest for tax evasion.
I can legally sell a product from the UK to the middle east or the USA and deposit the funds in Dubai and pay no UK tax.
I am not breaking the law doing this although IMO it is morally wrong. It becomes illegal if I spend the money here or try and get the cash here with no tax paid.

As for the multinationals, many car companies don't pay any tax, instead they offer jobs which is of no benefit in some cases as the losses are still more than we would get if they paid the correct tax.

Where do you get this stuff from?

Let's try to clear up a few points.
1. If you are UK resident tax payer (person or company) who sells good to the Middle East, where you put the proceeds is of no relevance to the taxability of that transaction - you are taxable on the profit.

2. A UK tax payer (person or company) can put money into a bank account pretty much anywhere in the world. It is not the cash itself that causes the issue, but the interest that you earn from that cash - this is the income that you must declare to the UK tax authorities. UK taxpayers are taxable on their worldwide income (apart from a few exceptions such as non-domiciled individuals): interest from a bank account is taxable income.

3. The point you raise about cash only being taxable if you remit it to the UK is only relevant for non-domiciled individuals. 'Non-doms' can earn income from foreign sources and are only taxed on it if they remit the cash to the UK. There are not many non-doms. And if you sell goods from the UK, the non-dom exception doesn't apply as that is income you earn from UK activities.

4. Your point about multinational car companies doesn't make much sense tbh. Clarify what you mean, back it up with some facts and maybe then I can reply.

ballysmate

Stevo's the one on the left.

Stevo_666

Ballysmate wrote:

Stevo's the one on the left.

Actually that will be Vtech if he does what he says above

VTech

I think the problem here is we have a couple of people speaking on the side of both morality and what they perceive to be by the law.
What people think as legal isn't necessarily the truth when it comes to tax.

I will say again, I can sell a product from the UK, sell it to a client in the UDSA or the Middle East, bank it in Dubai and pay nothing to the UK government and there is nothing they can do.
I will confirm however that I do not agree with this approach, I think if you are based in a country you should pay that countries tax in line with other workers.

I will explain more but I did not actually want to post this because I don't agree with it but to keep the usual few who try everything they can to argue with what I say at bay, here goes.

I have an agreement with a mail forwarder in Dubai.
I "ship" that forwarder product with zero sale to store.
I broker in the UK because that is where I live.
I forward that order to my forwarder in Dubai.
He/she ships to the reseller.
Money gets paid into account in Dubai.

NO TAX TO PAY UK GOVERNMENT.

Another way is:
I "work" for a company in Dubai (example) and I sell from my home location because my job allows me to work from home.
I get paid a salary from my job in Dubai.
Customers pay into the Dubai account.

NO TAX TO PAY UK GOVERNMENT ON STOCK SALES.

I was also asked to provide proof of big companies paying little or no tax, I used Peugeot as an example as they had worked a deal with the UK government to be subsidised in order to create new jobs.
We also had Rover which according to some reports was funded by the UK government to the tune of £3,000,000/day.

Starbucks
Experian
RSA Insurance
G4S
Vodaphone
Rolls Royce
TUI Travel
Tate & Lyle
Smiths Group
Intertec
British American Tobacco

I await the usual silly replies

Stevo_666

I'm off out in a minute but it will be fun replying to this later

VTech

Stevo 666 wrote:

I'm off out in a minute but it will be fun replying to this later

Take your time, you may need it

Stevo_666

VTech wrote:

Stevo 666 wrote:

I'm off out in a minute but it will be fun replying to this later

Take your time, you may need it

Its going to take time to put you straight on all the misconceptions you have about tax planning When it comes to tax, a little knowledge is a dangerous thing

Wheelspinner

Stevo 666 wrote:

VTech wrote:

Stevo 666 wrote:

I'm off out in a minute but it will be fun replying to this later

Take your time, you may need it

Its going to take time to put you straight on all the misconceptions you have about tax planning When it comes to tax, a little knowledge is a dangerous thing

Yes, I find complete ignorance is much safer in my case.

VTech

Stevo 666 wrote:

VTech wrote:

Stevo 666 wrote:

I'm off out in a minute but it will be fun replying to this later

Take your time, you may need it

Its going to take time to put you straight on all the misconceptions you have about tax planning When it comes to tax, a little knowledge is a dangerous thing

Although I don't profess to be a tax advisor, I have run several companies and paid a fair amount in tax. I have also been advised to take several schemes, all of which I turned down and chose instead to pay what I owe.
Please do take your time and point out where I am wrong in my earlier post. It would only be fair as some people may look at what you have written and think it true.

slowmart

pblakeney

This could get interesting! :P

Flâneur

Slowmart wrote:

popcorn

Stevo_666

I'm back

VTech wrote:

I will say again, I can sell a product from the UK, sell it to a client in the UDSA or the Middle East, bank it in Dubai and pay nothing to the UK government and there is nothing they can do.

Let's keep that to remind ourselves of what you said. And here's what I said:
"1. If you are UK resident tax payer (person or company) who sells good to the Middle East, where you put the proceeds is of no relevance to the taxability of that transaction - you are taxable on the profit."

VTech wrote:

I will explain more but I did not actually want to post this because I don't agree with it but to keep the usual few who try everything they can to argue with what I say at bay, here goes.

I have an agreement with a mail forwarder in Dubai.
I "ship" that forwarder product with zero sale to store.
I broker in the UK because that is where I live.
I forward that order to my forwarder in Dubai.
He/she ships to the reseller.
Money gets paid into account in Dubai.

NO TAX TO PAY UK GOVERNMENT.

- If you own that product (by 'you' I mean you or your company) and you are a UK resident then at some point you are selling that product to the reseller. It doesn't matter where the ownership of the product passes, you are taxable on the profit. FAIL.
- If you are saying that you don't own the product and you are only a broker, then you're not actually selling the product, are you. Someone else is selling and that someone else will make the profit. If you get a brokerage commission then because you are UK resident, you pay UK tax on the brokerage commission. NOT RELEVANT or FAIL.
- If you are saying that you sell the product to a third party in Dubai for a big undervalue or nothing then you've given away your profit on the sale and you make nothing or a loss. FAIL
- If you are saying that you sell your product to a connected party (company you own) for a big undervalue of nothing then you are flouting the UK transfer pricing rules that say all transactions between connected parties must be done at arms length (market rates). Crude tax avoidance at best and easily detected by HMRC. FAIL.

Which is the right scenario then?

VTech wrote:

Another way is:
I "work" for a company in Dubai (example) and I sell from my home location because my job allows me to work from home.
I get paid a salary from my job in Dubai.
Customers pay into the Dubai account.

NO TAX TO PAY UK GOVERNMENT ON STOCK SALES.

- If you are just an employee of a Dubai company but work in the UK then you pay UK tax on your earnings from that company. FAIL.
- If you actually live and work in Dubai and own the Dubai company then you are not UK tax resident so of course you don't pay tax as there is no tax in Dubai. But that's a different fact pattern from your original assertion that you can sell tax free to the Middle East if you are UK based. NOT RELEVANT.
- If you live in the UK and own the company in Dubai, then the Dubai company will pay no tax because there is no tax in Dubai as mentioned above. But then the seller is not a UK resident (see original point above). However as I'm sure you're aware, the UK has anti-tax haven rules that allow HMRC to send a tax bill to the UK shareholder of the Dubai company for the UK tax it would have paid if it was UK tax resident. There are certain exemptions if the company has proper substance (office, staff, etc) and is actually managed in Dubai. All too often these turn out to be brass plaque companies - are you happy that yours passes these tests? So either NOT RELEVANT or FAIL.

As above, which is the right scenario?

Let's not forgot that company law in Dubai states that a local Dubai 'sponsor' must own at least 51% of the company, but of course you would know that already...

VTech wrote:

I was also asked to provide proof of big companies paying little or no tax, I used Peugeot as an example as they had worked a deal with the UK government to be subsidised in order to create new jobs.
We also had Rover which according to some reports was funded by the UK government to the tune of £3,000,000/day.

Starbucks
Experian
RSA Insurance http://rsaar13.g3dhosting.com/system/files/ar13/rsa_annual_report_2013_financial_statements.pdf Corporate tax charge in accounts £140m
G4S http://www.g4s.com/~/media/3A387C7DC35049C6950D738F6AEBDB88.ashx Tax charge in accounts £70m.
Vodaphone
Rolls Royce
TUI Travel http://www.tuitravelplc.com/system/files/uploads/financialdocs/TUI_Travel_PLC_ARA_2014_single_interactive.pdf Tax charge in accounts £93m.
Tate & Lyle
Smiths Group
Intertec
British American Tobacco

I await the usual silly replies

Let's take a random sample of the companies above shall we. 0/3. Not very good examples are they I will only deal with corporate tax, but if your statment is right then we also have to assume that these companies pay no income tax or NI when the do their payroll runs, and pay no VAT on any of their sales. Not very likely, wouldn't you agree? Now look again at my link earlier on total tax contribution and reconsider your statement above.

Based on the above I'm puzzled. For a man of your immense wealth I can't understand why the hell you can't afford a decent tax advisor