The United Kingdom tax authority has been accused of going after low-hanging fruit in its quest to narrow the tax gap. Accountancy firm UHY Hacker Young reported last month that HM Revenue and Customs collected almost GBP500m (USD660m) in additional revenue from its compliance investigations in 2016/17, a five percent increase over the previous year. And Roy Maugham, a tax partner at UHY, is clear that HMRC is focusing its compliance activities on small firms because they are “an easier target than many larger businesses.”
He also emphasized that such audits can have a disproportionately detrimental effect on these taxpayers. “The cost of tax inquiries for SMEs can be high, and the investigations disruptive,” he noted, adding: “Small companies may not have the necessary resources to bounce back.”
Maugham suggested that the best way for small business to avoid being in HMRC’s … Read More »
We often refer to Ireland’s corporate tax advantage when discussing international tax issues and the competition for foreign investment. Less discussed beyond Ireland’s shores, I’m sure, is its individual income tax disadvantage.
While Ireland’s top rate of personal income tax at 40 percent (recently reduced from 41 percent) is broadly in line with other European countries, it kicks in at a relatively low amount of income (EUR33,800 in 2017). When Universal Social Charge – brought in as part of Ireland’s fiscal retrenchment deal with its bailout creditors – is factored into the equation, this has resulted in a marginal tax rate of over 50 percent for some, which places Ireland among the Nordic nations in terms of individual tax.
By comparison, the UK’s higher 40 percent rate of tax applies to income exceeding GBP45,000 this year, which is the equivalent of more … Read More »
While the US Government is attempting to reduce the tax burden on small businesses, Canada seems to want to go the other way. At least its Government does.
Governments these days are fond of claiming their openness, and their willingness to listen to taxpayers. In Canada’s case, the Government says it will ”act on what it has heard” during a consultation on controversial reform of tax planning rules surrounding the use by middle- and high-income taxpayers of corporate entities as tax planning vehicles.
But even without an official consultation exercise, the Government would have been hard-pressed not to have noticed the stir these proposals caused within Canada’s business community. Barely a week has gone by since the draft legislation was published that somebody hasn’t spoken out in vociferous tones against the reforms. Indeed, the small business community’s “spontaneous, grassroots response,” as Dan Kelly, President … Read More »
While these are exciting times for political commentators, they are something of a nightmare for taxpayers. Governments with clear majorities tend to have clear plans, even if most of the time the plans end up being executed only partially. But unholy alliances between parties of different stripes are often the source of policy paralysis, as the various participants seeks to reconcile what can sometimes be vastly differing positions on various issues, including taxation.
Germany is an interesting one in this respect. The CDU-led Government has stubbornly refused to loosen the fiscal reins in order to build up a budgetary buffer, in spite of successive pleas by economists to show a little mercy to long-suffering taxpayers. But the CDU is about to get into bed with a party calling for an aggressive tax-cutting policy in the form of the FDP. And joining … Read More »