February 2021 - no plans for vaccine passports, they are 'highly discriminatory' in his words. September 2021 - vaccine passports are introduced. Just out and out lying.
If he cared about behaviour rationally economically he would state that we would rejoin the SM and Customs Union. With the loss of 5% of GDP as a result of leaving both then everything else is pointless. Additionally fundamentally speaking a Chancellor who equates a household budget with a national one is not being serious.
There has been no charge of tax evasion as they have been able to establish Mens Rea or intent to evade. The penalties are for a misused avoidance scheme. Based on that whatever we think of him morally legally he has committed no crime
I wouldn’t be too sure about that. It’s wrong to say Nadhim Zahawi evaded tax. It’s also wrong to say he didn’t. Here’s why. Dan 20 January 2023 11:18 am 10 Comments zahawi It’s increasingly likely that Nadhim Zahawi should have paid £3.7m in tax at some point after 2005, but didn’t. What are the legal consequences? Did he evade tax? As lawyers always say: it depends. UPDATE at 1pm: the Guardian is reporting that Zahawi paid 30% penalties. I’ve updated the below to reflect that Here’s my handy tax avoidance/evasion infographic:doesn’t look normal, and a contractual settlement isn’t normal. But I guess in principle the Sun’s report could be wrong, and all my instincts and expertise (and that of the many other experts I collaborated with) could be dead wrong. Consequence: I apologise to Zahawi, make a donation to a charity of his choice, and then eat my hat. 2. Successful tax avoidance scheme. I always discarded this possibility – the structure just doesn’t work. The fact Zahawi appears to have approached HMRC to settle suggests that both Zahawi’s advisers and HMRC agree with me. But it’s just about still possible that I could be completely wrong. Consequence: I apologise to Zahawi, and make a donation to a charity of his choice. 3. Failed tax avoidance scheme. Zahawi was fully advised on the structure by a reputable law/accounting firm, and honestly believed it worked. The advisers were idiots, but he couldn’t know that. You might think Zahawi acted immorally, but that’s a value judgment – legally he’s squeaky clean. This feels somewhat unlikely to me, as the structure is so amateur. But it’s possible. Consequence: the tax is due, with interest. Very possibly no penalties. Zahawi should sue his advisers. 4. Non-compliant. Zahawi winged it, took no advice (except perhaps from his father or friends), and blundered into a situation where a pile of tax was legally payable, but he didn’t know that. This is very plausible, and forgivable, when a startup is founded – i.e. YouGov back in 2000. In my view it’s much less plausible once Zahawi started receiving serious sums of money from the structure – perhaps £25m or more. Surely at that point you’d obtain advice? Consequence: tax, plus interest, plus penalties of 10% to 100% (and possibly 200%) – depending on the precise facts 5. Tax evasion. Zahawi knew the YouGov proceeds were taxable, but dishonestly failed to pay or report the arrangements to HMRC. Or he was so reckless about it that it amounts to dishonesty. Consequence: tax, plus interest, plus penalties at the top end of that 10% to 100% range (maybe even 200%). Prosecution for tax evasion and potential jail time. So I don’t think it will be scenarios 1 or 2. I expect we will find out pretty soon if it’s scenario 3 – failed tax avoidance scheme. If advisers are at fault, then Zahawi will surely say so. That doesn’t let Zahawi off the hook for his behaviour after I revealed the avoidance. If Zahawi indeed paid a 30% penalty then we can probably discard this scenario. Otherwise, it’s scenario 4 or 5. And here’s the key point: the only difference between the two scenarios is Zahawi’s state of mind twenty years ago. If/when the facts are clearer, and if/when we get an explanation from Zahawi, we may be able to assess the plausibility of Zahawi blundering vs Zahawi being dishonest. But it’s very unlikely we will ever know for sure… and very unlikely HMRC would be able to establish dishonesty beyond “reasonable doubt”. Journalists should put this question to Zahawi: “did HMRC apply their investigation of fraud procedure, COP9?” If they did, then HMRC thought tax evasion was absolutely a possibility, but didn’t proceed with a prosecution. I’ll talk more about that below. Another important point: it’s my opinion that Zahawi has been dishonest in his response to my original report. If he knew for a fact his tax affairs weren’t in order, but put out statements saying they were, then that was dishonest. But it does not necessarily follow from this that he was dishonest in not paying his tax – he could have been hiding out of embarrassment that he had blundered so badly. So how should this be reported? I would say: “If the Sun report is correct, and Nadhim Zahawi reached a contractual settlement with HMRC over his YouGov arrangements, then that means that he originally failed to pay tax that was due. At this point we don’t know why.” It’s misleading to say he avoided or evaded tax, and misleading to say definitively that he didn’t. We just don’t know enough. There is no need to use the words “avoidance” or “evasion” at all. If Zahawi doesn’t like the implication, then Zahawi can provide an explanation. Why is there one rule for the rich, and one for the rest of us? There isn’t. Except there kind of is. The frustrating thing is that it’s much easier to prove dishonesty/tax evasion in simple cases. A shopowner fails to declare a chunk of their sales to HMRC, and does so regularly, keeping two sets of books. What explanation is there, other than dishonesty? Ditto some benefit fraud. But a wealthy individual fails to declare cash in an offshore bank account, opened in the name of their dog? They can argue they forgot and got confused, and a jury might believe them. Without the dog detail, it’s even easier. And another thing that’s frustrating to many of us: when HMRC finds tax evasion, standard policy is not to prosecute unless there are very aggravating factors. HMRC will often charge penalties, and reach a contractual settlement agreement, backed by a promise from the taxpayer that they have fully disclosed everything. This is what HMRC’s Code of Practice on fraud investigation, COP9, says: And that’s what happened with Lester Piggott – he confessed to undeclared cash in offshore bank accounts, paid the tax and penalties, and then it later turned out he had other offshore bank accounts he hadn’t disclosed. At which point the Inland Revenue prosecuted.clearly are prosecutions. But many of us think there should be more visible prosecutions of wealthy tax evaders – it would strengthen the rule of law, and everyone’s faith in the integrity of the tax system. But right now there is no reason to think Nadhim Zahawi has been treated any differently from anyone else. We can reassess that if/when we know the details of the settlement.
My take is that.. Tax avoidance is OK.. No one wants to pay more than is required by law. It is hypocritical of people to target the wealthy for doing so since at any level of income people only pay what is necessary to comply with legislation. The super rich can, and in many cases, do find other ways to contribute to society although these often offer tax incentives anyway. Tax evasion, on the other hand, is not only illegal but despicable, and indicates a complete lack of integrity, particularly if like Zahawi you are a multi millionaire. The very fact he not only paid back tax but also paid a substantial fine (and not because it was simply 'late') indicates it was the latter. As someone has pointed out, he must use competent accountants to handle his tax affairs. The would/should know the law and so he must have mislead them otherwise he would not be claiming it was an unfortunate oversight but blaming them publicly He is not guilty of an honest mistake but guilty of having been found out'. He should resign and resign immediately.
HMRC have already decided that they cannot prove intent so have accepted that this is could be an avoidance scheme that was incorrectly administered without the client intending to do so. They do not believe that beyond a reasonable doubt they can prove intent to a high criminal standard. Legally they have closed the matter. There is a lot of opinion in the above it literally says in my opinion but HMRC have made their decision.
Pretty clear his conduct didn't reach the bar for prosecution, but equally clear it amounted to wrongdoing vis a vis the tax legislation. You don't pay a penalty in excess of £1M if you are totally blameless. And he was nominally in charge of the entire tax system at the time.
I agree with that mate. The thing I posted was from the tax lawyer who has been investigating this for months. He’s being really careful in his language to make sure he’s not going to be continuously harassed by Zahawi’s lawyers. I know the case as such is closed but all this proves is that law is an ass. He knew exactly what he was doing, it wasn’t careless. You know that, I know that, everyone reading the story knows that. The issue is, it’s pretty much unprovable. He has taken advantage of tax and non dom loopholes. Loopholes that shouldn’t exist in any circumstances. £42bn was lost from the treasury last year due to the elite using tax loopholes. We can’t do the same, the working class uses PAYE and local accountants. A year or so ago, the tax office got my tax code wrong and I had to pay back £5k in 12 months. It was horrific but I had to pay it, even though it was their error. I lost my job in November and now HMRC owe me 5k. It’s taken me about 20 hours in calls to even get a bit of it back. These rich people can bleed the economy and pay only a fraction of what they owe, and they know they are doing it. If the facts of this case were all available, it is my opinion that it would be a criminal case, alas, that will never happen.
Tekkytyke said: No one wants to pay more than is required by law. What are you babbling on about? You are not making sense... Read my sentence above and then your response... Paying what is required by law IS paying your taxes in full!!
Another point... So we have a situation where, as soon as someone passes the threshold of £100k per year, thereafter every £2 over £100k means their tax allowance reduces by £1. So if they get a £10k pay rise they pay 40% tax but also lose £1 of their personal allowance for every £2 over £100k earned, effectively paying 60% tax. Once they reach £125,140 they hace lost their entire personal allowance. £100K sounds a lot but given inflation is high AND the Govt have frozen the personal allowance for 5 years! a lot of people will end up in that situation. Now here is the thing. If you put any income over £100k (up to £40k p.a.) into your pension fund you get tax relief and also avoid the loss of personal allowanc . That is a perfectly legitimate way of minimising your personal tax bill. Would you do that or are you saying you would simply take pay rise and for every pound you earn over £100k you would happily pay 60% tax meaning that £10k pay rise would give you only £4k?
If you 'save' on your tax bill by contributing to a pension, you're not avoiding paying tax, you're simply moving the time that you pay tax on that income. But let's not pretend that there's an equivalence between someone saving for a pension, or a SE person stretching their 'business expenses' with someone purposely hiding £27 million in capital gains, denying it's existence for years, and then reaching an 'agreement' to pay the tax on it whilst being the government minister responsible for HMRC. It's a bit like 'Tory minister admits stabbing wife' and having the response, 'we all break the law, everybody speeds at some point'
I'd have to question whether HMRC made that decision while Zahawi was the minister ultimately in charge of HMRC... This isn't the first time hes been economical with the financial truth and been caught out (claiming expenses for his stables - which he paid back but would likely have been a court case for us) Given the investigation that Sunak has just opened, it wouldn't be surprising if he is on the back benches by the end of the week.
Not really since by the time you draw the pension the tax allowance will probably have changed and the pension is unlikely to be at the level the income was thus avoiding the 60% trap. Anyway not something that concerns me as I was never in that tax bracket. As you say an unfortunate careless mistake doesn't wash given his former position as chancellor Who actually set the thresholds rates and allowances. He must go.
Why? Even if altruism Is the reason why give more money to the treasury than legally required given how much waste goes on in Govt. Why, if you are that flush with money would you not save the extra tax by making charitable donations to worthwhile causes of your choosing ( another way to avoid falling foul of the 60% trap).
Absolutely! That seems a common thread when politicians apologise. They are Sorry and humbled... Yeah right!! Not for the fiddle but getting found out. But the higher up the food chain the less punishment they seem to get.
