Paradise Papers

This topic contains 110 replies, has 11 voices, and was last updated by steveosnakeeye steveosnakeeye 6 years, 4 months ago.

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  • #1557076
    MacGuffin
    MacGuffin
    Participant
    • :

    @jay Belfast

    Classification Authors
    Classification is done by government, international bodies (eg EU, ISO), trade organisations (eg bfa), consumer groups

    Classification Methodology
    Footwear is classed “by type, purpose and material” as stated on GOV.UK website.

    Classification Codes
    These largely exist already for almost all footwear under gov “commodity code”. This page https://www.trade-tariff.service.gov.uk/trade-tariff/commodities/6402200000 is example of the detail to which existing codes go …

    Commodity information for 6402200000 – Footwear with upper straps or thongs assembled to the sole by means of plugs

    Tax Groups
    These are my tax groups. Rates for example purposes.
    A – Exempt – 0%
    B – Reduced – 10%
    C – Standard – 20%
    D – Enhanced – 30% – [eg fashion, advanced feature, non-essential]
    E – Luxury & Specialist – 40% [specialist is hi-tech industrial or professional]

    The Fuzzy Areas
    Yes there will be some discussion on grey area items but those few can go in the lower bracket. I believe most are clear from their material, features, purpose. If work shoes are branded as Executive shoes its clear they are not standard. The manufacturers themselves often decide product category eg the different shoe shelves.

    If you give me a footwear examples I can assign it to a group with justification.

    The Workload
    You argue it would be complex to do but most is already done with existing definitions & codes. All that needs to be done is go through existing commodity codes and assign some of them into categories D & E. In some cases new codes may have to be created and items moves from existing code to the new code.

    Relevant Sites
    https://www.gov.uk/guidance/classifying-footwear

    #1557079
    Dandy
    Dandy
    Participant
    • :

    Macguffin – Whilst your optimism is clear to see, I can only assume you don’t know anybody who works or has worked for HMRC. Calls already go unanswered, hundreds of thousands of tax risks are unchecked, there is systematic abuse of online systems, systematic fraud abuse avoidance and evasion.
    VAT is a self assessing tax which means the onus is on the taxpayer to get it right in the first instance, the trouble is, tax is incredibly complex and businesses inevitably make mistakes. Coupled with the issues in my first para and you have a never ending wave complex issues which require man power. Yes HMRC does look to technology nowadays but no where near as much as you’d think.

    Some of the abuse of HMRC systems is highly sophisticated , even orchestrated by criminal gangs. HMRC is duty bound to collect tax efficiently and with the least burden on the taxpayer as possible. Your suggestions would make it twice as difficult for new businesses in particular. Remember tax doesn’t have to be taxing !!

    #1557080
    Dandy
    Dandy
    Participant
    • :

    I think it is also worth mentioning the austerity measures imposed on HMRC. Most employees are taking home less today, than 10 years ago once inflation is factored in. Moral is at an all time low. They cannot compete with accountancy firms for the top graduates, solicitors etc. They already have a huge need for more tax professionals

    #1557095
    Alfie07
    Alfie07
    Participant
    • :

    Take shoes, how do you class a luxury shoe using materials, features or purpose? One made of leather? Isn’t that far too simplistic. How would a leather shoe in Clark’s be the same quality as a bespoke shoe from George Cleverly? Or a suit made in M&S using the same cloth as one on Savile Row?

    #1557100
    Jay belfast
    Jay belfast
    Participant
    • :

    mac you miss the point, coding etc might be there but we need legal definitions for each:

    A – Exempt – 0%
    B – Reduced – 10%
    C – Standard – 20%
    D – Enhanced – 30% – [eg fashion, advanced feature, non-essential]
    E – Luxury & Specialist – 40% [specialist is hi-tech industrial or professional]

    #1557114
    Alfie07
    Alfie07
    Participant
    • :

    Jay – you would also need to set up the codes for each of those classifications within the existing codes – as well as the definitions, as you say. You would also need to set aside the rest of your life, should you work for HMRC, to fight the legal challenge when a retailer/manufacturer feels that their ‘Footwear with upper straps or thongs assembled to the sole by means of plugs’ should be classed for standard VAT and not enhanced VAT.

    #1557126
    Jay belfast
    Jay belfast
    Participant
    • :

    Yep totally agree alfie.

    A shoe with a strap may be easily identified as luxury or non luxury surely?!

    You basically have re legislate for every good produced in the economy separately whilst also put in place a system for future goods.

    Electrical goods is another good one. Laptops and tv’s for example, where would the distinction between luxury and standard be made? More importantly who and how often would decide this split?

    #1557127
    Jay belfast
    Jay belfast
    Participant
    • :

    good luck splitting a shop like b and q into luxury and non luxury. I’m definitely not taking the category of “lighting” lol

    #1557131
    Alfie07
    Alfie07
    Participant
    • :

    And with technology advancing as it is, when would a luxury TV become a non-luxury TV?

    #1557132
    Jay belfast
    Jay belfast
    Participant
    • :

    And im sorry your accountant comments are incredibly ignorant and offensive.

    “what do accountants do nowdays. Advise people how to cheat tax?”

    I have worked in accounts from practice, to an accountant in small businesses and large plc’s, never once have an instructed or advised anyone to “cheat” tax. Also for my last 10 years as an accountant I have had next to no tax interaction so clearly you have no idea the spectrum of things accountants work on.

    I, like anybody would, feel the insuation that I’m a crook offensive.

    It’s an incredibly ignorant and ill-informed view that you have casually thrown out without any thought of who it might offend or knowing it will offend…either way it shows a complete lack of class on your part. Not having the decency now to admit that mistake further highlights this lacking on your part.

    #1557209
    MacGuffin
    MacGuffin
    Participant
    • :

    @Alfie – That you cannot comprehend how something can be classed a luxury does not mean its not possible. The purchase tax was a luxury tax so government has experience in taxing luxuries.

    I suspect you never looked at the government site I linked to. The government said it classified products by type, purpose, material so I guess you better tell them you dont think it possible.

    As for deciding what product is essential or luxury the government can do this easily. It makes similar decisions all the time. And its fairly obvious for the common man in most cases. Manufacturers decide it all the time when they brand products as high end or luxury or top quality.

    In cases like a TV screen size and features would help determine it. Government has no problem classifying cars by horsepower. Yes, in time things may change but its no big deal to change small from under 20 inch to under 30 inch.

    Believe me, its not hard for government to justify increasing taxes on something … they do it all the time.

    #1557210
    MacGuffin
    MacGuffin
    Participant
    • :

    @dandy – I accept HMRC is underfunded and not as computerised as it should be. That is a problem irrespective of anything else.

    You highlight the woes of HMRC [criminality] and nature of VAT [Self policing] but that is a separate issue not related to tax bands or rates.

    A good system should be able to handle changes in variables easily. If it were a spreadsheet there would be no change to the spreadsheet design. Its just adding 2 more VAT categories (and rates) then reassigning product codes to those categories.

    Companies can change price of 1000s of products without fuss. They add new products on their DB. They change variables like price. Software calculates total sales, units, price, sales price, VAT automatic. It happens all the time. If a manufacturer is incapable of finding the commodity code then they are pretty inept. If a company needs assistance from HMRC well charge them for the help.

    Its not rocket science. And if tax systems are so rigid they cannot easily be changed, that is in itself a problem. VAT was supposed to be a flexible system.

    #1557211
    MacGuffin
    MacGuffin
    Participant
    • :

    @jay – Thank god you are not a double glazing salesmen or lawyer. You’d have a heart attack at the comments. Jokes about accountants are as prolific as bishops and traffic wardens. My cheat comment was an offhand flippant remark but it does have truth in it.

    I know very well the functions of accountants but they shift the goalposts. Bookkeepers are accountants, accountants expand their services into a variety of areas. Financial analysists can be called accountants.

    You claimed changes in VAT variables would require additional accountants. I’ve developed financial software and its designed to handle changes in variables (as is all business software).

    #1557212
    MacGuffin
    MacGuffin
    Participant
    • :

    @jay – Legal definitions is not a massive task. What I called enhanced is basically a treat or indulgence for the common man eg a mohair tailor made suit. A luxury is an extravagance like gold plated golf clubs or big yacht.

    Yes there are always grey areas but please dont tell me government cannot distinguish between gold golf clubs and a pair of wellington boots.

    Massive legislation is not needed. Most items could be agreed without fuss. And hey, if massive legislation is a reason not to do something Brexit would never happen.

    Once the government has its product codes and vat classes done all future governments need do is change the rates for classes, shift codes into different classes periodically. The EU has codes, rules and rates for everything from garlic to car parts. The infrastructure is mostly there.

    The argument against is a political one, should government influence spending through taxation. Should a man pay higher tax rate on gold golf clubs than football boots. But this is the same as where we started, should a man making more money pay a higher tax rate than somebody earning less?

    #1557231

    Paxman
    Participant
    • :

    Mac – I am a financial analyst, but I am no accountant, and as far as bookeepers go, there is a long way between them and accountants also.

    #1557244
    Alfie07
    Alfie07
    Participant
    • :

    I suspect you never looked at the government site I linked to. The government said it classified products by type, purpose, material so I guess you better tell them you dont think it possible.
    I did look at it. They classify goods by type, purpose and material – not by luxury – this is a new category. I will ask again – How would a leather shoe in Clark’s be the same quality as a bespoke shoe from George Cleverly? Or a suit made in M&S using the same cloth as one on Savile Row?

    Manufacturers decide it all the time when they brand products as high end or luxury or top quality. They do, but often to oversell something. I always see ‘luxury suits’ as a sign in a shop window selling suits for £300, but never in Savile Row tailors who charge £6,000. Just because a salesperson uses the word ‘luxury’ it does not make the product so, just as the absence of the word does not make the product a non-luxury item.

    In cases like a TV screen size and features would help determine it. You miss the point – what is cutting edge now (say luxury) will not be cutting edge in 5 years time. Will the TV classed today as luxury still be classed as a luxury item in five years time, when most of it’s features will just be run of the mill.

    Its not rocket science. And if tax systems are so rigid they cannot easily be changed, that is in itself a problem. VAT was supposed to be a flexible system. It is flexible to an extent – you can change the basic rates easily (to a point!), but this is a whole new ball game. Rates within products is going to push any system. I’ve not heard of a system like this in the world (may be wrong), so any software will need to be written from scratch. Far too naive to think it will just all be fine, just because people want it to work.

    What I called enhanced is basically a treat or indulgence for the common man eg a mohair tailor made suit
    This is incredibly subjective – which is a poor basis for a tax system! Define tailor made for a start. I often see ‘tailored’ plastered over the advertising for a shirt or a suit – yet they look to be all factory made and stitched by machine. Not what I would call tailored at all.

    #1557256

    nine nine nine
    Moderator
    • :

    Jay@9:06am: Jay,I’ve come across a lot of Accountants in my career as well as personally and I’ve only ever found them to be highly professional and totally honest.

    #1557276
    Jay belfast
    Jay belfast
    Participant
    • :

    Mac I’m sure the majority of lawyers and doubled glazed salesmen are also insulted when they are called crooks and liars. The rest of your post was just garbage.

    #1557285
    Jay belfast
    Jay belfast
    Participant
    • :

    Mac “@jay Legal definitions is not a massive task” that’s you best line yet. Yeah someone just pings off an email and boom it’s law. Religious magazines teaching about god being classed as educational or non educational magazine wouldn’t cause much of a political fight? Sporting footwear/clothing being taxed as a luxury or not wouldn’t cause controversy?

    Massive legislation IS needed because you want to treat all goods differently. if you think that is easy then you are so naive it’s not even funny. Still waiting for the legal definition of an “enhanced” shoe? If it’s so easy I’d imagine you could come up with it fairly easy?!

    After you realise that isn’t easy then realise that’s just one bracket for only one type of good. Now can you see the scope of what you’re suggesting?

    And after all that it’s just a terrible idea! If you tax superior goods more heavily as you’ve (magically) defined them as luxuries what is the effect to the overall economy? As a country we would produce and purchase more inferior goods. That’s innovation out the window then. I can’t think of one desirable feature of this system.

    #1557286
    Jay belfast
    Jay belfast
    Participant
    • :

    Alfie pretty much nails your system there too.

    Cheers 9, like any profession there will always be bad apples but on the whole we’re not a bad bunch, even if we do get too excited about spreadsheets to be considered normal 🙂

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