Thursday 29 January 2015

Thursday, January 29, 2015 Posted by Hari No comments Labels:
Posted by Hari on Thursday, January 29, 2015 with No comments | Labels:

Tax crackdown on the rich: HMRC Affluent Unit nets an extra £137m
HMRC's Affluent Unit covering UK residents on annual incomes over £150,000 - or wealth over £1m - raised £137.2m in tax, up from £85.7m in 2013. The Affluent Unit, set up in 2011, doubled in size in 2013 with the recruitment of an additional 100 tax inspectors. About 500,000 UK residents fall into its remit. Also, HMRC's ability to investigate people has been made easier by a computer system called Connect. Costing £45m, Connect was launched in the summer of 2010 and designed by the defence contractor BAE Systems. The computer system collects data on people from multiple sources, including banks, local councils, and even social media. However, tax expert Richard Murphy, from Tax Research, said: "HMRC is supposed to collect £167bn of income tax this year, of which at least a quarter will be from the top 1% of income earners... In that case, to collect just £127m as a result of investigations into this group when the official tax gap is £35bn suggests that much less attention is given to them than any other group." He added: "The investigation success rate is way below anything that could be expected given that we know tax avoidance is mainly undertaken by the wealthiest... If these statistics prove anything it is that HMRC need many more resources to collect tax from those most likely to owe it." BBC NEWS

Benefits cuts mean those with children in the lowest 10% of earners lose £1,223 a year on average
Coalition changes to taxes and benefits have cost the average UK household £489 a year. Some households have lost a lot more than this, but others have gained from the changes the coalition has introduced, according to the Institute for Fiscal Studies. Low-income working-age households have been hit hardest, losing the most as a percentage of their income. Those with children in the lowest 10% of earners lost £1,223 on average. The richest 10% of households with children lost £5,350 a year. Middle-income working-age households without children have gained the most. Pensioners were "relatively unaffected" on average, as their gains from the "triple lock" on the state pension were largely offset by a hike in VAT. James Browne, a senior research economist at IFS and co-author of the report said: "Increases in the tax-free personal allowance have played an important role in protecting middle-income working-age households meaning that those without children have actually gained overall." By household alone, the poorest households lost around 4% of their incomes, compared with around 3.5% for the next poorest tenth, between 2.5% and zero for middle-income households and a loss of about 2.5% for the richest. The hardest-hit region was greater London, where households lost an average £1,042, followed by south east England, the West Midlands and north west England. BBC NEWS

Apple’s global tax dodging: it made sales of AUS$6 billion in Australia last year, paid just AUS$80.3 million in tax: a tax rate of 0.01%
Apple has been in the spotlight over its taxes in Australia, after an investigation by Fairfax Media last year showed it had shifted AUS$8.9 billion in untaxed profits from its Australian operations to Ireland in the past decade. Apple's Australian entity describes itself as a company that markets products and sells digital software and services.  It is controlled by Irish holding company Apple Operations International. While tax is calculated as a proportion of profit, not revenue, multinational companies including Apple have been criticised for booking revenue offshore, in low-taxing places like Ireland or Singapore, to minimise their reportable profit and therefore their taxes in places like Australia. The company's local revenue was down slightly from AUS$6.1 billion a year earlier, when it paid just AUS$36.4 million in tax. It is one of the companies expected to be hauled in front of a Senate inquiry into corporate tax avoidance, with hearings due to start as soon as March. It follows efforts by the Organisation for Economic Co-operation and Development to clamp down on profit shifting, as governments around the world become increasingly desperate to shore up revenue. This week Apple's fiscal first-quarter profit hit a record $US18 billion, on sales of $US74.6 billion. SYDNEY MORNING HERALD

€1.1 trillion Eurozone quantitative easing helps the rich only, warns Soros
Speaking at a dinner at the World Economic Forum in Davos, the 84-year-old billionaire investor George Soros, who was born in Hungary, voiced concerns that an "excessive reliance on monetary policy tends to enrich the owners of property and at the same time will not relieve the downward pressure on wages." But he emphasised that he expected the European Central Bank (ECB) policy to drive economic growth in the European Union. He also said there was another powerful way of boosting the Eurozone economy. "There is one large untapped source of triple-A credit, and that is the European Union itself - that has practically no debt, but it has taxing power," he said, urging the EU to spend more on financing infrastructure projects, such as energy pipelines, electricity networks and even roads. BBC NEWS

Ofsted can now inspect academy chains, but Dept for Education will keep its own ratings secret
Last week, Education Secretary Nicky Morgan announced a U-turn, saying that Ofsted should be able to publish information about the performance of academy chains. But it will not be allowed to make judgments about whether a trust is effective or not. Now a union boss has called on the Department for Education to publish the internal ratings it gives to academy sponsors. Kevin Courtney, the deputy general secretary of the National Union of Teachers has questioned why these grades, which the Department for Education gives to academy trusts, are not made publicly available. He said: “It now appears that the DfE is happy for Ofsted to publish information about the performance of academy chains... It throws into sharp focus the fact that the department itself already assesses the performance of academy sponsors and produces ratings for them but is not willing to share this information with the public. Why not?” The issue of Ofsted not being able to inspect academy chains had been raised last year at Education Select Committee hearings. Mrs Morgan had told MPs that inspectors already had sufficient powers to look at the work of chains when it looked at their individual schools. She dismissed the idea that Ofsted needed new powers to directly inspect academy chains. At the time committee chairman, Beverley and Holderness MP Graham Stuart said the decision was bizarre. YORKSHIRE POST

Osborne's £10bn Pensioner Bond is another gift to the wealthy at the expense of the taxpayer
The government is borrowing £10bn by selling bonds to pensioners. If you’re 65+, you can buy a one-year bond, paying 2.8%, and a three-year one, paying 4%. But the only people who can afford pensioner bonds are pensioners with spare cash. If the government really wanted to borrow money, it’s perfectly able to. HMG can go to the market and issue a gilt (a UK government bond) for, say, one year. Investors buy that gilt, and the government pays them 0.36% for the privilege of holding their money. So, when the government chooses not to do that – and instead borrows ten billion big ones from pensioners (and pensioners only!) far above market rates – that’s all well and good for the pensioners. But when you think about it, when our government purposefully borrows above market rates, unless you’re directly benefiting yourself, you’re footing the bill. On top of all this, this sop to the over-65s does absolutely nothing to put the older generation’s cash to work in the real economy where it can actually do some good. In fact, all it does is tie up savings in a manner that they cannot get to work in the real economy – because they’re stuck inside the bond for its duration. MONEY WEEK

Student loans: the real cost could be £40,000 more than official estimates
The analysis, compiled by RedSTART, an education arm of the consultancy firm Redington, claims the Government’s mathematicians have used “outdated” sums to calculate the size of repayments graduates will make on student loans taken out after 2012. The report claims someone graduating this year on an average starting salary of £29,000, will make total student loan repayments of £62,272 over 30 years, compared to £33,346 if official numbers are used. It also found students set to graduate this year with a starting salary of £38,000 will face the largest repayments, and can expect to repay £100,146 in total. This compares to a much smaller £55,000 estimated repayment if official assumptions are used in the calculation. The figures are based on a full-time student borrowing £15,000 a year for three years (£45,000) and going on to work in a full-time role after university. The report has criticized the Government for calculating how much future payments will be worth in today’s money terms by using what its author describes as an “insanely high” measure of inflation, as measured by RPI, plus 2.2pc – a measure decided upon in 2010. By assuming a higher rate of inflation, future repayments appear lower. Another key reason why graduates will repay more under the new system is because the repayment period has been extended from 25 years to 30 years. Frederick Patten, the report’s author, refutes government claims that the changes mean most students will be better off under the new system, maintaining that the vast majority of students will be much worse off. TELEGRAPH

New banking shame: two million credit card holders to get up to £270 compensation for paying for 'security' policy they already got for free
Security products were sold to customers of 11 high street banks, including Barclays, HSBC, Lloyds, Santander and The Royal Bank of Scotland, according to the Financial Conduct Authority. Issued by Affinion International Limited but sold under names including 'Card Protection', 'Sentinel', 'Sentinel Protection' and 'Safe and Secure Plus', the policies were marketed as offering protection if the card was lost or stolen.  However, the bank or issuer usually offers – free of charge when you take out the card - cover for everything over £50 if transactions take place before the card is reported missing, so for many the product would be redundant. The policies cost £25 per annum and have been on sale since 2005. Therefore if someone had paid out for ten years, compensation could be as high as £250 plus eight per cent interest – around £270. Card holders who could be eligible for compensation will receive letters in the next few days about a voluntary redress scheme and must vote in favour in April or May for it to go ahead. If a majority of customers agree, then the scheme must be approved by the High Court and compensation will be paid out later this year. There has been no formal investigation by the FCA, nor any finding of wrong-doing. The announcement from the Financial Conduct Authority comes after a similar, but much wider-reaching, compensation scheme saw seven million banking customers share a pot of £1.3billion after they were missold card protection insurance by CPP. DAILY MAIL


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