A meeting with an old friend left me a little disappointed and disillusioned.

Three years ago he and his wife were in pretty dire straits. Friend was made redundant and his wife hadn't undertaken paid employment since the birth of their 12 year old daughter. They'd lived life up to the max of their income, were (are) mortgaged up to the hilt and their daughter attends one of the best independent schools in the country.. They called on the advice of a mutual friend to ensure they received all the benefits they were entitled to and I helped them to create a workable budget; one that ensured they lived within their means, but allowed for a treat/night out now and again.

Six months on and with no job offers on the horizon friend set up his own business and a further six months down the line his wife started a degree course at a good university. I admire both of them for taking control of their own future, so why am I disappointed? Because they spent most of the evening gloating about how little tax they paid last year; He runs his office from home and, like many others I know, thought it a matter of congratulation that they put everything possible through the books: all motor expenses – RFL, insurance, repairs, petrol etc: meals out (entertaining) phone bills (including top ups for daughters mobile) digital camera and laptop for daughter - depreciation can be charged to the p/l – and needless to say spares and accessories They think they can get away with charging all decorating and soft furnishing expenses to the office accounts - not to mention cleaning material, the daily help and the window cleaner.

I could go on.

Now I can claim to be au fait with the concepts and conventions of accountancy – in particular the concept of prudence – maximise expenses, minimise profit – but HMRC are not fools. I pointed out, gently I hope, that a good accountant does not put his/her reputation on the line by filing dodgy accounts. He/she will come to an agreement with HMRC as to the portion of expenses that can be considered business or private My friend scoffed; clearly he thinks he's more clever than me – so I let him think so.

The final straw was when his wife pointed out that she would not need to repay her student loan until her salary exceeds £21.000 and said she'll ensure she won't earn more than the repayment threshhold. I pointed out that if, in the bad times they were happy to take, then surely in the good times they should give.

Silence reigned

Actually sounds like tax avoidence, which is perfectly legal.

They probably also get paid in dividends (which are taxed less than normal pay) and then get paid up to the maximum without paying any tax.

tax evasion is doing illegal things to avoid tax.

There will always selfish ****'s in the world OP, just be glad and take pride in the fact that your not one of them.

FWIW, although most people put that kind of stuff down as "business expenses" they often get rejected when it comes time to submit them to the tax man.

As for the student loan, it seems rather to be "cutting your nose off to spite your face" to have gained a degree and then deliberately choose not to use it to gain a better job just to avoid paying it back.

True, being legal doesn't make it right though.

Sounds rather like tax avoision.

If she is self employed she will be getting money somehow, possibly from the joint bank account she holds with her husband

It is - as long as what you are claiming for is a legitimate tax-deductible expense.

http://www.hmrc.gov.uk/incometax/tax-allow-ees.htm

Buying equipment for personal use - and putting it through the business books isnt simple tax avoidance since you are lying about the intended purpose of the purchased equipment.

A quirke of our great society unfortunately...

a socialist will say "well surely I cant afford it but someone can, therefore let them pay for me"

a capitalist will say " I can afford it, why should I worry"

an idealist will say " there is enough money somewhere lets find it"

a realist will say " each man and woman has the right to defy socialists/capitalists and idealists and will find a way to live without paying taxes"

Who is right?

Can't we just make them fight each other to the death , the team who wins gets some sort of sentence deal cut or freedom. We could charge people to watch the shows and the money goes back into the system, it would be like the Romans never left. Fun times!

On the available evadance I'd have to concur.


The benefit cheats are a lot more numerous.

Not all socialists are poor you know and a 'realist' would surely have the common sense to realise that things like the NHS, education and social care don't pay for themselves? Your idea of a realist is my idea of a bit of an arse hole.

I have no issue with your capitalist though. I've never met a poor one of those.

But tax dodgers usually have a bit more money then benefit cheats, so they could buy robots and and bodyguards to help them.

You think so?

From what you pointed out in the OP, I cant see where the problem is. These people have just come across what lots aleady knew and do.

Not saying breaking any law is good (if thats what he is doing witrh his expenses) but it all sounds a million times better than a benifit cheat.

At least these people will be putting a lot back into the system. He will pay some tax, his business obviously keeps others in employment and she will be paying tax and spending her own money once she is earning, even if its only £21,000.

Where exactly is the problem?

Then why havent they donated their earnings to the NHS?

By avoiding paying tax they are cheating the system, how is that any better than what a benefit cheat does?

Getting a degree and not using it to get a graduate position with a larger salary is absolutely ridiculous and is one of the reasons degrees are becoming worthless because people are getting a free ride off the taxpayer with no intention of paying it back.

Also, I presume she is starting university next year and hasn't applied yet because if she is starting in 2011 or deferred entry to 2012 she will still be under the old system with the £15,000 threshold. As I will be under, I'm starting university in September.

If that's her plan, it begs the question how she got into uni in the first place. I'd be intrigued to know what course she is doing. The only course I can think where that would be beneficial is something like web design where she could freelance off the books whilst still drawing a small wage from the business.

I'm not sure why your asking that. Socialists don't aspire for us all to be poor.

I was kind of counting on this.


A hunch based on the loopholes for tax evasion being larger and the requirements for a suitably high earning job being supposedly higher.

Why do you ask BTW? Do you have evidence to the contrary?


My guess is that tax avoiders have convinced themselves that their net benefit to society is higher on the basis that the more you spend money on goods and services, the more you stimulate the economy. Not that a benefit cheat couldn't be in a similarly high earning position but it's not likely to be as common as with tax cheats.

The cat with the cheese burger?

OP your friends are going to get a (in my view, deserved) shock when HMRC disallows most of their expenses.

At least tax evaders work, benefit cheats sit on their arses all day not looking for work

And tax evaders are wealthy which means they made their money from creating jobs so they deserve an easier ride than a career scrounger

Oh right.

So a benifit cheat who is intentionally sat on their arse, screwing the system is the same as someone who runs their own business, pays some tax, legally aviods paying other tax, generates their own income to feed back into the country, thus keeping others employed and supports their family.

The part about him claiming expenses he is not entitled to irrelevant. If what he is doing is illegal, then of course its wrong. Im not disputing that. Its a legal loophole that could very easily be closed by HMRC, but they dont. Small business were encouraged by past Governments in this way. Its one of the perks of running your own business. You would be surprised at how much HMRC let past. Its only the real piss takers who get stopped.

What they are doing is nothing like a benifit cheat.

I know plenty of self employed people who are like this, one even said self employment was the biggest con going