The Taxman changing the rules to get more tax

The Times reveals a worrying story of how the HMRC has changed some tax rules retrospectively and has been supported in this by the Court of Appeal:

"Thousands of entrepreneurs and celebrities face huge tax bills after a British businessman based in the Seychelles lost a long-running court battle over his residency yesterday.

The Court of Appeal ruled that Robert Gaines-Cooper was liable to pay UK tax despite spending less than 91 days a year in the country because England had remained “the centre of gravity of his life and interests”.

The ruling is a serious blow for wealthy men and women who are based overseas but visit Britain frequently. After the court’s decision, Revenue & Customs (HMRC) said that it would increase its efforts to catch people who owed tax.

Although the three Court of Appeal judges expressed “some sympathy” for Mr Gaines-Cooper, they ruled that he had never qualified for exemption from British taxes as a non-resident. Now he may be pursued for tax bills dating back to 1993, estimated at about £30 million. "

So there we go, judges have kowtowed to the HMRC and thrown out the well understood 91 day rule and replaced it with an entirely subjective and arbitrary "centre of gravity" rule.

Retrospective changes in the law, whether tax or otherwise, cannot be right. However 13 years of Labour misrule have left the UK needing every last penny of taxation, hence all the short-term "tax amnesties" to be followed by many in-depth tax investigations.

The other realisation that many are coming to is that there is a now a presumption in the UK that all the money 'earned' by individuals really belongs to the state and that citizens should feel privileged to be allowed to retain some of these 'earnings'. Of course the socialists who believe this don't realise that taxing the rich until 'the pips squeak' gives the rich a great incentive to move themselves, their wealth and their tax elsewhere thus eventually impoverishing everyone.

That reminds me of the story that I have told before about how the Tax System works, do read it:

"Suppose that every day, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay £1
The sixth would pay £3
The seventh would pay £7
The eighth would pay £12
The ninth would pay £18
The tenth man (the richest) would pay £59

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by £20.' Drinks for the ten now cost just £80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the £20 windfall so that everyone would get his 'fair share?'

They realized that £20 divided by six is £3.33. But if they subtracted that from everyone's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid £2 instead of £3 (33%savings).
The seventh now pay £5 instead of £7 (28%savings).
The eighth now paid £9 instead of £12 (25% savings).
The ninth now paid £14 instead of £18 (22% savings).
The tenth now paid £49 instead of £59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

'I only got a pound out of the £20,' declared the sixth man. He pointed to the tenth man, 'but he got £10!'

'Yes, that's right,' exclaimed the fifth man. 'I only saved a pound, too. It's unfair that he got ten times more than I did'

'That's true!!' shouted the seventh man. 'Why should he get £10 back when I got only two? The wealthy get all the breaks'

'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor'

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill.

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up any more. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier and weather is nicer. "