The people of Greece are showing us the way to a better, fairer more democratic society

The people of Greece have spoken and cried a resounding no to the politics of the elitists of the EU. Their democratically elected government, exercised democracy by allowing the people to decide whether or not to accept the EU deal. Despite the familiar tactics of scaremongering, fear and threats from right wing politicians right across the EU, the people of Greece have rejected the terms of more austerity from the EU, ECB and IMF. For the first time ever, the people have stood up to the bullies and said enough is enough, no longer will we bow to your impossible demands. Their decision takes Greece and their creditors into unchartered territory, as Ireland, Spain, Italy & Portugal all accepted the terms of their creditors terms for a bailout. Nobody knows what will happen next. Right wing politicians are spreading threats that the EU will eject Greece from the Euro, but it does not have the mandate to do so. Those on the left are calling for some of the Greek debt to be written off and a new repayment agreement being drawn up over a longer period of time. Without a mandate and with Britain holding an in/out referendum on the EU by 2017, it seems unlikely the EU will want to rock the boat by expelling Greece from the Euro.

What is clear from the Greek referendum is that democracy works. It was right that the Greek prime minister let the people decide whether or not to accept the deal on offer. Although completely unfamiliar in modern British politics and across the world, power should ultimately lay with the people. Decisions about the kind of society we want to live in should be made by the people, rather than centralised bureaucrats in government. We would not be living under a ideological program of austerity in Britain, while the richest in our society are given tax cuts if we lived in a true democracy where the people make the decisions. The resounding victory in Greece, clears the way for other EU nations to make a stand against enforced austerity, in favour of a more democratic and sensible approach to our economic issues.

In a more democratic society the people would decide the rates of taxes payable. We would empower our tax collector with the resources it needs to collect all taxes that are due. Obtaining a licence to trade in Britain would come with a commitment from all companies to pay all taxes in full and on time. Directors of corporations would be made liable for the corporations’ actions and those not paying the taxes due would be dealt with using the full force of the law. If a corporation tries to avoid paying tax by artificially shifting their profits to an overseas secrecy jurisdiction, the UK company directors would be prosecuted for non payment of tax. We could use the proceeds of crime act to seize the companies UK assets until the tax owed is paid and if it is not, sell the assets in order to reimburse the public purse. Where a bank is suspected of illegal trading such as rigging the rate of libor, the SFO would be called in to investigate. Individuals found to have participated, would be arrested and prosecuted in a court of law, as would directors of the bank who can be proven to have known of the illegal rigging activity. Again, the banks assets could be frozen and sold off to compensate the public purse for any estimated losses. The ultimate sanction, reserved for repeat offenders would be to withdraw their trading licence, making it impossible for them to trade in Britain.

It is wholly undemocratic that HMRC are not accountable to parliament. In a new democratic society HMRC would be made accountable to a government minister of taxation. The minister would therefore be accountable for the operation of HMRC and ensuring it is enabled to collect all taxes that are due on time. With the right number of staff and other resources, HMRC would be empowered to tackle the estimated £104billion in lost tax revenue through avoidance and evasion in 2014. It would reopen the network of local tax offices across the country, allowing people to have their concerns resolved face to face with a member of staff. The current practice of business friendly relationships with large multi national corporations would be abolished and those corporations who do not pay the taxes they owe would be prosecuted to the full extent of the law. The mega rich and large corporations would no longer view HMRC as a soft touch tax collector, while being over zealous with individuals and small and medium sized businesses. It would be a firm but fair tax collector, treating all it’s customers the same.

Individuals who do not pay their taxes would be treated in exactly the same way as corporations. Through a public register of ownership and improved tax agreements with other nations, anyone identified as hiding money overseas from the taxman would be prosecuted to the full extent of the law. There would be no more cosy deals like was seen in the recent case of HSBC Swiss bank, where eleven hundred British nationals were found to have been evading tax by hiding money in Swiss bank accounts. The law would apply equally to everyone, regardless of their wealth or position in society. The people would set the applicable rates of tax, and everyone would be expected to make their contribution to society. Tax revenue would be spent on a public education system, a national health service, publicly owned systems of transport, a welfare system, through which we would look after those who are unable to look after themselves for whatever reason and any other provision as determined by the people.

All tax revenues and spending would be made freely available online by local constituency councils. The spending of public money would be open and transparent for all to see. The people would determine the salaries of all public sector workers and members of the local constituency council would vote on any proposal for a bonus to be paid to a public sector worker. The national minimum wage would be raised to a living wage and enforced by law. Any employer found to be paying anyone eligible to work in Britain less than the minimum wage would be prosecuted, with the ultimate sanction being the removal of that employers trading licence.

Bung us 40million francs and we’ll say no more about it

The hopes of millions of people across Europe, that Switzerland would join the tiny number of countries taking legal action against HSBC (Swiss) for money laundering were dashed today when Geneva’s chief prosecutor Olivier Jornot announced that a financial settlement of 40million Swiss francs (£28million) had been reached and that the Swiss authorities would be taking no further action against the bank.  The bank was under investigation for money laundering, following when UK channel 4’s dispatches program made public information that the Swiss arm of British bank HSBC had been assisting individuals to hide money from their national tax authorities. The information originally came to light when IT specialist Herve Falciani who was working at the bank in Switzerland turned whistleblower and leaked details of some 106,000 private accounts at the bank.

In the UK, HMRC received the leaked files in 2010. Following the dispatches program in February, it was revealed by HMRC they had identified three thousand six hundred British nationals from the Falciani files, when they appeared before the Public Accounts Committee. Of those, two thousand five hundred were found to have done nothing wrong, as it is not illegal to hold a private bank account in a foreign country. All but one of the remaining one thousand one hundred British citizens, were allowed to pay the outstanding tax plus a small financial penalty of 10% and that was the end of the matter. That means one thousand and ninety nine British individuals were caught red handed evading tax, which by the way is illegal in Britain and not one of them were prosecuted. HMRC claim to have collected £135million in unpaid taxes and penalties. The one individual HMRC did prosecute was found guilty of tax evasion in the amount of £387,103 and was ordered to pay an additional £469,444 in fines and legal costs. Tens of millions in tax evaded and not a single person spent even one day in jail.

It was through a tax amnesty agreement between the British tax authority and tax authority in Lichtenstein that the one thousand and ninety nine individuals were allowed to make financial settlements. The Lichtenstein agreement was set up in 2009 so that British nationals who held financial assets there could declare them to HMRC without facing prosecution. However the agreement had some strict conditions in order for the amnesty to be offered. Firstly, the assets had to be held in Lichtenstein. Secondly, the amnesty could not be used where a criminal prosecution was likely. Thirdly, the claim could only  involve assets about which HMRC were not already aware and the disclosure had to be made voluntarily, without intervention from HMRC. But none of the assets were held in Lichtenstein. All of the individuals had committee tax evasion and therefore criminal prosecution should have been likely. HMRC had found out about the assets through the Falciani files and therefore already knew about all of the assets when the individuals were approached and therefore none of the disclosures had been made voluntarily. The favourable treatment available under this tax amnesty, should never have been given to any of the one thousand and ninety nine individuals concerned.

When giving evidence before the Public Accounts Committee, HMRC chief executive Lyn Homer said that half of these individuals had asked to be given amnesty from prosecution under the Lichtenstein agreement and were advised by HMRC to move their assets to Lichtenstein in order to qualify for the amnesty. The other half knew nothing about the Lichtenstein agreement, but were advised of it by HMRC staff and told to move their assets. This is not just giving out amnesties to tax evaders, it is advising breaking the rules by advising them of the amnesty and how to qualify. It was never the intention of parliament that those caught red handed evading taxes should be given an amnesty, so clearly HMRC are ignoring the will of parliament and applying the rules how and when they see fit. HMRC do not, nor should they ever be given the power to decide if and when the laws of the land are to be applied and when they can be ignored. Their sole remit is to collect the taxes that are due as determined by parliament.

Online campaign group Avaaz who have more than 40million members worldwide, have initiated judicial review proceedings against HMRC in relation to it’s decision to offer the amnesty.  Avaaz’s campaign director, Alex Wilks, said in a statement when the legal action was launched: “If the police extended the terms of knife amnesties to criminals caught carrying weapons, the public would be outraged. Tax officials must urgently explain why they gave get out of jail free cards to so many wealthy tax dodgers.” The difficulty with financial penalties is individuals who are caught evading taxes on this scale can well afford to pay the tax owed plus a small financial penalty, in the highly unlikely event of them being caught. Therefore financial penalties provide no incentive to change behaviours or to think about the consequences of what they are doing, aside from the fact it is illegal. As with the case of HSBC bank in Switzerland and the multiple fines imposed on UK banks in the past five years, financial penalties send out completely the wrong message to those actively and anyone considering participating in illegal behaviour. It says do as you please because even in the unlikely event you get caught, the worst that will happen is you will receive a fine.

Put these individuals or businesses on trial in a court of law and if found guilty, send them to jail for a substantial period of time. Then use the proceeds of crime act to seize all of their assets and reimburse the public purse. Prosecute a few cases in this way and word will spread like wildfire that there are serious consequences for breaking the law in Britain. Such actions will have the effect of focusing the minds of anyone considering illegal activity and it will be an effective punishment for those found guilty. They will think twice before carrying on with business as usual once released. Treating wealthy tax dodgers and banks who help them exactly the same as we treat an individual who over claims benefits they are not entitled to is exactly how things work in a truly democratic society.

It is also noteworthy here that because the Swiss authorities have decided to agree a financial settlement with the Swiss arm of HSBC, information they gained on exactly what the bank had been up to will never be made public. Also, despite authorities in France, Belgium and Argentina having brought charges of money laundering and fraud against HSBC bank, no such charges have ever been lodged against the bank in Britain. Finally, HMRC had powers at the time of the Falciani files case to impose financial penalties of up to 200% of the tax evaded, but it chose not to use them. What kind of democracy is this?

No George, clearly we're not all in this together .....

One contemptuous feature of Britain's finances is a tax break for individuals called "non-domiciled status." The more than 200 years old tax break was designed to attract wealthy foreign investors to Britain by allowing them to keep any money they earn out of reach of the British Taxman. We are the only nation in the world to have such a system and HMRC has long suspected that some “non-doms” have been using the status to avoid tax on money made in Britain.

The tax break is available to any individual normally residing in Britain who either was not born in Britain, one of their parents was not born in Britain, or they are British and have spent an extended period of time abroad. Anyone apply for non-dom status must also prove a connection with family or a business abroad and declare it is their intention to eventually leave Britain. HMRC declare there are 114,000 non-doms currently living in Britain.

One of the ways in which the status is known to have been abused is when a non-dom, who owns a British company transfers the company to an offshore tax haven and sets up a trust that is declared as owner of the business. Profits generated by the business are legally foreign income and therefore not subject to UK corporation tax. If and when the company is sold, gains are again legally foreign income and therefore not subject to UK capital gains tax. 

However the rule was never intended to shelter British assets, yet all attempts to change or abolish non-dom status have been met with strong criticism, including when former leader of the labour party Ed Milliband announced the parties intention to scrap the rule during the recent general election campaign. In an attempt to crack down on abuse the then labour government introduced an annual charge for claiming non-dom status of £30,000 and this has subsequently been increased to up to £90,000 depending on how long the individual has been resident in Britain.

Prominent tax lawyer Jolyon Maugham once said that generally speaking “there is no rational basis for a system that transfers ownership of this UK income abroad.” But even when non-dom status is used as intended, it is controversial, as all other British residents pay tax on worldwide income, regardless of where they make it. Staunch opponents of the favourable treatment include captains of British industry and establishment newspapers such as the Financial Times, who say non-doms get an unfair way to avoid taxes. The system's backers include employers' group the Institute of Directors and free-market think tanks, say the non-dom status attracts foreign talent and money at no cost to the taxpayer.

One high-profile businessman who is known to be a non-dom is business guru James Caan. Having been born in Pakistan entitles Mr Caan to non-dom status. In 1985 he set up a recruitment consultancy called Alexander Mann in London Mayfair and built it into one of Britain’s biggest talent acquisition and management services groups. In 1998 Caan transferred ownership of the company to a Jersey based family trust of which he was a legal beneficiary. The trust sold the company to private equity firm Advent International in 1999 for £130million. As the company was foreign owned and Mr Caan has non-dom status, he was able to legally avoid paying any capital gains tax on the sale that might otherwise have been due.

Former racing star Jackie Stewart is an example of how non-dom status lets’ even Britons send profits earned in Britain offshore. Stewart moved to Switzerland in 1968 but in the 1990s, returned to live in Britain so he could establish a Grand Prix team. His company, Stewart Grand Prix, was based in Britain but was owned via a Jersey trust for the benefit of Stewart's family. In 1999 the team was sold to Ford for £76million. As the team was held by an offshore trust and Stewart was a non-dom the windfall was not subject to UK capital gains tax.

For 25 years Harrods Egyptian born Mohamed Al Fayed who is a non-dom owned department store. In the 1990’s Inland Revenue alleged that enormous dividends from Harrods were being sent offshore. This lead to an agreement between the two parties whereby Al Fayed would pay around £200,000 in tax annually regardless of how much he earned between 1985 and 2003. When he sold Harrods to Qatar Holdings in 2010 for a reported £1.5billion, it was registered to a family trust in Bermuda and given his non-dom status, Mr Al Fayed was required to pay no capital gains tax on the proceeds of the sale.

Foreign national footballers playing in the English & Scottish leagues are also known to abuse the non-dom tax status. As they are not British born and will in all probability leave Britain at some point in the future, they too qualify for the tax benefit. Earning huge sums of money they are able to avoid income tax by legally having their salary paid into an offshore bank account, often in their home country. These are then legally classed as foreign earnings and provided they are not brought back into Britain, will never be subject to any UK tax. The players then sign lucrative sponsorship deals, which are subject to UK taxes to cover living expenses.