The Fizz! Blog

Scam emails still doing the rounds

The scam emails that I've warned about before are still doing the rounds, apparently, and still raking in the bank details of the unwitting.  If you ever get any such emails, just delete them without a second thought.

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One supply or two?

A common theme of VAT cases is attempts by businesses to claim that they are selling two separate things when they're actually only selling one.  The reason that you'd try and do this is that some things have VAT on them - meaning that if you sell them you have to give some money to the taxman - but some things aren't - meaning that you can keep all of the money.

Though sometimes a claim will succeeds, often they're audacious or just silly.  The benchmark for some time has been Sky TV's claim that their subscribers were buying a) satellite TV and b) a monthly magazine.  If they'd succeeded in that claim, they would have been able to cut their VAT payments, as there's no VAT on magazines.  Of course, they didn't succeed, as it was a ridiculous claim, and every level of tribunal and appeal quite rightly found that the prospect of a magazine didn't enter into a customer's mind when they signed up - it was very much incidental to the main supply of TV channels.

But, following a VAT tribunal case in the summer, Sky have lost the crown for the most ridiculous claim, which now belongs to Purple Parking.  They're one of the companies that provide parking near airports, and then drive you from the car park to the terminal.  Their - undeniably imaginative - claim was that their customers are purchasing two things - a) car parking and b) a ride in a bus.  When the tribunal had stopped laughing, they told Purple Parking that their customers were plainly buying parking - the clue is kind of in the name Purple Parking - and that the bus ride part is incidental to that.  Sometimes you do wonder how much thought goes into making these claims, particularly bearing in mind the hefty professional fees that must be involved.  Although you often have to applaud creative attempts to minimise tax burdens, this isn't one of those cases!

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BBC presenters attempt to avoid 50% tax

Many papers (such as the Telegraph) ran a story over the weekend about BBC presenters setting up companies so that they can come off the BBC payroll, freelance, and avoid the new higher income tax rates coming in from 6 April.

It's a more complicated story than that presented in the papers - just deciding to be a paid as a freelancer when really you should be an employee potentially has nasty tax consequences from either "freelancer" or "employee".  I've written about IR35 on this blog several times before.

But, it does illustrate the point that simply hiking the top rate of tax doesn't necessarily lead to a proportional increase in the tax take - people start to take action to restructure their affairs to reduce their tax liability, or they just don't bother to seek further income.  In fact the highest rate of tax won't be 50% next year, it will be 61% - which I'll discuss in another article.  And, however great your desire to effect redistribution of wealth via tax policy, there's no question that the prospect of only being allowed to keep 39% of some of their earnings is likely to change the behaviour of some taxpayers.

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