dinners David Hartnett, the then head of the Inland Revenue, agreed to let them off the £10m. He later resigned when it became public. The Parliamentary Select Committee estimates that over £25bn tax goes uncollected each year because of ‘special’ deals. •
Flipping: In the last parliament many MP’s used the technique of ‘Flipping’. As they were not required to pay capital gains tax on their main home, many MP’s with two homes constantly changed the house they defined as their ‘main’ one in order to avoid paying capital gains tax completely. Hazel Blears for example ‘flipped’ her home 3 times in one year, and was able to avoid £13332 in tax.
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Charitable Donations: As donations to charity get tax relief, some rich people exploit this. For example they can set up personal investment schemes abroad, register them as charities, and then by paying all their savings into them, they can claim back large chunks of their income tax.
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Being Paid Through Personal Companies: High earners can significantly reduce their Income Tax by being paid through a private company. It recently came to light that at least 2000 highlypaid civil servants, instead of receiving the wages normally, were using this technique, at a cost to the taxpayer of £30m per year.
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Barclays Bank were recently caught out by the Inland Revenue trying to avoid £500m in tax by buying back their own debt at a discount through a series of front companies. Barclays has got 280 subsidiary companies registered in tax havens so is clearly very keen to do all it can to avoid paying tax. It needs the money as it paid £2.5bn in bonuses to its staff last year.
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