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Why pay tax? HMRC operates not a tax net, but a colander

The Government likes to tell us they’re cracking down hard on tax avoidance. Yet the UK is steadily turning into a property speculators’ honeypot, aided by tax loopholes and the offshore secrecy of the British Virgin Islands (BVI) in the Caribbean that conceal property transactions.

Were the UK authorities even aware of this, let alone strenuously blocking it? Why does it require a detailed investigation by the media – the Guardian and the US-based International Consortium of Investigative Journalism to bring this to light? Why on earth does Briain’s Land Registry allow offshore property owners to keep their true identity secret? Why does the government turn a blind eye when British banks, at a time when British industry was screaming for funding, shells out £14bn in outstanding loans to the BVI? Why does the government continue to allow 3 major tax loopholes – in terms of escaping capital gains tax, inheritance tax and stamp duty – to fuel the offshore property boom?

Offshore entities don’t pay any tax on property speculation, though resident Britons have to. Why does the government, if it believes that aggressive tax avoidance is ‘morally repugnant’, allow this obvious huge tax loophole to continue? People living abroad and non-doms who claim they’re only living in Britain temporarily are permitted to avoid inheritance tax by buying a house through an offshore entituy. Why? And people can still avoid up to 5% stamp duty being levied on the next purchaser by vesting their house in an offshore entity. Why does the government not terminate this loophole?

No doubt the goverment would justify this as part of its overall programme to demonstrate that Britain was open for business. But what it attracts is not entrepreneurial or genuine business skills, but rather a flood of foreign property money manipulated by global speculators to maximise wealth through wide-open tax loopholes often denied to genuine UK residents. One has to ask why this goes on.

It’s not as though the UK authorities – government, Treasury, Bank of England, regulators – are blind to all of this. The truth is more disturbing. The government (Tory and New Labour alike) have sold their soul to Big Money, a Mephistophelean deal to leave the City, Big Business and big-time speculators (private equity and hedge funds) alone in exchange for the funding deals to secure re-election.

‘Light touch’ regulation meant virtually no regulation at all, which is why the manipulation of Libor (Barclays, etc.), successive mis-selling scandals (pensions, PPI), money-laundering for drugs and arms (HSBC), and tax-dodging on an industrial scale were allowed to fester untouched for so long. Britain has beome a casino of corruption, and the widespread use of offshore entities with identities concealed to exploit property speculation with huge tax loopholes thrown in is just the latest unearthing of this rotten core.

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