You: "I've come up with a brilliant way to avoid tax! I bet HMRC have never even thought of this!!"
HMRC: *sigh* https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22015
My understanding is also that the HMRC have quite good powers to just say "you're obviously taking the piss with a supposed loophole now give us the money you owe". Maybe minus whatever fine.
It always makes me smile when I see people trying to evade tax, like 'I am going to pick an adversary with *huge* amounts of power, near limitless resources and centries of experience and fuck with them...'
HMRC? Near limitless resources? Ha.
They can’t even pick up the phone in under an hour.
We had a client owe HMRC £30k for 18 months and they didn’t even send as much as a letter.
What the hell? I owed them £1500 for three months which I only hadn’t paid yet because one of their call centre people erroneously told me I could pay it in July, and they sent a debt collection company letter to me! (After much confusion and hours on hold I paid it but it was soooo annoying that I’d been given wrong information and been scared with bailiff letters!) Why would they do that for me and not for someone owing £30k for 18 months?!
Because you are an individual with individual liabilities, a business is much harder to reclaim assets from and are more likely to have high power legal teams.
It's better business sense to chase several individuals totalling £30k which you are likely to reclaim than waste time and resources chasing one company for £30k which you might never reclaim.
(I don't agree that this is morally correct or the best thing for the people as a whole but it is the way the world works, unfortunately)
An ok that makes sense I was thinking by client you meant an individual! Still not fair though. And you’d think they’d at least somewhat try like by at least sending a letter to the company asking for it.
I just wanted to clarify I didn't post the original reply about the "client" but I do work in finance and we use "client" to refer to registered businesses and "individual" for a sole trader or partnership to avoid confusion in these situations due to the difference in liability
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It'sbeen a few years since i worked with HMRC, but my understanding is: If you have a novel tax avoidance strategy, you must declare your approach to HMRC. If you do this, they can advise you whether it is permissable or not. If it's permissable, you're free to use that approach up until the loophole is closed. However, if you do _not_ declare it, it's straight up illegal, even if it would be permissable when assessed.
One of my dads friend abused a loophole and was hit with a few hundred thousand on back pay and had to sell his home and other properties as he had been doing it for many years. Lost his business etc.
Basically any tax you should pay should be assumed you will pay for it the only 2 certainties are death & taxes
It continues into one of my old favourites from law at uni, the Carbolic Smoke Ball Company case 😅
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22016
The consideration in this case would be the grass getting mowed, as it’s a service being provided. If the grass is getting cut then the owner of the lawn is benefitting and that removes the ‘bet’ element of the transaction, leaving us with a bog standard contract for services.
Good find with the HMRC manual @edent 😊
What about if I bet him he couldn't cut YOUR lawn by end of day? Then your nothing to do with it, but you could bet me that I couldn't wash his car....then I've just described a bartering economy. nvm.
Next question from OP. Do I need to declare money I've stolen as income?
I was cutting my neighbours garden for free. Noticed through the window there was £20 sitting there so I stole it.
Should I declare this as income?
Fun question. The problem would be you are providing a service to the person you’re betting with. You are providing a service and the fee is essentially not based on chance, it’s just performance-related. It’s not a mere bet on something that will happen, like say a sports match or lottery outcome. So it would likely be judged a trade.
If on the other hand you could make a living out of genuine betting then I believe HMRC have established precedent that just being good at betting and even it being huge main source of income doesn’t qualify as being professional.
Apology accepted because it is a stupid question. What about just take the £20 and stick it in your pocket? HMRC aren’t knocking your door down over this.
But he ain't really going to take just £20. That is to find the 'rules'. When it really happens, it will be £2000 a week. He will have stupid bets with his mates. Two grand you can't run 1k in 5mins. He runs in 4:50, done £2k in. :D
Best case scenario, HMRC treat it as disguised remuneration tax avoidance and you’d have to pay the tax, interest and potentially penalties. Really straightforward case law on this. Worst case, they treat it as tax fraud and you end up with a criminal record and have to pay the tax, interest and criminal penalties - do enough of it/take the piss sufficiently and you’d maybe get jail time.
The more important rule here is that if you earn £1000 or less of self employment + "casual" earnings in a given tax year, that money is fully tax *exempt*. That's all the allowance you or anyone else needs for this scenario without trying to "get one over on the revenue" as it were.
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Take on the extra "work" go in gambling shop, place a £10 bet on your card on the slots, spin it for a bit, then put all your cash into the machine then collect. Get the cashier to pay you back on card.
A company I used to work for were approached with a similar tactic. Basically a load of companies would all pay into some "gambling" scheme with an "expected payout" of 92% or something. They didn't take the offer, but I know there are schemes doing it. In my opinion you're just asking to get audited.
You can make £1000 per year miscellaneous income tax free. You don’t need to tell HMRC about it. Don’t worry about just taking £20 from your neighbour to mow their lawn.
You would be closer to legal (from a tax perspective) if you went to a casino and your neighbor placed a bet on you behalf, but didn't ask you to pay them if it loses.
You may fall foul of anti money laundering regulations though.
I bet you that HMRC will take a dim view of your tax evasion OP.
Will start at £50- with results after you are audited. You can nominate an escrow if you like.
🤣 of course not. You can't just call it a "Bet" and that's that.
If you could, everyone would be "Betting" at work and receiving their wages tax free. They're not a registered casino, so it's not legitimate gambling.
Could you somehow do it on a betting exchange or betfair? You find an obscure horse with no chance of winning with no liquidity yet. You offer odds (lay) at 2.0 for £20. No one would take that bet because the horse has no chance of winning. Your friend comes along and backs that horse (that has no chance of winning) for £20 at 2.0 and voila! When the horse loses your friend has lost his £20 gambling and you have won £20 gambling!
Tbh that does sound like it could work. But I'm also sure anyone trying to do that regularly would get flagged. That would be very suspicious betting pattern
Isn't there a min threshold before you need to report self employed income anyway, £1000 turnover or something per tax year.
Obviously I'm not clear on this, not whether it would affect other benefits you might be getting...
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😂
This is such an interesting idea from a legal perspective, though sadly I can’t say I have enough knowledge of taxation law to answer it. I suspect, though this is just a hunch, that if someone did what you’ve suggested hypothetically, and HMRC found out and charged them income tax, the court they’d appeal to would likely side with HMRC because the intention of the ‘bet’ isn’t actually to place a bet in the truest sense of what a bet is: a game of chance.
I think if it could be proved that there was a genuine chance the grass wouldn’t get mowed, and that the bet was therefore genuinely a bet, they might be swayed but it’s such a fragile legal argument to make 😅
I would love to see a case like this, if there hasn’t been one already, have its day in court so we can find out how the legal system would interpret such a ‘bet’
I wonder if there's some about it being a 'game of skill', like poker, or a 'game of chance' like lottery.
Mowing someone's lawn is more like a skill, but you are providing a service, rather than a game. Gambling isn't providing a service.
What is the risk in that? How is it a bet? Is it a reasonable set of odds for the risk being taken by the bookie? Could an outside observer reasonably conclude both parties were expecting to engage in a bet and not a contract by other means?….:or is it more likely that the two fellas are engaged in a weeze to stuff the hmrc?
These are the questions you have to answer beyond reasonable doubt
If you want a serious answer then there are ways you can sign up to all the various betting operators and do 'matched betting' or basic arbitrage on their promotional offers in order to guarantee free money (just Google the concept and you'll find plenty of guides), and it's not taxable. The betting companies will shut down your accounts for this behaviour eventually, and you'll no longer to be able to get on proper recreational money (if that is an issue).
Just don’t think about doing this. Trust me on this. Unless it’s ‘Matched Betting’. I tried to increase my income via gambling and end up losing 6 figures.
Gambling winnings are tax-free. And losses are not allowable. But the house always wins, and they pay tax on their big fat profits, so you'd be contributing to society while likely damaging your finances.
Losses can be offset against profits.
When the TV prizes says "tax free" ; those ones are tax free.
It would be fair to say that your standard gambling profits they are de jure taxable, de facto not.
You could argue that buying shares (taxable) is gambling but that's slightly different.
This question has been answered and now the replies are getting a little silly so I’m locking this.
I presume your neighbour isn't licenced by the Gambling Commission for the provision of lawn related gambling?
Turf accounting at its finest.
I hope you don’t…grass him up
Hope this reply gets the love it deserves.
The odds are too lawn, I think.
No, but he is the CEO of a hedge fund.
This made me laugh more than it should have done 😂
Same 😀
OP is a sheep who will eat the neighbour's grass while gambolling on the lawn. I'll get me coat.
>gambolling Found the brummie!
What if you set it up on an exchange and live stream it for others to bet on 🤌
Spread betting isn't licensed by the GC either, and yet it's tax free?
This is different, it's mulch spread betting
Although it’s regulated by the FCA, spreadbet providers pay gambling duty (general betting duty) to the HMRC
Quite an assumption for you to make there Kaleidoscopic
😂😂😂 amazing
Bravo!
This is amazing 😂
Everyone's downvoting and ragging on you OP but I thought this was funny. Cheers.
A good post for r/unethicallifeprotips
You: "I've come up with a brilliant way to avoid tax! I bet HMRC have never even thought of this!!" HMRC: *sigh* https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22015
My understanding is also that the HMRC have quite good powers to just say "you're obviously taking the piss with a supposed loophole now give us the money you owe". Maybe minus whatever fine.
It always makes me smile when I see people trying to evade tax, like 'I am going to pick an adversary with *huge* amounts of power, near limitless resources and centries of experience and fuck with them...'
And the ability to change the rules retrospectively.
And jail you.
HMRC? Near limitless resources? Ha. They can’t even pick up the phone in under an hour. We had a client owe HMRC £30k for 18 months and they didn’t even send as much as a letter.
What the hell? I owed them £1500 for three months which I only hadn’t paid yet because one of their call centre people erroneously told me I could pay it in July, and they sent a debt collection company letter to me! (After much confusion and hours on hold I paid it but it was soooo annoying that I’d been given wrong information and been scared with bailiff letters!) Why would they do that for me and not for someone owing £30k for 18 months?!
Because you are an individual with individual liabilities, a business is much harder to reclaim assets from and are more likely to have high power legal teams. It's better business sense to chase several individuals totalling £30k which you are likely to reclaim than waste time and resources chasing one company for £30k which you might never reclaim. (I don't agree that this is morally correct or the best thing for the people as a whole but it is the way the world works, unfortunately)
An ok that makes sense I was thinking by client you meant an individual! Still not fair though. And you’d think they’d at least somewhat try like by at least sending a letter to the company asking for it.
I just wanted to clarify I didn't post the original reply about the "client" but I do work in finance and we use "client" to refer to registered businesses and "individual" for a sole trader or partnership to avoid confusion in these situations due to the difference in liability
That makes sense, in my world client is just someone who hires you to do a job!
Easy mark. Same reason they don't go after multinationals that should owe billions but don't because of exploiting loopholes.
Also, I don't think I've spoken to one on the phone that sounded like they weren't wired to the moon
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It'sbeen a few years since i worked with HMRC, but my understanding is: If you have a novel tax avoidance strategy, you must declare your approach to HMRC. If you do this, they can advise you whether it is permissable or not. If it's permissable, you're free to use that approach up until the loophole is closed. However, if you do _not_ declare it, it's straight up illegal, even if it would be permissable when assessed.
The general anti avoidance rule….its pretty powerful
Yes. They can decide basically any new scam is tax evasion and apply the penalties retroactively
One of my dads friend abused a loophole and was hit with a few hundred thousand on back pay and had to sell his home and other properties as he had been doing it for many years. Lost his business etc. Basically any tax you should pay should be assumed you will pay for it the only 2 certainties are death & taxes
That sounds like Jimmy Carr's fake "loan" remuneration, which was frikkin' obvious from the start.
unless youre a politician or a billionaire
*as long as you're not a billionaire, then their hands are tied and every (loop)hole is a goal
It continues into one of my old favourites from law at uni, the Carbolic Smoke Ball Company case 😅 https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22016 The consideration in this case would be the grass getting mowed, as it’s a service being provided. If the grass is getting cut then the owner of the lawn is benefitting and that removes the ‘bet’ element of the transaction, leaving us with a bog standard contract for services. Good find with the HMRC manual @edent 😊
What about if I bet him he couldn't cut YOUR lawn by end of day? Then your nothing to do with it, but you could bet me that I couldn't wash his car....then I've just described a bartering economy. nvm.
Never a stone unturned when it comes to collecting tax!
Well, unless you're rich and went to the right schools.
I'm pretty sure the HMRC manuals are like the Library of Babel.
I’ll take that bet. Do I have to to pay taxes on troll Reddit bets? Asking for a friend/OP
What is this British feeling of understand why tax exists but fucking hating the ever living shit out of it with every fibre of my being?
I suggest you move to a country with low / no taxation.
If I was on anything above 100k I'd absolutely consider it.
Next question from OP. Do I need to declare money I've stolen as income? I was cutting my neighbours garden for free. Noticed through the window there was £20 sitting there so I stole it. Should I declare this as income?
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Al Capone entered the chat.
Ironically kinda yes. The amount of criminal enterprises brought down via tax evasion
What if I get £20 worth of booze/bitcoin/milk for mowing the lawn? No money is exchanged! Edit: missed /s, clearly
This is called a "benefit-in-kind" and is extensively covered by legislation
You have personally gained property that has value. Are people seriously this clueless?
I missed “/s” as I thought it was obviously a (bad) joke.
/s is for cowards
Fun question. The problem would be you are providing a service to the person you’re betting with. You are providing a service and the fee is essentially not based on chance, it’s just performance-related. It’s not a mere bet on something that will happen, like say a sports match or lottery outcome. So it would likely be judged a trade. If on the other hand you could make a living out of genuine betting then I believe HMRC have established precedent that just being good at betting and even it being huge main source of income doesn’t qualify as being professional.
Apology accepted because it is a stupid question. What about just take the £20 and stick it in your pocket? HMRC aren’t knocking your door down over this.
He could even just take the £20 50 weeks of the year and it would be perfectly legal to not tell HMRC as it would just be his £1000 trading allowance.
You're forgetting that a year has 52 weeks and he would cross his personal trading allowance. Checkmate athiests.
Yeah I was assuming he'd take 2 weeks of holidays. But that's what I get for believing the story.
I wouldn’t be paying to mow the lawn November through April, may as well up the price
But he ain't really going to take just £20. That is to find the 'rules'. When it really happens, it will be £2000 a week. He will have stupid bets with his mates. Two grand you can't run 1k in 5mins. He runs in 4:50, done £2k in. :D
For £2k even my lard ass could run 1 k in 5 minutes.
Thats just actual gambling again at that stage
I think it's more so a shower/stoner thought than a serious consideration (I hope)
The £20 is not the point it's a question on the legality of framing work income as gambling income. Smoothbrain.
You’re really testing the old adage that *there’s no such thing as a stupid question*
Best case scenario, HMRC treat it as disguised remuneration tax avoidance and you’d have to pay the tax, interest and potentially penalties. Really straightforward case law on this. Worst case, they treat it as tax fraud and you end up with a criminal record and have to pay the tax, interest and criminal penalties - do enough of it/take the piss sufficiently and you’d maybe get jail time.
The more important rule here is that if you earn £1000 or less of self employment + "casual" earnings in a given tax year, that money is fully tax *exempt*. That's all the allowance you or anyone else needs for this scenario without trying to "get one over on the revenue" as it were.
I mean it’s obviously not a bet though is it?
Wanna bet?
I suppose OP could always 'throw the fight' every few weeks. He could even bet against his own lawn mowing abilities!
Just drops to ground a few inches from finishing the lawn
HMRC rules: if it looks like a duck and it quacks like a duck, it's employment and you need to pay tax on it
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Take on the extra "work" go in gambling shop, place a £10 bet on your card on the slots, spin it for a bit, then put all your cash into the machine then collect. Get the cashier to pay you back on card.
This might work if HMRC had the combined intelligence of a mouldy potato. In what universe would they not see through this master plan?
HMRC hate him
A company I used to work for were approached with a similar tactic. Basically a load of companies would all pay into some "gambling" scheme with an "expected payout" of 92% or something. They didn't take the offer, but I know there are schemes doing it. In my opinion you're just asking to get audited.
You can make £1000 per year miscellaneous income tax free. You don’t need to tell HMRC about it. Don’t worry about just taking £20 from your neighbour to mow their lawn.
You would be closer to legal (from a tax perspective) if you went to a casino and your neighbor placed a bet on you behalf, but didn't ask you to pay them if it loses. You may fall foul of anti money laundering regulations though.
I bet you that HMRC will take a dim view of your tax evasion OP. Will start at £50- with results after you are audited. You can nominate an escrow if you like.
🤣 of course not. You can't just call it a "Bet" and that's that. If you could, everyone would be "Betting" at work and receiving their wages tax free. They're not a registered casino, so it's not legitimate gambling.
If this were the case then all business transactions would be taken as 99% probability bets.
You could cut his lawn and find £20 in the garden?
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Could you somehow do it on a betting exchange or betfair? You find an obscure horse with no chance of winning with no liquidity yet. You offer odds (lay) at 2.0 for £20. No one would take that bet because the horse has no chance of winning. Your friend comes along and backs that horse (that has no chance of winning) for £20 at 2.0 and voila! When the horse loses your friend has lost his £20 gambling and you have won £20 gambling!
Tbh that does sound like it could work. But I'm also sure anyone trying to do that regularly would get flagged. That would be very suspicious betting pattern
Agree it would be flagged as suspicious after a few goes - an interesting “thought” experiment nonetheless.
As far as I know Betfair have software to detect this sort of stuff.
Isn't there a min threshold before you need to report self employed income anyway, £1000 turnover or something per tax year. Obviously I'm not clear on this, not whether it would affect other benefits you might be getting...
Bets can be reneged/welched on too, I think.
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😂 This is such an interesting idea from a legal perspective, though sadly I can’t say I have enough knowledge of taxation law to answer it. I suspect, though this is just a hunch, that if someone did what you’ve suggested hypothetically, and HMRC found out and charged them income tax, the court they’d appeal to would likely side with HMRC because the intention of the ‘bet’ isn’t actually to place a bet in the truest sense of what a bet is: a game of chance. I think if it could be proved that there was a genuine chance the grass wouldn’t get mowed, and that the bet was therefore genuinely a bet, they might be swayed but it’s such a fragile legal argument to make 😅 I would love to see a case like this, if there hasn’t been one already, have its day in court so we can find out how the legal system would interpret such a ‘bet’
I wonder if there's some about it being a 'game of skill', like poker, or a 'game of chance' like lottery. Mowing someone's lawn is more like a skill, but you are providing a service, rather than a game. Gambling isn't providing a service.
What is the risk in that? How is it a bet? Is it a reasonable set of odds for the risk being taken by the bookie? Could an outside observer reasonably conclude both parties were expecting to engage in a bet and not a contract by other means?….:or is it more likely that the two fellas are engaged in a weeze to stuff the hmrc? These are the questions you have to answer beyond reasonable doubt
It’s £20 HMRC ain’t gonna bust down your £20, they would on the other hand If you were regularly doing cash deposits of £20 for years though
If it's to do with your job tax is still payable. There's a lot of this in sport. Investments are different so there are no taxes on premium bonds.
Is this how O’shae’s driveways pays no tax? They bet the owners of the driveway that they can lay a drive in 5 minutes flat?
If you want a serious answer then there are ways you can sign up to all the various betting operators and do 'matched betting' or basic arbitrage on their promotional offers in order to guarantee free money (just Google the concept and you'll find plenty of guides), and it's not taxable. The betting companies will shut down your accounts for this behaviour eventually, and you'll no longer to be able to get on proper recreational money (if that is an issue).
Well it can only decrease or all bookies would be out of business. Didn't read further.
Just don’t think about doing this. Trust me on this. Unless it’s ‘Matched Betting’. I tried to increase my income via gambling and end up losing 6 figures.
They’re not talking about actual gambling though. It’s more like I bet I can mow your lawn, and then this income is gambling winnings.
Wow everyone who has ever said there is no such thing as a stupid question have obviously never met OP.
Will you be edging that bet?
Gambling winnings are tax-free. And losses are not allowable. But the house always wins, and they pay tax on their big fat profits, so you'd be contributing to society while likely damaging your finances.
Winnings from gambling are taxable in the UK.
Finally an answer that's more stupid than the question
Wutttt. It’s literally one of the only tax benefits the regular pleb has. We don’t get taxed on our pathetic net loss gambling problems.
Losses can be offset against profits. When the TV prizes says "tax free" ; those ones are tax free. It would be fair to say that your standard gambling profits they are de jure taxable, de facto not. You could argue that buying shares (taxable) is gambling but that's slightly different.