Wrong all round

I must confess that I occasionally read Christie Malry’s blog. Not for pleasure, I hasten to add. It is part of my work for the Anti Neoliberal Agitprop League think tank. In the war on right wing propaganda, I have found that ANAL is my first port of call.

Now, I am no friend of Richard Murphy’s the dogmatic right-wing tax avoidance adviser who advises Guardianistas how to avoid paying employers NICs on their payments to their nannies. Presumably, this also extends to payments to their butlers, chauffeurs and footmen.

However, he finds himself being accused of not being able to correctly correct the head of tax at ACCA’s piece on avoiding taxes through using a personal service company, as typically used in the nannying industry. Hence Richard Murphy is clearly an expert in this type of avoidance, being an advocate of it.

Double however though, Malry gets it hopelessly wrong in his criticism of Murphy’s criticism of Roy-Chowdury’s criticism of critics of nanny’s use of personal service companies.

So, taking centre-stage, Roy-Chowdury gets it hopelessly wrong by suggesting that paying dividends could create a higher rate of tax than paying a salary to your nanny. This would only be the case if IR35 were applied but he doesn’t explain that. And I can’t be bothered to do the calculation to see if that’s what he’s arsed up.

Enter stage right (because he’s a right wing loon), Murphy says “Oi! Leave those nannies alone! You are suggesting that I have incorrectly advised the employers of said nannies by saying that they might pay more tax! Lies and sophistry!”

Murphy then says that the criticism of the critics of nannies is wrong, and that Roy-Chowdury’s numbers are hopelessly wrong. He then produces some hopelessly wrong numbers by a hopelessly wrong method to disprove Roy-Chowdury.

For starters, he thinks that dividends carry the corporation tax credit to be offset for income tax purposes. Secondly, he thinks that this means that the tax on dividends always ends up the same as tax on salary and always has been. Thirdly, he adds it all up wrong. Fourthly, he thinks that dividends carry the corporation tax credit to be offset for income tax purposes. Fifthly, when corrected by people, he then corrects his correction incorrectly, and worse than before.

Sixthly, he’s obviously talking bollocks, even to a layperson such as my children’s nanny’s limited company’s company secretary, my wife.

So, we have so far had the pledge, the turn and now for the prestige. Enter stage even righter (because he’s an even righterwing loon), Christie Malry points out these errors and then does the calculation wrongly.

Everybody knows that corporation tax is given as a “non-refundable notional tax credit of 10%” as explained by TaxAid. This seems self-explanatory, but it actually means almost the exact opposite! It means that the corporation tax is allowed to be used as a refundable actual tax payment of the percentage  paid in corporation tax.

So a company that paid corporation tax at 20% paying a dividend of £160,000 would be treated as paying a dividend of £200,000 carrying a tax credit of £40,000 even though the paperwork says that it carries a non-refundable notional tax credit at 10% of £17,777 and that the gross dividend is £177,777.

See! This is exactly why you need a tax avoidance expert for these matters. Whilst a layperson reading the rules in HMRC’s manuals, Tolley’s tax guide or the legislation, would assume that Christy Malry gets it right, they would be very much mistaken.

A real tax expert would know that the tax paid on dividends and salaries are exactly the same, and that anybody who has ever performed a bonus v dividend calculation has been sorely wasting their time. They’re taxed exactly the same!!!

The only difference is employers NICs. Which you calculate by waiting until somebody corrects your numbers and then you pretend that the NICs are the balancing figure. Usually this will be HMRC, but in some cases it can be a Tory troll making spurious accusations in the comments section of your blog.

Enter stage left, me. I explain this and then take a tea break in my garden now that the gardener has laid it out in winter mode.

I’m rambling on somewhat, so I won’t explain how the employee’s NICs make no difference whatsoever. Besides, you non-tax experts wouldn’t understand it.

So in summary:

  1. Everybody else is wrong.
  2. Dividends carry the corporation tax credit to be offset for income tax purposes.
  3. The tax on dividends always ends up the same as tax on salary and always has been.
  4. Dividends carry the corporation tax credit to be offset for income tax purposes.
  5. Don’t ever question my numbers or I’ll send round UK Uncut to mess you up.
  6. Yeah, Hartnett, how do you like them apples?

So, I think I’ve proved my point, if you’re looking for the world’s authority on tax, look no further, he’s looking at himself in the mirror right now.

That’s me, by the way. If you don’t get that, you must be some sort of neoliberal imbecile.

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3 thoughts on “Wrong all round

  1. I have removed several comments from this post. These were mainly Tory trolls suggesting I cannot perform a simple tax calculation.

    You know who you are, your comments are not welcome here. I only allow healthy discussion of the issues I raise.

  2. Pingback: Restoring the 50% rate on dividends is essential, but don’t mention Richard Murphy | The Justice for Taxes Network

  3. I thought the top rate of income was 60% but you haven’t mentioned it. Has it been abolished? Does Ed Balls know? Or is it a secret rate, and should I not have mentioned it either?

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