The #MoneyRebellion campaign — part of the Extinction Rebellion environmentalist direct action movement in the U.K. — held a conference call today that covered some important legal information for campaigners there who are considering tax and debt resistance. I listened in so that I could learn more about how tax resistance works in the U.K. There is a lot of similarity between the legal situation for resisters there and in the U.S. but also some differences.
For one thing, income tax is much more difficult for the typical wage-earner to resist there. In the U.S., there is the federal income tax — for which there is paycheck withholding but where the employee has a lot of control over the withholding and ultimately files a tax return to determine how much is owed — and the payroll tax, which is withheld from each paycheck at a steady, inflexible rate, and for which there is little opportunity to interrupt or reverse that withholding as an employee. In the U.K., there is only a pay-as-you-earn tax that works more like the U.S. payroll tax in this regard, and so it is difficult to resist.
As with the payroll tax, the pay-as-you-earn tax can be resisted if the resister is self-employed (for instance a “sole proprietor” in the U.S. / “sole trader” in the U.K.). In such a case, the resister — not a third-party employer — is responsible for paycheck withholding, and so they can choose civil disobedience instead.
In the U.K. there is also the council tax (the remnants of the “poll tax” or “community charge” over which there was so much tax resistance back in the day). This is a local tax, but is also a potential target of #MoneyRebellion resisters as a protest against local budgeting for e.g. fossil fuel transport infrastructure.
There’s also a value-added-tax, but it wasn’t covered in much detail on the call today, except that it was noted that the value-added-tax enforcement seems to be more swift and severe than that for other taxes.
In the case of income tax (pay-as-you-earn) resistance:
- The government will attempt to “attach earnings,” or what in the U.S. would be called a levy.
- However, if you can resist pay-as-you-earn, you probably can resist such a levy, too.
- If the debt is less than £5,000 or so, the government will likely turn it over to a collection agency. There isn’t much of an opportunity for a day-in-court.
- Because of the pandemic, it’s pretty easy these days to apply for and receive extra time to pay.
- The government has more power to collect business tax debts than personal tax debts (for instance they can seize business property more easily than personal property). This doesn’t apply to “sole traders” but if you are organized as a limited-liability corporation, it could apply to you.
In the case of council tax resistance:
- Households pay it as a unit, and have joint-and-several liability for it. So if you resist, you need to have buy-in from the other adults in your household.
- Non-payment is not a criminal offense, but councils can apply for a three month “committal order” against resisters which is something like a judicial contempt imprisonment in the absence of criminal charges.
- If you don’t pay your council tax, there will be a liability order hearing in magistrates’ court. This will cost you about £50.
- You are required by the court to make a report of your finances.
- You can choose whether or not to attend this hearing. If multiple people are resisting, showing up together at the hearing can be a publicity/press opportunity.
- The council will select from various enforcement options (in part based on your financial report), which may include sending out a bailiff to look for seizable property (though they aren’t authorized to enter your property without permission), attaching your earnings, issuing a “charging order” (something like what we call a “lien” in the U.S.), beginning bankruptcy proceedings, or applying to put you behind bars for 30 days.
- If they choose the latter (jail), you can pay your debt on day #1 to get out of jail. If you decide to stick it out, you’ll be released after 30 days, but that does not discharge your tax debt.