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2025年9月15日 星期一

Phoenixing Fraud: How UK Taxpayers Lose Billions

 

Phoenixing Fraud: How UK Taxpayers Lose Billions

The UK's tax authority, HMRC (His Majesty's Revenue and Customs), has recently revealed a staggering loss of £836 million due to a specific type of tax evasion known as "phoenixing." This figure is a massive 45% higher than previous estimates, showing just how widespread and damaging this issue is. Phoenixing is a sneaky tactic where companies repeatedly shut down and then quickly restart under a new name, often to avoid paying taxes they owe, particularly VAT (Value Added Tax) and other business debts. It's especially common among smaller businesses.


How Phoenixing Works 

Imagine a company that owes a lot of money in taxes, perhaps from sales or employee contributions. Instead of paying these debts, the owners decide to close down the company, liquidating it (meaning, selling off its assets). But before all the debts are settled, or sometimes even before the liquidation is complete, the same people who ran the old company start a brand new company, often with a very similar name or operating from the same location, and doing the same kind of business. It's like a mythical phoenix bird that burns itself to ashes only to rise again, but in this case, it's about dodging tax bills.

Here's a step-by-step breakdown:

  1. Old Company Accrues Debt: A business operates, generates income, and incurs tax liabilities (e.g., VAT, corporation tax, PAYE).

  2. Strategic Liquidation/Dissolution: Instead of paying these debts, the directors decide to put the company into liquidation or simply dissolve it. This usually happens when the tax bill becomes too large to manage.

  3. Assets Transferred (Often Illegally): Crucial assets or the "goodwill" (customer base, brand reputation) of the old company might be secretly transferred to a new, secretly created company, often at a low or no cost.

  4. New Company Rises: The same individuals (or close associates) quickly set up a new company. This new company then takes over the old company's business activities, customers, and even employees, but it has none of the old company's debts.

  5. Unpaid Debts are Written Off: The old company, having no assets left or being officially liquidated, leaves its tax debts unpaid, and HMRC (and other creditors) lose out.

  6. Cycle Repeats: This process can be repeated multiple times, allowing the same individuals to operate businesses while systematically avoiding tax payments.

The Impact and Government Response

The latest figures for the 2022-23 tax year show that these losses from phoenixing made up more than a fifthof the total £3.8 billion in tax losses, significantly more than the previously estimated 15%. This highlights a serious drain on public funds that could otherwise be used for essential services.

The UK government has acknowledged this problem and has promised to crack down on phoenixing. Their strategy includes:

  • Increased Upfront Payment Requirements: Making businesses pay more tax earlier to reduce the amount they can accrue and then evade.

  • Expanded Enforcement Sanctions: Tougher penalties for those caught engaging in phoenixing activities.

  • Greater Director Accountability: Holding company directors more personally responsible for company tax debts, making it harder for them to walk away from liabilities by simply closing one company and starting another.

These measures aim to make phoenixing less attractive and more risky for those attempting to exploit the system.


2025年7月6日 星期日

Roots of Resilience: How Sweet Potato and Cassava Became Silent Tools of Resistance

 

Roots of Resilience: How Sweet Potato and Cassava Became Silent Tools of Resistance


Across the vast landscapes of Asia and Africa, sweet potato (Ipomoea batatas) and cassava (Manihot esculenta) are more than just staple foods sustaining hundreds of millions. They also carry deep social and political significance, transcending their simple "famine-proofing" function. Their subterranean growth habit has made them unique crops, offering the powerless a means to hide wealth, circumvent state control, and, in certain historical contexts, act as silent tools against government authority.


Freedom Underground: The Untaxable Crops

The key characteristic of both sweet potato and cassava lies in their edible parts—the tubers—being buried deep underground. This biological trait gives them distinct advantages over cereal crops:

  • Difficult to Monitor and Quantify: Unlike above-ground crops like rice or wheat, whose growth and yield can be relatively easily estimated from a distance or from aerial views, the actual output of sweet potato and cassava is challenging for government officials or tax collectors to precisely gauge. The tubers grow underground, and harvesting times are flexible, allowing farmers to dig them up incrementally as needed, rather than in large-scale, one-time harvests. This makes effective taxation or requisition by the government difficult. As anthropologist James C. Scott argues in his work on "the arts of resistance," "the weapons of the weak are often small, anonymous, and hidden... they happen quietly in everyday life, difficult for the state to detect and punish" (Scott, 1985). Sweet potato and cassava are precisely the material embodiment of such "micro-resistance."

  • Hidden Wealth: For farmers facing heavy taxes or state requisition, storing wealth as "unharvested crops" underground serves as a natural safe deposit box. These "hidden reserves" not only ensure household sustenance but also allow them to retain a degree of economic autonomy beyond state intervention. Historians analyzing China's population growth during the Qing dynasty often refer to the role of sweet potato in evading land and poll taxes. "Sweet potato provided not only calories but also a strategy for tax avoidance. Farmers could plant it on marginal lands and dig it up as needed, making it difficult for the government to record its true yield, thereby undermining tax efficiency" (Perdue, 1987). In Africa, cassava's "underground pantry" characteristic also offered farmers a means to bypass government requisitions and control during the late colonial and early post-independence periods (Richards, 1985).

  • Power for the Powerless: In colonial or autocratic regimes, when the fruits of farmers' labor were largely appropriated, sweet potato and cassava offered a lifeline. They enabled people to produce enough food outside official records to survive, and even trade in informal markets, thereby weakening the state's comprehensive control over their economic activities. The existence of such a "hidden economy," though not officially recognized, was a crucial strategy for many vulnerable groups to maintain their livelihoods and dignity. As scholars have noted, "for marginalized groups, informal economic activities are often key sites for maintaining livelihoods and even resisting the penetration of state power" (Portes, 1994).

This "hidden" characteristic made sweet potato and cassava symbols of "power for the powerless." They represent a form of grassroots resilience, a way of self-organizing and sustaining life outside state surveillance.


Beyond Famine-Proofing: Dual Guarantees of Livelihood and Autonomy

Of course, the "famine-proofing" quality of sweet potato and cassava remains a core reason for their popularity. Their high yields, adaptability to harsh environments, and rich nutritional content make them a last line of defense against hunger. However, when we consider this alongside their "untaxable" nature, their societal impact becomes even more profound. A crop that can both feed people and help them avoid excessive state exploitation would undoubtedly be favored by farmers. This dual guarantee has made them a preferred crop for farmers in many parts of Asia and Africa.


Other "Resistant" Crops: Diversified Livelihood Strategies

Besides sweet potato and cassava, throughout history and in contemporary societies, other crops have served as tools for people to circumvent government control due to their specific characteristics:

  • Taro and Yam: These tuber crops are also buried underground, sharing similar advantages of concealment and storage with sweet potato and cassava, playing comparable roles in many tropical regions. Studies show that in some Pacific Islands and African societies, these root crops played a vital role in maintaining traditional economies and social structures, partly because they were not easily fully controlled by external forces (Denham et al., 2004).

  • Certain Wild or Semi-Wild Vegetables and Fruits: These crops are typically not included in official agricultural statistics, and their gathering and consumption are entirely outside state oversight systems. They provide additional food sources for impoverished populations, forming an important component of the invisible economy.

  • Cannabis and Opium Poppy: Although these crops are controversial due to their illicit nature, in certain regions, their cultivation is precisely due to their high value and the difficulty for governments to fully control them, making them a means for farmers to escape poverty and state pressure. This highlights the complex politico-economic meanings that crops can acquire in different social contexts. Anthropological research on such "marginal crops" reveals their complex roles in informal economies and community autonomy (Moore, 2017).


Conclusion

The story of sweet potato and cassava extends far beyond their biological function as food. Their global dissemination not only alleviated hunger but also subtly shaped the socio-economic landscapes of Asia and Africa. Their subterranean nature provided a unique space of autonomy for the powerless, enabling them to quietly sustain livelihoods, accumulate wealth, and even engage in silent resistance under the shadow of state power. From an anthropological perspective, sweet potato and cassava are not just foods that nourish the body; they are cultural symbols laden with complex power dynamics, livelihood strategies, and grassroots resilience. They remind us that even the most ordinary crops can play unexpectedly pivotal roles in the grand narrative of human society.


References (Selected Bibliography)

  • Denham, T. P., Haberle, S. G., & Lentfer, C. J. (2004). The Emergence of Agriculture in the New Guinea Highlands. Blackwell Publishing.

  • Moore, L. (2017). The Anthropology of Drugs and Alcohol. Palgrave Macmillan.

  • Perdue, P. C. (1987). Exhausting the Earth: State and Peasant in Hunan, 1500-1850. Harvard University Press.

  • Portes, A. (1994). The Informal Economy and its Paradoxes. The Handbook of Economic Sociology, 245-266.

  • Richards, P. (1985). Indigenous Agricultural Revolution: Ecology and Food Production in West Africa. Hutchinson Education.

  • Scott, J. C. (1985). Weapons of the Weak: Everyday Forms of Peasant Resistance. Yale University Press.