A Fair Share of Tax – A rant in four parts; Lies, Lies and Damn Statistics

A Fair Share of Tax A rant in four parts; Lies

, Lies and Damn Statistics

1) The anarchists occupy Fortnum & Mason

According to HMRC and HM Treasury we in the so called tax avoidance industry should be looked at and treated in the same way as the anarchists who raided F&M at the weekend. They view us as living it up on the back of performing a smash and grab on the UK economy. I must admit that we are similar with the anarchists in our desire for high class groceries, champagne and caviar but are at opposite ends of the spectrum as to how to get it.

We legitimately minimise the tax burden for clients and one of the core reasons that we exist is because our clients feel that they are paying too much tax. Now, we could all say that; however for UK residents it appears that the burden for higher earners is becoming more and more intolerable - hence the flight from the UK of individuals and businesses to alternative jurisdictions where they are happy to pay tax at a sensible rate.

Let's give the example of my own parents: They were both teachers in the UK for their entire working careers and retired with a reasonable pension after 40 years service. Throughout their lives they paid Income Tax and NIC on salary and CGT on any investments they made. When they die their estate will then pay an additional 40% IHT on the capital that they have managed to amass over the nil rate band. Is this fair? I say no. Inheritance tax is one example of an outdated tax designed to redistribute wealth from the aristocracy to the working classes via the government of the day. In reality it has never worked to achieve this aim and simply causes anguish to hard working people who have very little left to show for their lifelong efforts.

2) Lies, Lies and Damn Statistics

Okay, admittedly, when I refer to statistics I mean percentages. Why should the higher earners pay a greater percentage of their wealth to HM Treasury? Surely they are paying more anyway because they earn more; but they are being penalised because they are successful. With this question I refer of course to the alternative; a flat rate of tax with no CGT, NIC, SDLT, VAT or IHT but rather a tax on gains (income or capital) for everyone at one rate. If the UK introduced a flat tax rate with a slightly higher personal exemption then the overall rate could be 29% or lower on current tax take figures. The reality is that the saving in bureaucratic costs would be immense but also the higher earners would be willing to pay this without looking to avoidance for an answer. Not only this, but the UK may even attract high earners to become resident (again!) or attract new HNWI's thus further increasing the real tax take for HM Treasury. My message to George Osborne is that if you really want to close down tax avoidance then make the tax system palatable, sensible, and fair' for all.

3) The Ducking Stool drown if you're innocent, survive and you're a witch and burnt at the stake

By this analogy I of course refer to the " potential" introduction of a General Anti-Avoidance Rule (GAAR) as being contemplated by HM Treasury and HMRC. But hold on, they seem to have already confirmed implementation for this beast. With legislation that is currently in drafting, if HMRC disputes any claim by a taxpayer then the taxpayer must lodge the disputed tax amount with HMRC in advance of any arguments being put by either side as to the legitimacy of HMRC's claim. Simple? This is designed to take away the cashflow advantage for tax avoiders but will HMRC pay the compensation to a taxpayer when they win their case? What if the funds lodged with HMRC would have been used otherwise to invest into a high yielding UK investment that produced a 60%pa return? I think not. This proposal, which will become legislation, is stifling to the UK economy and the legal system as you will now be guilty until proven innocent.

4) Why Dave Hartnett may be the secret twin brother of Muammar Gaddafi

Gaddafi is accused of human rights violations and taking money from the people of Libya.

Hartnett is accused of allowing Vodafone to reduce their tax bill by 6Bn which took money from the people of the UK and is surely, at worst, a violation of their human rights and at best, theft from the "Big Society" on a massive scale.

The HM Treasury and HMRC paper on tackling tax avoidance talks of how proud they are to be appointing relationship managers to deal with high tax paying corporations. However in the past it appears that all personal relationships like this managed to achieve was legitimised tax avoidance. The answer is clear I must assist my clients in avoiding a lot more tax than currently so that I can get my own HMRC relationship manager and negotiate our collective tax bill down proportionately to single figure percentages. Happy days.

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