The Queen’s Birthday List and the Immorality of Tax Avoidance.

How tedious that one of the Queen’s birthday honourees should be the subject of a political squabble about the morality or otherwise of his tax avoidance.

Is it that neither of the political greenhorns has yet learnt that public debate on tax and morality is always a dead-end conversion?

Even if you pick one of the most, to your understanding, egregious examples of perfectly legal tax avoidance, and seek to fashion a question of ‘morality’ around it, all that happens is that you quickly realise that political discourse about tax policy is not usefully grounded in probity.

What elevates tax avoidance to a question of ‘virtue’ or ‘godliness’ and so become the subject of public outrage (or dare we say it – admiration); political pot-shots and most incredible of all, calls to rebuff a Sovereign’s largesse?

Certainly if tax avoidance is of a kind to trigger an investigation by a national revenue authourity to decide whether what was done amounted, not to the avoidance of tax, but to its evasion, then clearly depending on the outcome of the probe, the practice should then be air-marked for proscription under law.

It used to be trite to recite the distinction between ‘avoidance’ and ‘evasion’ but these days great confusion has been caused by the characterisation of so-called ‘aggressive’ tax avoidance as ‘reprehensible’ and its practitioners moral reprobates.

Rather than trying to gain consensus about the ethics of ‘avoidance’ it might be infinitely more useful to decide that an overly effective avoidance scheme ought to be classified as ‘evasion’ in law; saving taxpayers and non-taxpayers alike the impossible task of reconciling their own desire to pay as little tax as is legally possible and self-doubts about their own piousness.

Is it possible that the answer has much to do with the fact that governments are consistent in their loathing of arcane and complicated domestic tax systems which, like sediment, have built up over centuries to such a depth that to get to the foundations of the law is too difficult a task for even seasoned politicos?

To read what all the fuss is about see: http://www.bbc.co.uk/news/uk-politics-18535642#

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4 thoughts on “The Queen’s Birthday List and the Immorality of Tax Avoidance.

  1. Great pic of the Queen. Are you calling for tax reform of some sort? It seems that schemes like Icebreaker are created solely to profit in regulatory arbitrage – so additional legislation may not be the answer, and then, if you legislate broadly, there’s still the question of how the courts will interpret the provision. The article linked does mention a successful challenge by HMRC to Icebreaker I on grounds of ‘substance over form’. Given HMRC’s success on Ice.I it seems as if the common law is fairly well equipped to move with the changing nature of arbitage based schemes.

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  2. Great points! Common law is a good start but lacks the specifity sometimes needed in tax. For example until recently there was no statutory definition of domcile – a concept easily recognised by those familiar with the common law not so with others. My point is that the rhetoric of morality is a smokescreen obsuring the point that tax avoidance is an integral part of any tax system it is just a matter of degree. On balance if a tax authourity finds that a particular structure causes more tax savings by the taxpayer than contemplated, fine, fix that but don’t call it immoral. That’s the kind of tax reform I mean. Prefaced of course by sensible not emotive tax ‘bites’ which serve no purpose.

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  3. I have to say, I have some sympathy towards “evasionism” but really on moral grounds, if you benefit from society, then you are required to be taxed and neither evade, or avoid it. The more you have, the less you should try.

    With very few exceptions, you benefited in some way from society and that society was almost always built using tax. As for Gary Barlow, while his talent will be fleeting, its unlikely that his ability to spend will outlive the revenues from that talent. Pay up bozzo.

    As I consider retiring, I’m looking at how I can “cash out” my UK pension, it makes sense to be tax intelligent, meaning not paying tax in both the UK, and in the US but avoiding paying any tax is not even an issue, even though it seems possible.

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    1. You’re right i think the issue of tax and morality comes up when the idea is to pay no tax at all! Of course one man’s zero is another man’s 30% that’s why it’s such a hard issue to frame around morality especially when you start to think of x% of what. No tax authority that allows for legal means of avoiding or mitigating tax like tax deductions for a whole host of things does not contemplate a reduction to zero! That’s how avoidance sometimes morphs into evasion or aggressive avoidance when the tax loss is way more than anticipated.

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