Tax

The Government is once again promising to clamp down on the lawful efforts of people who attempt to keep as much of the money they have earned through lawful work/investment as possible.

David Gauke MP, Treasury Minister, proposes to "name and shame" those using aggressive tax avoidance schemes.  Presumably, the press release will read something along the lines of: "here is a list of people who have done absolutely nothing illegal in respect of their tax."

Since he is so keen on naming and shaming those conducting themselves in ways that our Prime Minister described as "morally wrong", he won't mind me mentioning that he avoided paying £10,248.32 worth of tax in the form of stamp duty when he chose not to pay it but instead to claim it on his Parliamentary expenses.  If you believe that trying to keep your own money is "morally wrong" (I think Mr Gauke actually uses the words " morally repugnant" himself) then you must think that making the tax payer pay your tax for you is tantamount to criminal behaviour.  Interestingly, Mr Gauke gave a speech, and I believe wrote in the Times, describing the purchase of a house through a company to avoid stamp duty as tax avoidance of the sort he wants stamped out... but having the tax payer pay your tax is presumably fine?

David Gauke's "morally wrong" behaviour doesn't stop there.  Earlier this year he advertised for an intern.  The intern's duties were described as including: "administration, basic correspondence, diary management, fundraising, campaigning and related tasks".  The appointment was for a minimum of six-months and although hours are not mentioned, that list of duties look like something that would require a full time effort.  So, our moral crusader looks as if he is attempting to avoid paying the national minimum wage... and the associated employers PAYE tax and national insurance contributions that go with it.  This from the man who is the Minister responsible for HMRC, which is the organisation that said, "[n]on-payment of the national minimum wage is not an option."

Let's stop playing the ("morally repugnant") man and play the ball for a second.  How does the "honourable" member for South West Hertfordshire choose to define aggressive tax avoidance schemes?  He says that they are schemes contrived to defy the will of Parliament by depriving the government of expected revenues.  In his speech he did say that putting money into an ISA is not tax avoidance, although it obviously is since it's entire purpose is to lawfully avoid paying tax.  This definition is so wide that it could include almost anything - including the activities of David Cameron's late father in Panama, his gifts to our PM and provision in his will for a trust in respect of his remaining property for his other children... all of which seem to have no function other than to avoid tax.

There is a reason why tax avoidance is so rife in the UK and that is because we have one of the most complicated tax systems in the world.  Last year, I had a very simple question for my accountant: "do I have to pay VAT on this income?"  The position was so complicated that my very experienced accountant didn't know, nor did any of her partners nor their team.  They had to call in advice from an outside VAT expert to give a yes or no answer.

Simplifying the tax system would cut out tax avoidance.  Unfortunately, the Government's plans seem to be to make the tax system even more complicated.

As a final thought, I'd like to say that I don't object to the Government closing tax loopholes and collecting tax from the super-rich.  What I object to, is the Government attempting to shame people for behaviour that is entirely lawful and is lawful because the Government have done nothing to outlaw it.  I appeared on a French TV documentary last year attempting to explain that in England and Wales (probably Scotland too, but I know nothing of Scots law) everything is legal unless the law prohibits it.  The Government appear to want to reverse that position where tax is concerned.