Vince Cable spoke at a fringe meeting in Bournemouth, organised by the local ICAEW.
At the meeting he said that tax avoidance is "deeply corrosive of the ethical basis of taxation".
Piffle!
We all practice tax avoidance, via using personal allowances.
Avoidance is legal and ethical.
Evasion is illegal and unethical.
I hope the ICAEW pointed that out to him?
What is the difference between illegal and unlawful ?
ReplyDeleteOne is a sick bird and the other's against the law?
ReplyDeleteI'll get me coat...
Nonsense. For most of us, the use of personal allowance has absolutely nothing to do with avoidance. The generally accepted judicial definition of tax avoidance is (I paraphrase) the use of complex or novel arrangements in order to benefit from tax advantages without suffering the economic disadvantages that were intended to be incurred by someone benefiting from those advantages. A taxpayer making use of their personal allowance through the ordinary course of things patently does not meet this definition as clearly the whole purpose of the allowance is for someone in that position to benefit from it!
ReplyDeleteTo suggest that all avoidance is ethical is frankly outrageous. For example, do you consider it ethical for a foreign multinational to route a transaction through the UK purely to obtain a tax advantage at the expense of the UK taxpayer without bringing economic benefits to the country (employment, etc) is ethical?
ISA's are used to avoid tax, are they unethical?
ReplyDeleteNope. Using an ISA isn't avoidance either. I refer you back to the definition above. The purpose of ISAs is to give people a tax advantage in exchange for incurring certain economic consequences (namely saving/investing your money rather than spending it now), thereby incentivising saving for the future. By using an ISA (funnily enough I opened one last night!) I'm definately not doing anything counter to the spirit and purpose of the legislation.
ReplyDeleteFYI, the judicial quote I paraphrased is as follows:
ReplyDelete"the hallmark of avoidance is that the taxpayer reduced his liability to tax without incurring the economic consequences that Parliament intended to be suffered by any taxpayer qualifying for such a reduction in his tax liability."
- Lord Nolan in CIR v Willoughby (1997)
Now that definately isn't using an ISA or a personal allowance.
Other people may have different definitions (perhaps the Americans, for example?), but the crucial thing is that, when HMRC talk about tackling avoidance, this is the definition they're talking about. By trying to confuse things like ISAs and personal allowances with avoidance, you're legitimising a lot of very aggressive avoidance schemes that cost the taxpayer millions!
...and another thing!
ReplyDeleteUnder the disclosure rules in FA04, advisers have to disclose to HMRC avoidance wheeze they sell to clients. There's a form and a reference number gets issued for each scheme. You're a CA, Ken. When was the last time you (or one of your colleagues, as I don't know if you do advisory work) were issued an avoidance scheme reference number after advising a client to use an ISA or submitted a return on their behalf where the personal allowance was claimed?