I was interested to read the reports of the reaction of the US to the widespread views which have been expressed on the subject of international tax avoidance. Are you going to do something about Delaware? Er, I don’t think so – surely these suggestions do not apply to us!
It is obviously right to be concerned about people dishonestly concealing taxable income in secret places and that clearly needs to be addressed. It is probably (perhaps invariably) a crime, but in any event it is a tax offence and such people need to be pursued for the tax and the appropriate penalties.
However, it is one thing to make sure that HMRC are notified of assets held in other jurisdictions which may be taxable here. It is quite another for this information to be made public so that the individuals can be pursued by the tabloids. The fight against tax evasion can be won by HMRC being provided with the relevant information. It is not assisted by prurient intrusion.
It is the avoidance debate that has gone completely off the rails. George Osborne says that it is important to make the UK competitive to encourage foreign businesses to set up here. So we have a low rate of corporation tax, special tax reliefs for research and development expenditure, an even lower rate of tax on intellectual property and so on. This is called 'a good thing'. However, if Ireland, or Luxembourg or Jersey (or actually, anybody else) have a low rate of corporation tax or introduce reliefs to encourage businesses to set up there, they are conspirators in tax evasion and there is no limit to the opprobrium which should be heaped upon them.
I am afraid that the politicians are mainly to blame for this by deliberately speaking about tax avoidance and tax evasion as if they are the same thing. It is very important indeed to understand the difference between those who comply with the law and those who break it. By confusing the two you may get a good sound bite (or think you do), but you also get chaos and we are now reaping that particular whirlwind.
It is also rather insulting to HMRC who are actually rather good at collecting the tax according to the law. If the newspapers and the politicians were to be believed, they alone are aware of a new and very clever idea called transfer pricing which is an easy way to move profits from one jurisdiction to another - completely overlooking the fact that HMRC have been dealing with such arrangements for decades and have real expertise on the subject.
A great deal of good can come out of the present initiative for international co-operation on disclosure and tax compliance and this will benefit everybody. However, if we persist in regarding our tax incentives as good and those introduced by other countries as bad, we will get absolutely nowhere – and worse, it will undermine the international co-operation which we need to support.
I was interested to read the reports of the reaction of the US to the widespread views which have been expressed on the subject of international tax avoidance. Are you going to do something about Delaware? Er, I don’t think so – surely these suggestions do not apply to us!
It is obviously right to be concerned about people dishonestly concealing taxable income in secret places and that clearly needs to be addressed. It is probably (perhaps invariably) a crime, but in any event it is a tax offence and such people need to be pursued for the tax and the appropriate penalties.
However, it is one thing to make sure that HMRC are notified of assets held in other jurisdictions which may be taxable here. It is quite another for this information to be made public so that the individuals can be pursued by the tabloids. The fight against tax evasion can be won by HMRC being provided with the relevant information. It is not assisted by prurient intrusion.
It is the avoidance debate that has gone completely off the rails. George Osborne says that it is important to make the UK competitive to encourage foreign businesses to set up here. So we have a low rate of corporation tax, special tax reliefs for research and development expenditure, an even lower rate of tax on intellectual property and so on. This is called 'a good thing'. However, if Ireland, or Luxembourg or Jersey (or actually, anybody else) have a low rate of corporation tax or introduce reliefs to encourage businesses to set up there, they are conspirators in tax evasion and there is no limit to the opprobrium which should be heaped upon them.
I am afraid that the politicians are mainly to blame for this by deliberately speaking about tax avoidance and tax evasion as if they are the same thing. It is very important indeed to understand the difference between those who comply with the law and those who break it. By confusing the two you may get a good sound bite (or think you do), but you also get chaos and we are now reaping that particular whirlwind.
It is also rather insulting to HMRC who are actually rather good at collecting the tax according to the law. If the newspapers and the politicians were to be believed, they alone are aware of a new and very clever idea called transfer pricing which is an easy way to move profits from one jurisdiction to another - completely overlooking the fact that HMRC have been dealing with such arrangements for decades and have real expertise on the subject.
A great deal of good can come out of the present initiative for international co-operation on disclosure and tax compliance and this will benefit everybody. However, if we persist in regarding our tax incentives as good and those introduced by other countries as bad, we will get absolutely nowhere – and worse, it will undermine the international co-operation which we need to support.
