I've mentioned that Dennis Howlett is an accountant who has "got" UK Uncut.
Stuart Jones is another one who does so. As he has said on this blog today:
I went to see a “Topshop protest”.
I pay tax but as a Chartered Accountant I obviously save my clients paying too much tax. Everything I do is legal as is the case with the big name tax advisors. The difference is that I draw a line and advise my clients not to step beyond it for numerous reasons.
But I am sick and tired of seeing wealthy individuals and companies avoiding huge amounts of tax through artificial schemes which are ONLY available to them (because of their wealth).
Sitting on the fence has NEVER been an option for me.
Scrapping the tax avoidance “industry” would not affect any of my clients other than they may pay less tax because others are paying the right amount.
Keep up the good work Richard and UKuncut and if I (a 57 year old, politically right of centre, Chartered Accountant) am banned from a shopping centre for taking a photo of a Topshop then the protests must be worrying someone.
Stuart makes a really good point. Tax compliance is something wise accountants do - and yes, they still do help their clients plan their tax because there are legitimate choices to be made in the tax system and I'm not going to deny those to people. But that is fundamentally different from the artificial structures seen in tax avoidance. A wise accountant like Stuart can see the difference because it is plain to see to those in the know - and to those with eyes to see from beyond the profession.
The question is not one of legitimacy when it comes to this issue - we all know tax avoidance is as legitimate as apartheid was in South Africa once upon a time - it is one of ethics, inequality and the appropriateness of creating structures that do not reflect the economic reality of a transaction, which is why offshore is so often the focus of the debate since offshore is almost always tax avoidance activity and not tax compliant.
How is it Stuart can see that but the CBI can't? And what's wrong with a level playing field for big and small business in this regard - where all, of course, abide with the idea of tax compliance.
It would be great to hear the Big 4 or the CBI or the Institute of Chartered Accountants in England and Wales answering such questions. Because in the case of the CBI and the ICAEW they claim to represent the smaller businesses who are losing out as badly as ordinary people from this abuse. And how can they justify that?
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I’ll never get bored of saying simplification is important. In this case, you have an accountant noting that he helps clients to ensure that they pay the right amount of tax and not more.
Additionally, he is drawing an arbitrary line and advising clients not to cross it.
Firstly, a system which needs advisors to help clients understand it could use some simplification.
Secondly, a system which relies upon arbitrary ethics is clearly hopelessly unsuited for purpose. Ethics shouldn’t come into it: either something is legal and as intended by the Treasury, or it is not.
@Richard Murphy … “Because in the case of the CBI and the ICAEW they claim to represent the smaller businesses who are losing out as badly as ordinary people from this abuse.”
Both the CBI and the ICAEW have a vested interest in unfair tax avoidance and while the ICAEW remains a poodle to the Big 4 there will be never be a “level playing field for big and small business.”
The UK would move closer to your objectives if both were disbanded and replaced with equitable, impartial bodies… and the three offshore tax shelter islands were forced to harmonise ALL their tax laws with those of the UK.
Then you could really get to work!
If a scheme is artificial it can be attacked under Furniss v Dawson or Ramsay principles. So no problem for HMRC.
@Chris
Oh dear. How wrong can you be?
The law is never and can never be a clear guide as to what to do or whether to do something
And too often what is objected to is about the gaps between law – internationally
There is always choice to be exercised
To deny the role of ethics is to deny the very nature of human behaviour itself
And all moral responsibility
What a barren, empty, desolate philosophy
And what an inappropriate basis for taxing, let alone conducting corporate activity
“we all know tax avoidance is as legitimate as apartheid was in South Africa once upon a time”
you are a sick man Richard
@Premier Shareholder Group
Hmmm. The ICAEW is a private members club. I believe we still have freedom of association in this country.
Of course I would imagine it is a club Richard is also a member of.
Chris
Unfortunately it is not written anywhere that any one of us is exempted from making moral choices – even atheists are not exempt! The fact that we have to make choices is part of being human. You need to learn to trust yourself more.
@alastair
With the very greatest of respect – and having acknowledged that I did not state this as well as I might – I disagree
Tax avoidance is not the same as tax compliance. Tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.
Those who tax avoid seek to get around and abuse the law claiming the action is legal if unethical
Apartheid was legal but unethical
That was my point
To say it is sick is just wrong
@Richard Murphy
OK – I guess we can differ on what is a reasonable analogy. I just think that in propogating that line you do yourself no favours.
James, the problem is we all have different ideas of what is “moral”. And with the UK population generally feeling that tax is a dirty word, surely it would be better to rely on the law to close the tax gap?
@Greg
Of course law plays a part
Like a general anti-avoidance provision
And a change to the domicile rule
And tax residence laws
And country-by-country reporting
But so too does more tax staff
This is an issue with more than one solution
@ alastair January 4th, 2011 at 14:49
ICAEW is a “Private Members Club” with membership restricted to trainee and qualified accountants; with more than 134,000 members in over 160 countries.
The term “club” is not a legal term per se, but a group that organizes itself as a club must comply with any laws governing its organization and otherwise be cognizant of the legal ramifications in undertaking to organize itself in this manner.
The ICAEW claims to:- “provide its members with knowledge and guidance based on the highest ethical and technical standards.” The ICAEW also claims to:- “shape opinion, understanding and delivery to ensure the highest standards in business and in the public interest.”
All new ICAEW members are required to attend a graduation ceremony at Chartered Accountants’ Hall in London. The ICAEW does not openly publish a “Register of Members” but Mr. Murphy may well be an inducted member — or (subject to regulations and accompanied by a member) attend functions as a guest in good standing.
Who cares?
“I wouldn’t join any club that would have me as a member –
Their standards are too low.”
@Premier Shareholder Group
I am a member of the Institute of Chartered Accountants in England and Wales – and have been since 1982
I certainly am unaware of any need to graduate. I did not! I think a got a letter through the post with a bill attached!
And I don’t think the ICAEW is implicitly a bad thing – but like many over many years I wish it did its job better and was less dominated by the Big 4
@Richard Murphy
What does the domicile rule have to do with tax avoidance? I understand that some could see it as a little shifty, but it is not tax avoidance.
@Richard Murphy – “And I don’t think the ICAEW is implicitly a bad thing”
Whatever.
This does not alter the PSG’s extremely low opinion of the ICAEW and the Big4
@Million Dollar Babe
Dear M.D.B.
I did reply to your comment but it has not appeared. My comment was not offensive and certainly I am not aware of it being right wing, I was simply exploring the way in which the domicile rule might be considered an instance of tax avoidance.
However it is Richard’s blog and he makes the decisions.
So sorry not to have been able to address the point you make.
Kind regards
Gregory
@Gregory
If your reply did not appear it was because it failed moderation
Promotion of neoliberalism is good enough reason to fail
@Richard Murphy
Can you please explain how/why the domicile rule is connected to tax avoidance? Those who use the remittance basis are clearly NOT going around around the law, and are fully complying with your definition of tax compliance.
There are many reasons why the domicile rule is wrong (and an equal number why it is perfectly right), but tax avoidance issues are not among them.
I think most would struggle to define what neo-liberalism means.
@Richard Murphy
Hi Richard
I did not intend to be promoting neoliberalism. If you read my reply to M.D.B. you will have noted that I was offering an explanation of the domicile rule and then offering reasons why the domicile rule might be considered tax avoidance, nothing more. I was not seeking to justify the domicile rule, far from it. For me whether there is a domicile rule or not is part of Parliament determining where the tax base falls.
Regards
Gregory
@Million Dollar Babe
The domicile rule makes the UK a tax haven
I consider that non-tax compliant
Many others agree
Planning that is not tax compliant falls into the category avoidance
Ethics and morality are paramount or put another way: right intention, right action and right speech. Im an FCA and CTA and I find the tax avoidance and evasion culture hard to jusify because it takes resources away from where they are needed. Am I on my own having a problem with greed ?
@Richard Murphy
I disagree with your statement that the domicile rule does not make the UK a tax heaven. Non-domicled resident are fully taxable on their domestic income and on any income that is remitted from abroad. It is very fundamentally different from, say, Monaco.
More importantly, how can someone be avoiding tax when he/she is obeying both the letter AND the spirit of the law. The domicle laws clearly intend for non-dom foreigners to avail themselves of the remittance basis. If they failed to use it, they would actually, maybe perversely, be acting against the clear desire of Parliament.
@Million Dollar Babe
I respect your right to disagree
But think you are wrong
This is tax avoidance that requires action to stop it
Which is wh it is on the Coalition agenda
@Million Dollar Babe
I look forward t a debate on the domicile rule. Looking at it dispassionately, there are just as many points in its favor as against it.
As with many other reforms, I don’t think this one is moving fast towards the top of the Coalition’s liost of priorities. Let’s see.
@Million Dollar Babe
The debate’s done
the question is when not if
@Richard Murphy
I know you propose the US system of tax residence for individuals BUT what is your proposal for corporations and other non-individual entities?
@JayPee
Broadly speaking, formulary apportionment across groups of controlled entities so that profits are allocated on the basis of where the economic substance of the activity lies