Channel 4 was last night embroiled in an explosive row with the Government over an investigation into the financial affairs of Cabinet Ministers.
The documentary makes allegations about millionaire Ministers including Chancellor George Osborne, Transport Secretary Philip Hammond and International Development Secretary Andrew Mitchell.
Last night, all three men strongly denied any implication that they had acted improperly by deploying tax-avoiding measures, with Mr Hammond warning that his ‘lawyers will be watching’ the programme tomorrow.
And the Foreign Office entered the row after learning that the report would claim that it had granted special financial treatment to the Cayman Islands — an infamous tax haven — thus indirectly benefiting companies run by Tory Party donors.
The programme is on Channel 4 at 8pm on Monday 18 October.
The producer tells me I appear six times. John Christensen also appears several times. But in case Mr Hammond’s lawyer’s are reading — the Mail story was the first occasion that I knew that he was in the programme.
So I look forward to learning more.
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Is Tax Research UK a website about tax and economics, or is it about one man’s political views?
Hi Richard,
I hope you don’t mind me using your comments feature for this purpose, but emails to richard.murphy@taxresearch.org.uk are bouncing back. Feel free not to publish this comment.
Anyway, I’ve just written an article for LabourList regarding the coalition’s ‘crackdown’ on tax evasion. As I’ve referenced some of your research, I thought I should give you a heads up. Any thoughts or feedback would be most appreciated.
The article is at http://www.labourlist.org/coalition-weakness-on-the-tax-gap-creates-an-opening-for-labour
Best wishes,
Dan Hogan
hoganist.wordpress.com
@Dan Hogan
Good work!
And agreed, of course
Inbox problem solved too – thanks for alerting me
@william
One man’s political views, of course!
I would argue in this case Richard has a point. Although at the same time, you have to question that if you are in business and not avoiding tax, you are not doing your duty to shareholders – i.e. maximising profits (ergo minimising tax exposures).
Laffer losses surely hold more gusto than £40bn?
@william
This is a website about tax and economics. But there is no way on earth that you can write about tax and economics unless you acknowledge that every single comment on the subject is always political.
To suggest otherwise is to simply promote an untruth
I do not do that
@James
Your argument might make sense if business actually maximised profit on behalf of shareholders.
It might also make sense if there was some benefit from business minimising tax on behalf of shareholders who, in practice, benefit from the payment of the tax that they pay.
The truth is that business is not maximise profit. And the truth is that shareholders are prejudiced by tax minimisation.
In that case your argument cannot be used.
As for Laffer – that is living in Lala land
What exactly do you mean by shareholders are prejudiced by tax minimisation?
@JayPee
Next time you need to go to accident and emergency and discover that it has been closed because of the cuts I think you will know exactly what I mean
There is not, and never will be, a private alternative to A&E
I witnessed a major road accident yesterday. Shortly after the event there were five fire engines, numerous police cars, ambulances and a rescue helicopter on the site. But in two or three years time? Who knows? Will the victims have been left on the roadside to die? the possibility exists. If this is the big society it is a very long way from the parable of the Good Samaritan
Yet again we have the terns evasion, avoidance and minimisation freely interchanged and totally misused for populist advantage.
As for the chap writing for LabourList: well he doesn’t have a clue equating tax planning with evasion. Sadly Danny Alexander doesn’t know the difference either.
I fail to see amy relevence between tax minimisation and the likelihood of their being no A&E services, if A& E were to disappear and people are regularly left to die on the raodside (which is so unlikely that it is ridiculous to even suggest it) it cannot ever be ascribed to the deeds of people who legally minimise the extent of the their tax bills.
Helverings case summed it up nicely – their is no patriotic duty to pay more than you are legally obliged to pay.
@Justin
I refer you to http://www.taxresearch.org.uk/Documents/TaxLanguage.pdf
And when tax avoidance and tax evasion plus late paid tax amount to more than £120 billion a year I suggest that you are being wilfully blind to the consequences of the abuse that accountants promote – even if restricted solely to the avoidance activity that they so love
@Justin
Thanks for correcting me re: tax planning. While I mistakenly used the term as shorthand for the promoters of tax avoidance schemes, I didn’t equate it with outright evasion. I have now corrected the version on my own blog, and emailed the editor of LabourList with the same changes.
My argument still stands: Osborne sees avoidance and evasion as seperate, when in fact they are intricately related, and his plans to deal with the problem – however it is framed – are flawed on a number of levels.
@Dan Hogan
you are right – the relationship between tax avoidance and tax evasion is close but both are some distance apart from tax compliance because the latter encompasses an entirely different mindset
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.
@Justin
There is no such thing as tax minimization
a) It’s not possible
b) It’s not desirable
c) It’s anti-social
d) Balanced human beings practice tax compliance
e) If they do they’re likely to focus on making money – and accountants would be wise to learn how to help them do so – but they have no clue how to undertake that much more important activity
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.
Your denial of tax minimisation (or tax mitigation) does, I believe, flaw your overall thesis.
Firstly: the concept has been recognised by the Privy Council and the House of Lords (Challenge Corp and Willoughby). Most leading tax academics also subscribe to the concept.
Secondly: it is possible. Taking tax as a consideration in determining whether or not to proceed with a transaction (or a particular form of transaction) comes clearly within what is tax mitigation.
Thirdly: Whether or not tax mitigation is desirable is subjective and driven by personal opinion.
Fourthly: Yet another subjective enquiry.
Lasstly: Tax is a cost and any sane person would be seeking to mimimise cost within legal boundaries.
To all intents and purpose, what you refer to as tax planning is pretty much what I call tax minimisation. So for arguments sake I will equate the two and call it TAX PLANNING.
The flaw in your definition of tax planning, if I undersatnd you correctly,is that tax planning is when you are within what parliament intended. This results in a complicated legal examination of what was the intention of the legislature when it enacted legislation often many years back. Consequently your definition of tax planning is far too narrow. Taking out an ISA is not tax planning as this is a very specific tax exemption created by parliament.
Therefore it is trite to say that investing in an ISA is tax planning – tax planning goes beyond that. Nor is it advisable to create the constraints of tax planning by referring to the legislature’s intention.
The issue that needs to be addressed is the when a taxpayer crosses the rubicon from tax planning/mitigation to tax avoidance and seeking guidance from Parliament’s intention is unsatisfactory.
@Justin
Let’s summarise what you say
Tax planning = seeking to abuse the law
And that’s why all you say is ethically unacceptable and why the position you promote will continue, rightly, to be opposed by all reasonable people
Now why am I not surprised by this rather illogical and wholly unsubstantiated response.
I would be interested to know where, if at all, I am advocating abuse of the tax law.
The courts support my view – Murphy decrees this is wrong.
Many legal academics support my view – Murphy decrees we are all wrong.
Governments and revenue departmemts support my view – again Murphy decrees we are all wrong.
What you forget is that taxpayers. like all citizens, are entitled to know their legal position. They are entitled to know what is to be regarded as tax fraud, tax avoidance and acceptable mitigation. The law has to be clear, precise and certain so that the taxpayer knows what is abusive avoidance and what what will be regarded as acceptable mitigation.
It is with regard to the above that your definition of tax planning falls horribly short. That to me that is ethically and constitutionally unacceptable.