The Paradise Papers pose a whole range of questions, many of which I have raised over the last day or so. But underpinning everything is the fact that a combination of tax havens and the lawyers, accountants and bankers who populate all these places make this possible. And actually, even the tax havens could not deliver without the accountants, lawyers and bankers who devise the laws and create the structures that they have to sell. So when it comes down to it, tax abuse is only possible because some so-called professional people sell the services that let it happen.
And I stress, they don't just sell the services, but they design them too. After all, the local politicians in places like the Isle of Man are not tax and trust experts. In a small island those politicians usually have the sorts of skill often found on a local council. There is nothing wrong with that, but international tax law expertise is not commonly represented in such places. So let's not pretend that tax havens and the lawyers, accountants and bankers who populate them are independent of each other, because they're not: those professionals mould these places to suit their needs and capture them for the benefit of their clients, taking no consideration of the needs of local people when doing so.
This troubles me. I am a chartered accountant. And today there is news that accountants EY in the Isle of Man have been selling services that appear questionable. This brings my profession into disrepute, and I am not happy about that.
Nor am I happy when I have to debate with tax advisers who say things like 'It's not my job to have moral judgment on my clients' when professionals have two duties, one of which is to profess and the other is to do so in accordance with an ethical code of conduct.
I am also deeply unhappy to note that in all the comment that is coming out on the Paradise Papers the Institute of Chartered Accountants in England and Wales, of which I am a member, is notably silent. And I am getting very bored by that silence, which is in my opinion intended to imply that there's nothing of concern going on when there quite clearly is.
As a matter of fact the ICAEW charter was granted so that it might act ethically and in the public interest. And as a matter of fact I do not think it is doing either such thing.
If it was acting ethically it would be making clear that artificial tax structures are contrary to its code of ethics. It would not be saying it is for members to decide. It would be saying they are wrong.
And it would say that it is unethical for a member to assist a state to design tax law intended to underline the tax system of another state.
And it would say that it was wrong to artificially relocate transactions for the sake of saving tax to a place where their economic substance does not arise and that members doing so or auditing transactions that do so should be penalised.
More than that though, it should be positively promoting transparency.
It should be demanding country-by-country reporting instead of opposing it.
It should be demanding all accounts (full accounts, not abbreviated ones) should be on public record. How else can accountants fulfil their public duty, after all?
And it should be demanding registers of beneficial ownership on public record that reduce tax and business risk.
They should be shouting out about this.
But they're not. And I want to know why not.
For which reason I challenge Michael Izza, chief executive of the ICAEW, to debate with me on this issue. He's been too quiet for too long and that's a failure on his institute's - my institute's -part that has been inappropriately suffered by the public who indirectly grant its charter and licence to operate.
The question is a simple one. It is
'This house believes that the ICAEW has a duty to promote tax transparency, country-by-country reporting, the filing of full accounts for all limited liability entities on line anywhere in the world that they are produced and that the full, verified, ownership of all limited liability entities be on public record.'
I will be sending this blog to the ICAEW. They are welcome to respond.
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Spot on. But why not go further. Let’s call this activity and particularly the tax-avoidance by the rich, criminal activity. What is and is not criminal is simply a matter of definition. There are many activities which were formerly legal and are now criminal, such as torture. Andy Wightman wrote “The Poor had no Lawyers” which allowed the rich and powerful landowners, who also made the laws, steal the land from the common folk. The poor still don’t have any lawyers, but the rich have their useful idiots in WM who create and maintain the laws that allow them to hide their gains.
And this tax evasion is criminal activity, because, just like child pornography which the perpetrators claim has no victims, evasion has victims. The video you posted from Oxfam was compelling in showing who the victims are. But there are also victims in rich countries like the UK because evasion means governments can’t spend when they know they won’t get it back in taxes because the rich and powerful syphon it off and hide the proceeds in secrecy jurisdictions. The latest from the Trussell Trust makes shocking reading. Tax evasion, supine complicit governments and food banks are not unrelated.
I’m off to Ravenscraig to order some steel for my pitchfork – oh wait!
Well said Richard. I hope that our fellow Chartered Accountants will engage with the ICAEW on this incredibly important matter which threatens to besmirch our professional standing.
The argument for greater Tax transparency is quite simple – if the wealthiest people and corporations are paying less Tax than thye were, the shortfall has to be made up from PAYE, VAT, IHT, Income Tax, Fuel Duties, Road Tax, Tabacco Tax, CGT and NI.
The argument for allowing offshore Tax Havens is that we live in a Globalist system where an Investor cannot find all the investment products they need in the UK.
But there’s another reason why the standard Taxes for most people are going up, other than the wealthiest can hide their wealth abroad and that is that the money system itself has changed over the last forty five years. The expansion of credit money created by Banks is inflating Housing costs and creating a Stock Market bubble. Malinvestment is the result of speculative non-productive activity, as only 8% of Bank Lending goes into the economy.
The argument that people have to invest offshore becasue there aren’t enbough investment opportunities in the UK seems rediculous when so many Foreign Investors are coming to the UK to invest in the City of London Stock Markets and London Housing Market. Why go offshore? To evade Tax.
Why doesn’t the Government put a stop to it – because it”s complicated, costly to employ the right staff to administer (HMRC is starved of funds) and because Political Donations come from people who wish to continue to invest their money abroad – they pay less Tax and the Law Makers benefit from those Tax savings, so there is no incentive for the Political Parties to propose policiies that will restrict the offshore activities of the City of London and the Political Campaign Fund Donors.
Why are the Corporate Headquarters of large american global companies located in Dublin, Ireland? Because Corporation Tax is only 12.5% in Ireland. It’s 34% in the United States and 20% in the UK.
You are calling for full tax transparency, but I don’t see you willing to put your own tax records out for the world to see? If you are, why not publish your full company and personal tax returns here to show that you have nothing to hide?
I also see that your wife, a GP, is a partner in your tax LLPs. I assume this is for tax reasons as LLPs need more than one partner to be set up, whilst a limited company, which you could have also set up at the time, doesn’t?
I have never campaigned for individuals to put their tax returns on public record
I don’t ask companies to do so either
I actually oppose that when campaigners call for it
I do voluntarily publish the full accounts of Tax Research LLP
I have explained why I use an LLP many times, and have nothing to hide