I have written about tax barrister Jolyon Maugham and his emergence as one of the new thinkers on tax reform in this country before. Today I have a simple recommendation to make with regard to a blog he has written about one of the core problems in tackling tax avoidance in the UK. Please read it.
In the blog Jolyon turns on some in his own profession, who he euphemistically calls 'the boys'. These are the six or so, all male, tax barristers in the UK who sign the opinions that suggest that the abusive tax avoidance schemes peddled by a relatively small number of purveyors mught actually work. It is these 'opinions' that are used to validate these schemes to the unwary punters, many of whom are now discovering that the opinions are not worth the paper they are written on but that they have no claim against 'the boys' for redress.
Jolyon is right: there really are a handful of so of barristers engaged in this disreputable trade, most of whom are well known for doing so. Their rewards are high. The damage they cause is significant, to the tax system, to the reputation of the tax profession and to their victims, which is the role in which Jolyon paints those with very limited knowledge of tax who have been sold these schemes believing them to be entirely legal because of the existence of such opinions. He suggests Katy Melua and Gary Barlow are amongst such victims.
I think Jolyon may be generous on that point but not wholly without reason. What I am quite sure about is that, as Jolyon says, action needs to be taken against these 'boys', as he calls them.
Jolyon has written a courageous blog. Please read it. This is an issue whose time has come.
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Thanks, Richard, as always for your thoughtful engagement.
One point of clarification. I said of Katie Melua and Gary Barlow only that they felt aggrieved. I also said that some had the right to feel aggrieved. Whether Mr Barlow and Ms Melua have the right to feel aggrieved I know not.
One of the points I made in my blog was that people sometimes have no way of knowing whether they are accessing a relief in a manner intended by the draftsman, or in a manner explicitly or tacitly encouraged by the Revenue, or in a manner entirely contrary to both. This is true, sometimes, even of highly sophisticated finance professionals. And it is bound to be true of those, such as footballers and musicians and comedians, who are unlikely to have the same level of financial sophistication.
You, I know, are of the view that people should just leave all tax risk alone. We’re not quite on all fours there – I see tax risk wherever I look and I fear that to argue one should avoid all tax risk runs the risk of dulling the effect of fiscal incentives. But we can surely can agree that it’s undesirable that taxpayers face great uncertainty as to whether their actions constitute ‘good’ or ‘bad’ planning. And (and this was my point in my blog) that getting that judgment wrong is not the only variable in determining their level of moral culpability.
Jolyon
Jolyon
Thanks.
I have some sympathy with your arguments.
Are you familiar with David Quentin’s arguments on tax risk? He has written an excellent paper but has not so far published it, which is currently a loss to this debate as he explores what look like differences between us and reconciles the views very well, I think
Richard
So how does one sue a barrister I wonder ? I guess the legal profession would gather round and prevent such a thing.
Hi Trog –
It happens all the time.
But the particular problem here is that the “Boys “give their advice to one person (the “House”) which then sells the tax product to individuals (and companies). If the tax product doesn’t work, the House has already collected its fees so those who lose out are the individuals and companies. But because they weren’t the person to whom the barrister gave advice it’s difficult for them to sue him.
Here I think there may sometimes be a difference between big tax payers – especially MNC’s – and smaller players. So possibly taxpayer could sue, but I have never heard of it happening — no doubt I suspect because the advice is caveated enough to prevent that.
My own experience of tax schemes for a big MNC, is that you go direct to the barrister – So the ‘Boy’ is giving advice directly to the taxpayer – i.e. the MNC. Although never said, I am sure there is an expectation that if the scheme were challenged then the ‘Boy’ would be the defence barrister – hence more fees … and of course notoriety and a day in court.
My personal experience is that the barrister originally ‘signing off’ on the ‘idea’ is typically the one that acts as defence counsel when things go that way.
actually covers that in his blog; first £2.5m is covered by solicitor’s insurance, with premiums rising equally for ALL contributors in event of lost case! and by the sounds of things they don’t strike their own off the bar even after serious wrongdoing (unlike say, medical profession). so the only real incentive to be honest when giving advice is, by the looks of things, to preserve a credible reputation!
looks like a great read, thanks for sharing Richard.
I haven’t seen it, although I’ve read some of the ideas from it on your Blog. I shall look forward to doing so.
Did you note this, Richard http://www.ft.com/cms/s/0/251ddb24-1d5b-11e4-b927-00144feabdc0.html?siteedition=uk#axzz39otKviDP. I was very much aware of the climate change report but not about the others. Note the recommendation for LVT, but also not averse to the VAT extension – thinking of a consumption tax – use of non-renewable resources. Interesting.
I did blog that article Carol in last few days
But thanks
I’m behind with blog-reading as I’ve been away.
My fault!
Surprised you are somewhat late on this one.This knowledge has been around for some time.If you look back I have mentioned several times re the activities of some in the legal profession. Better late than never I suppose.
I agree – it’s been known for ages
But Jolyon’s article was decidedly new