The Class conference discussed the importance of the ownership of business, and how that has impact on the service it supplies.
I have discussed, today, what I consider the abuse of shareholders by directors in their own self interests. In the process I mentioned the duty of directors as specified by the Companies Act 2006. For completeness I will share them:
A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to–
(a)the likely consequences of any decision in the long term,
(b)the interests of the company's employees,
(c)the need to foster the company's business relationships with suppliers, customers and others,
(d)the impact of the company's operations on the community and the environment,
(e)the desirability of the company maintaining a reputation for high standards of business conduct, and
(f)the need to act fairly as between members of the company.
The conditions of paras (a) to (f) are important (and should be ranked equally with the membership, in my opinion), but let me look for a moment at the opening paragraph. What I want to emphasise is that this opening statement can be read as if complete in itself if cut off like this:
A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company
The reality is that, in my opinion, all that then follows, including references to the benefit of members, must be seen as qualifications on how this short statement I have just extracted can be clarified to make sure it is effective in practice.
I make the point because what this says is that the corporation is not, of itself, an immoral structure, just as tax is not, as I have already argued in itself capable of such judgement until put into practice. The very clear duty of a director is to run that organisation to the best of their ability. That's it. Nothing more, or less.
So the question to be asked is whether tax avoidance could ever in that case reflect action taken in good faith likely to promote the best interests of the company. I agree with David Quentin that this can actually be reduced to a question that does not even need involve moral language: it simply needs to be asked whether or not the act of avoiding tax is anti-social in that it imposes cost on others or not, and since it does the question is answered that such practice can never in that case be consistent with acting in good faith.
Shall we end the debate there? I doubt there is anything else to add. Whether or not the business is owned by shareholders, the state, or is a co-op the answer is the same: good management always requires the same thing of directors on this and many issues. It is the current cohort of corporate directors that lead the UK's largest companies that have got this matter seriously wrong. And if they cannot get it right the time has come to replace them, by nationalising companies where the public interest is threatened by their lack of good faith that might compromise the public if no other way is eventually possible.
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But on another of your blogs you argued that even if a company is fully compliant with UK tax law, both with the wording and the intent, then if you don’t like the law, you consider that tax avoidance is being undertaken.
You have reduced the argument to setting yourself up as judge and jury as to what tax avoidance with no appeal against condemnation.
I agree there’s no point in a debate if you frame it like that.
I’ve never said I am the judge
But if I was I’d tell the jury in the summing up that you’d made up your evidence
“But if I was I’d tell the jury in the summing up that you’d made up your evidence”
Which bit did I make up? On your blog about “The rights and wrongs on tax avoidance from HM Treasury” the exchange was;
Ed Ryan – “If these things were intended by Parliament, they cannot be tax avoidance”
Your reply “They abuse other states, so yes they can be”
You are making a straw man out of what I said and you know it
Agreed – but this really needs to be put beyond the need for debate by a clarification amendment to the Companies Act.
Agreed
Here is a link to an article, which is slightly off-topic, but an indicator of the symbolic value of tax as a benchmark for a functioning, healthy society:
http://www.aljazeera.com/indepth/features/2014/10/gunning-down-taxmen-somalia-2014102052539346950.html
Geoff
You do Richard an injustice. All mathematical languages are subject to a theorem in higher mathematics known as Gödel’s Incompleteness Theorem. The theorem states that all such languages are either incomplete or if they are complete they contain at least one contradiction. Therefore they will all contain prepositions that are undecidable within that language. Both accounting and taxation are formal languages and as such as such are subject to Gödel’s Theorem. They therefore contain prepositions that can only be decided by reference to a control language. One of Richards’s great contributions to this debate is that he has brought to the table in the field of economics and politics such a control language. He has brought to the table the control language of ethics and morality — a language everybody can understand. The injustice you do Richard is to accuse him of being inconsistent and by implication insincere. It is not Richard that is inconsistent; it is the property of the language. You are not alone in this accusation many contributors to this blog make the same error. You of course may hold a diametrically opposed view to that of Richard on the morality of tax. You may think that the burden of taxation should fall on the poor, not on the rich. It is not a view I would agree with, but you are entitled to your opinion. I would go as far as to say I would be prepared for a fight to the death (incidentally that is your death not mine) for your right to hold it. But don’t hide behind logical inconsistencies. If you do hold such views argue the case in terms of ethics and morality. Show how your world view would promote a better life for all.
Thank you
John Adams
You are, of course, trying for some reason to explain what are clear inconsistencies in two of RM’s blogs beheind a smokscrenn of ‘language’ thesis.
Doesn’t cut it, frankly.
The only person not cutting it is you, playing silly games with comments out of context in a longitudinal narrative of 11,000 posts
Sorry, but you’re wasting my time and other reader’s too with silly neoliberal games that are recognisable a mile off
Richard,
I agree. In particular, I’m not convinced that Co Dirs that enter into the sort of artificial scheme that requires trustees of an artificial trust or Dirs of an artificial Co to act in a way that is plainly detrimental to that trust/Co’s best interests, can ever be acting in a way that is beneficial to their own company. To my mind, entering into those sorts of transactions gives you a horrible future risk that doesn’t end even when HMRC’s involvement seems to be over.
Lets suppose you say you didn’t pay employees wages you just gave them loans &, even suppose, the Courts decide in your favour over HMRC that these were loans not bonuses. You’re still left with a lot of money outstanding in employee loans.
If the Co is taken over, or goes into administration, you have a load of employee loans on the balance sheet. What is to stop the new owner/Administrator seeking to claw-back those loans? That can only end in grief since the employees never thought of them as loans but as bonus payments.