{"id":14154,"date":"2012-02-19T16:38:35","date_gmt":"2012-02-19T16:38:35","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=14154"},"modified":"2012-02-19T16:38:35","modified_gmt":"2012-02-19T16:38:35","slug":"if-were-to-beat-widespread-tax-abuse-then-we-must-have-a-real-general-anti-avoidance-principle","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/02\/19\/if-were-to-beat-widespread-tax-abuse-then-we-must-have-a-real-general-anti-avoidance-principle\/","title":{"rendered":"If we’re to beat widespread tax abuse then we must have a real general anti-avoidance principle"},"content":{"rendered":"

I've just posted a blog on why we need a real\u00a0general anti-avoidance principle in UK tax law. There's a PDF of it here<\/a>.<\/p>\n

This is something I have argued for for some time - longer than most in this country. And I am more convinced than ever that we need one now. The latest\u00a0reports\u00a0on\u00a0thousands\u00a0of people in what are really employments getting round tax law by being\u00a0paid\u00a0through\u00a0companies - when this is obviously a ruse to save them and their employers tax and national insurance - proves how widespread this need is.\u00a0And I very strongly contend that it's\u00a0neither\u00a0anti-competitive, nor \u00a0a source of uncertainty in the UK tax system to say this.<\/p>\n

People in employment should be taxed as if they're in employment under UK tax law, or as\u00a0H M Revenue & Customs say<\/a>:<\/p>\n

If these requirements are not met it creates unfair competition between those businesses that meet their responsibilities and those that do not. It also creates unfairness where, for instance, two workers engaged on the same project and performing the same tasks for separate businesses are not paying the same tax and NICs due to the incorrect classification of one of them.<\/p><\/blockquote>\n

So it's fundamental to tax justice that this happen. And yet\u00a0despite\u00a0there being law to try to enforce<\/a> this as is very obvious this\u00a0type\u00a0of\u00a0abuse goes on.\u00a0A\u00a0general anti-avoidance principle of the type I propose<\/a>\u00a0would\u00a0stop\u00a0this\u00a0because\u00a0if there was, under the \u00a0arrangement I suggest:<\/p>\n

1) a series of transactions; which are<\/p>\n

2) pre-ordained; and<\/p>\n

3) into which there are inserted steps that have no commercial purpose apart from tax avoidance,<\/p>\n

then the\u00a0artificial\u00a0step(s) would be ignored. In the case of these false consultancy arrangements\u00a0that\u00a0artificial\u00a0step is inserting a company into what was really an employment relationship. The risk in such a case would also, appropriately, be on the employer who had not applied PAYE who would then have to make good the shortfall to HMRC, maybe taking into account what the\u00a0recipient\u00a0company of the employee had paid, if any.<\/p>\n

But let's be clear, this general anti-avoidance principle\u00a0does not stop in this case:<\/p>\n

1) people genuinely self employed running a business through a company;<\/p>\n

2) people\u00a0genuinely\u00a0self employed running companies paying themselves by dividend, which remains a wholly legal activity albeit one that has\u00a0attracted\u00a0government\u00a0attention\u00a0in the past.<\/p>\n

For both of these issues, and the\u00a0sensitive\u00a0issue of paying\u00a0spouses\u00a0who (in my\u00a0experience) frequently do contribute to the management of self employed businesses primarily run by their partners I have offered a much\u00a0broader\u00a0solution, which would bring small business tax into the twenty first century, here.<\/a><\/p>\n

But I stress, those issues are\u00a0largely\u00a0unrelated to the abuse of companies to avoid PAYE obligations (although curiously many on the\u00a0political\u00a0right seem quite\u00a0unable\u00a0to differentiate them). That is why different solutions are needed for each of them.<\/p>\n

But of the two it is apparent that the abuse of\u00a0employment\u00a0law is the more\u00a0important\u00a0now and if ever there was a\u00a0reason\u00a0why the UK needs a\u00a0general anti-avoidance principle and not the extraordinarily limited general anti-avoidance rule\u00a0Graham\u00a0Aaranson has\u00a0recommended, then this is it.<\/p>\n","protected":false},"excerpt":{"rendered":"

I’ve just posted a blog on why we need a real\u00a0general anti-avoidance principle in UK tax law. There’s a PDF of it here. This is
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[134,10],"tags":[],"class_list":["post-14154","post","type-post","status-publish","format-standard","hentry","category-gantip","category-tax-avoidance"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/14154","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=14154"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/14154\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=14154"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=14154"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=14154"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}