More tax avoidance political point-scoring
A record £23.9 billion has been “recovered’ by HM Revenue & Customs following the crackdown on tax avoidance schemes within the 2013/14 tax year, it has recently been revealed.
This “landmark figure surpasses” last year’s total by £3.2 billion, and according to the Treasury minister, David Gauke, “HMRC will pursue those seeking to avoid their responsibilities and will collect the taxes that are due.”
In my opinion, the government’s celebratory attitude surrounding this subject is very much misguided. It seems to be being forgotten – to politically point score, no doubt – that tax avoidance is not a crime. Indeed, mitigating tax using wholly legal practices can constitute an important component of a sound financial strategy.
Tax evasion on the other hand is completely illegal and punishable by law. As such, this is the area – as it is a crime – that should be the primary focus for the MPs and the tax authority.
The recent uproar over Gary Barlow’s alleged tax avoidance, to my mind is misdirected. The Take That singer was accused of ‘getting away with’ not paying taxes, but how is it possible to ‘get away’ with something that is legal?
Another example is global coffee giant, Starbucks. The company made the decision to voluntarily pay more tax a couple of years ago following a contemptuous report by the public accounts committee, which accused major multinational firms of employing tax avoidance strategies. At a time when Britain should be more ‘open for business’ than ever, rancorous attacks by MPs and backing individuals or organisations into a moral corner so they ‘volunteer’ to pay more tax – something which they are not obliged to do – could seriously destabilise economic growth, and deter foreign investment.
International online retail giant, Amazon has also recently been accused of tax avoidance, following reports of £11 billion being routed through the firm’s subsidiary company in Luxembourg, and only £ 4 billion paid in corporation tax in the UK last year. Yet, the company pays all applicable taxes in every jurisdiction where it operates.
In my opinion, rather than focus on targeting specific companies or individuals, who have done nothing illegal by mitigating their tax burdens, opposers to these so-called tax avoidance schemes should take their concerns to MPs who are able to do something proactive to change the complex tax laws. Perhaps there is a case for these laws to be overhauled, but unless and until we get to that point then this very public witch hunt against prominent, wealth and job-creating organisations, and high profile individuals should be stopped.
No-one – neither multinationals nor individuals – wants to pay more tax than they are required to do, and legally mitigating tax liabilities is a sensible part of financial planning. However, clearly there are ‘grey areas’ when it comes to the subject of tax avoidance, which is why consulting with a specialist independent financial adviser is imperative.