Tax avoiders are obeying the law

by Andy White, Carter Backer Winter

More from this author

13 Mar 2012

  • Comments

ONLY A HERMIT could have failed to notice the current furore over "abusive tax avoidance". After all, the media debates are often full of the self-righteous moralising over the activities of certain individuals and corporates who seek to minimise their tax burdens. Indeed one would imagine that tax avoidance is one of the great crimes of our age. Except that it's not a crime.

To further shape the debate, the Government has deliberately blurred the distinction between avoidance and evasion by tacking the word "abusive" onto the former. David Gauke was recently quoted as saying "Aggressive tax avoidance is ‘anti-business' and businesses should pay their full tax". Previous announcements have referred frequently to taxpayers paying the "right amount" of tax.

The plain fact that seems to have been overlooked in the din of the debate is that tax avoidance is perfectly legal and, one might say, mandatory. Is the company director who fails to take all legal steps to minimise the company's tax liabilities really doing his best as a custodian of the company's assets?

The current explosion of comment comes as no surprise. It suits the government very well to promote and foster a view that tax avoiders are "bad" and their activities are damaging to the country.

The economy is in bad shape, as we all know, and the Treasury is in desperate need of funds. More importantly, attacking tax avoiders reinforces the Government's mantra that "we're all in it together" and helps to deflect attention from the cuts.

A recent article in The Independent criticising an avoidance scheme promoted by a firm says, "In this case, both the clients and the firm were asking themselves the wrong question (can we get away with this?) rather than the correct one (is this the right thing to do?)."

The problem here is that, despite the government's efforts to redefine the English language, there is no such thing as the "right amount" of tax. Are they seriously suggesting that taxpayers should look at their income and gains and decide what tax bill it would be appropriate to pay? Therein lies anarchy.

Tax liabilities should be assessed in accordance with laws made by Parliament. If gaps and loopholes appear, then it is quite right and proper that laws should be amended to correct the situation.

To suggest that the taxpayer should somehow be the arbiter of what is "the right amount of tax" is arrant nonsense and a complete abrogation of responsibility.

Andy White is a tax partner at Carter Backer Winter LLP

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication


Charterhouse Accountants

Finance Officer

Charterhouse Accountants, Beaconsfield, Permanent, Full Time, £ Competitive




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.