On the money with Gavin Hinks

The warning has been issued, the shot across the bows fired. If you were
thinking of trying to duck the 50% rate of income tax by restructuring so that
you pay capital gains tax of 18% – think again. The taxman is looking out for
you. In fact we reported the permanent secretary for tax, Dave Hartnett, saying
as much last week.

But so are our readers. When we published a piece online about the
possibility of BBC presenters restructuring to take advantage of the much lower
rate of CGT, it quickly became one of the most commented articles we’ve ever
run.

Most of that revolved around the ethics of BBC stars avoiding their tax
liabilities. One reader simple remarked: “An insult to licence payers.” Others
focused on how unfair it was that the well-paid appear to have “the resources to
pay their advisers to find these” ways of ducking the tax.

Others blamed Auntie for apparently allowing this position to develop. “The
BBC should be ashamed of itself, and the government need to close this loophole
very quickly to avoid such celebrities exploiting the system.”

In fact, it now looks like HMRC has heeded such calls and is indeed making it
clear that it will act on such concerns.

What sticks out is that the BBC should have known better than to help its
stars exploit CGT. The allegations are that the BBC provided the advice. The
test, of course, is whether Auntie is the presenters’ main employer. If so, then
they should be treated as salaried employees and cough up their income tax – not
CGT.

Interesting though that it takes TV presenters to highlight what must be a
glaring problem – the disparity between the two rates.

CGT is so much lower that it must invite attention from those who want to cut
their tax liabilities and it will attract even more attention now we’re looking
at a 50% rate in income tax.

If the taxman is concerned about the artificial recourse to CGT then it
really does seem to place the BBC and its presenters in their sights.

Celebrity can make all the difference to a tax story. It gives it legs, makes
better headlines and really, really annoys those who don’t earn enough to pay
50% but feel they’re paying more than their fair share in any case. When the
celebs are then revealed to be using a nifty bit of tax planning to lower their
effective rate well, the annoyance measure rockets up the scale. If the celebs
concerned are earning their keep from the licence payer then annoyance just
isn’t the right word.

And that makes tax officials and politicians all the more sensitive to the
issue.

Though it has to be borne in mind that the BBC is everybody’s favourite
whipping boy at the moment. The lesson, of course, if you really want to change
a tax rule: make sure it’s being used by a celebrity the tabloids can write
about.

Satisfaction is then guaranteed.

Gavin Hinks is editor of Accountancy Age

Further reading

Hartnett
vows to ‘bear down’ on 50% top rate tax cheats

BBC
stars go freelance to avoid 50% tax rate