The tumbrils were out for tax dodgers in the media last week. But were all
the victims of the terror the enemies of the people as claimed?
The Revenue suspect people of stashing cash in Lichtenstein and not reporting
the income. They were offered the chance to buy leaked information on the
identity of those involved. Were they justified in fighting suspected
criminality by paying, if the price was right? Is Robespierre a Jacobin?
Tesco, like many businesses – and public bodies – apparently raises finance
by sales and leasebacks of property. The howls of outrage from press and
politicians would drown even the piped music in the stores. Why? Offshore
companies owning UK property do not pay capital gains tax when they sell. A
No. In fact, it is a basic, well-known and long-standing feature of our tax
system. You may recall the same cries of ‘aux guillotines’ when the Revenue
outsourced their estate management to a bidder benefiting from the same rule –
the press and politicians played Madame Defarge, but the Revenue itself were in
the role of Sydney Carton.
Tesco is right now and the Revenue were right then to do their best for their
stakeholders (us in the Revenue’s case) and sell to the highest bidder, and not
second-guess government on its tax policies.
The UK could tax foreign companies’ gains from UK property. All its
international Double Tax Treaties would allow it to. It has chosen not to. Do
the politicians raising the hue and cry want to change that?
There are economic reasons for exemption, but these have not been stated or
publicly reviewed for some time. Perhaps they should be. Any change should be
thoroughly consulted on, in advance, and should not be retroactive – or there
will be chaos in the property markets.
We need open debate on causes, not hysteria on symptoms. Its time for the
political hotheads to put up, or shut up.
John Cullinane is Chairman of The Chartered Institute of Taxation’s C
orporate Tax Subcommittee and a Tax Partner at Deloitte.
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