TaxPersonal TaxTax: Worrying irregularities

Tax: Worrying irregularities

We have been told that Mohammed Al Fayed is to sue the Inland Revenue over the withdrawal of an agreement to let him pay only #240,000 a year in tax.

Actually that sounds more like an agreement that in return for an annual fee of £240,000 they would exempt him from tax, as a tax must surely be related to income whereas a flat amount is not.

I am surprised to have seen no comment about the principle of the thing.

I have never heard of the ability to seek such an arrangement.

Nor has my friend Nigel Eastaway and we have something like 70 years tax experience between us. I can find no legislative authority for such agreements. The Revenue manuals are silent. So are the standard textbooks.

Am I the only one to be concerned about the concept of a tax system where the Inland Revenue (I suspect with the approval of Treasury ministers of previous governments) decide that certain people should not be taxed in accordance with the will of parliament, but under a different under-the-counter system in opposition to the legislative framework that applies to the majority of people?

We hear a lot from Gordon Brown and Dawn Primarola about fairness in tax.

How can fairness be dispensed from behind closed doors hidden from parliamentary scrutiny? Doesn’t fairness demand openness? What is the qualification for privileged tax treatment?

The papers suggest that there is a dual qualification; being ultra rich and non-UK domiciled. I would be a little surprised to learn that Al Fayed qualified as a non-UK domiciled.

Be that as it may, if a combination of wealth and foreignness seem to Gordon and Dawn to justify a privileged tax position, why are they seemingly not prepared to explain this to parliament?

Why are they not prepared to seek proper legislative authority to confer such privileges?

And why under a Labour government should wealth be such a significant factor?

Surely there should be a scale of fees so that all non-UK citizens can obtain exemption from the rigours of the UK tax system if it is inappropriate for others.

If it is desirable for the wealthy to be able do this why should it not be equally appropriate for the not so wealthy?

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