The comedian Jimmy Carr is finding out to his cost that just because something is legal, it’s not necessarily acceptable. Hopefully Gary Barlow CBE and the others involved in the latest tax avoidance scheme to hit the headlines will get their comeuppance too.
If you’ve had your head buried in the sand or you’ve just been too interested in kids/football/anything of vague interest to know what I’m talking about, the Times decided stray into the world of investigative journalism recently, after being on the receiving end of it over phone tapping for the last what seems like forever. They found, surprise surprise, a lot of rich people pay very little in tax.
Unfortunately there now seems to be a backlash against the backlash. Poor Jimmy, they say, he did nothing illegal and What about the likes of Vodafone, avoiding it’s £6bn tax bill, they also say.
Why should one form of artificial tax avoidance not be investigated because an entirely unrelated case hasn’t been looked into properly? That’s like saying Wayne Rooneys fat. Or something. Even if Vodafones lost tax equates to something like 3,484 “Jimmys”, it doesn’t mean that people abusing the system shouldn’t be held accountable.
Lets make it clear, we have a concept in the UK tax laws that states a UK domiciled person should pay UK tax on their worldwide income (less reliefs for tax already suffered overseas). That is the overriding principle that tax legislation seeks to enforce.
If you think it’s acceptable to:
- resign from your job;
- set up a trust in an offshore tax haven;
- be employed by that offshore trust;
- which in turn gets “your” job with your old employer;
- and then “lends” you money (which you’ll never repay) from the income it receives for you doing exactly the same job you’ve always done on their behalf;
- whilst writing off the “bad loans” it’s made to you (you’ll never repay them remember) against whatever tiny tax bill the trust will be liable for.