Tax avoidance and evasion is on the
’s political menu this week as Prime Minister David Cameron and his acolytes find “aggressive tax-avoidance” unsporting and unfair. Dutifully, BBC radio and TV news and the other channels reveal that a famous, high earning comedian purports to be employed by a tax-haven Jersey company which bills his clients then lends him money in UK (thus loans not income) tax-free, saving “many millions”. The comedian is one among many. “They” are all doing it – like the Greeks, Italians, Spanish, Russians and Americans. London
Strangely ALL the
newscasters immediately assure their audiences “…Of course, it is strictly legal.” I was for many years a tax-accountant and can assure you that such plans are “of course, strictly illegal” and have been since 1910. These funny-money, fast foot shuffles, diverting contracts and pretending offshore companies exist are shams which have long been outlawed under false accounting laws. UK
The basic rules in all tax regions are (1) The transactions must be “real”, at “arms-length” (not circular from you-to-you), and at normal commercial prices. (2) They must be “necessary” for the business – or lose the tax-relief. (3) The offshore company must be real – not a brass plate sham – and be managed by offshore residents (not by you back in
). (4) The “loans” must be real, at commercial rates – otherwise are treated as income for tax. The judge of these conditions is “the common man on a Clapham omnibus” – an ordinary Jack or Jill who on hearing the story is wholly convinced the scenario is real and the taxpayer should pay no taxes. London
So why; I hear you cry, in the face of such obvious illegality, sham, deception and false accounting, do the great and good of Britain panic forwards to assure all us compliant full-rate tax-payers that “of course it strictly legal”? Such fanciful Alice in Wonderland tales have so far only been believed by the saintly Dave Hartnett, outgoing head of HMRC (Her Majesty’s Revenue and Customs) who sees nothing but good and truth in taxpayers, where cynics see lies and greed.
Could the reason for the newscasters amazing solidarity be that they are all fully qualified and experienced tax lawyers who have studied the details of all schemes and found them to be indubitably beyond reproach? Or – Heaven forfend! The unthinkable! Are they themselves at it? Or are the news editors who feed them the scripts and auto-prompts, at it? Do they fear the knock on the door at midnight or, as one tax-barrister warned a cocksure client – “You won’t be so cheerful when you are gripping the bar at the Old Bailey”. Perhaps Jeremy-It-is-All-Strictly-Legal-Paxman, and Martha-It-is-All-Strictly-Legal-Carney, and John-It-is-All-Strictly-Legal-Snow – and not forgetting David-It-is-not-very-Nice-But-is-Strictly-Legal-Cameron and George-I’ll-slap-them-on-the-back-of-the-legs-with-a-wet-flannel-But-it-is-strictly-legal-Osborne and most other UK politicians, Lords, Ladies and gentlemen. Are they all offshore in dodgy arrangements – causing the