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Charles Moore’s tax avoidance tip

15 May 2014

Last week, volume one of my life of Margaret Thatcher won the Elizabeth Longford Prize for Historical Biography. This made me feel greatly honoured, because I knew and loved Elizabeth — she was our country neighbour — and admired her own biographies greatly. It is also undeniably pleasant to get £5,000 without having to do any extra work, or even apply. This is the third monetary prize that my book has won, and I have been thrilled to discover that prizes attract no tax at all, so £5,000 is £5,000. Since ‘aggressive’ tax avoidance is the in thing, I would recommend that organisations wishing to confer extra rewards on staff should combine with others in their trade — for example, in banking — and invent, let us say, the Lehman Brothers Memorial Prize. They would then pool the enormous sums which in the old days they would have paid as bonuses and turn them into untaxed trade awards.

The political rhetoric against tax avoidance is a cover for greater state powers. The proposals in the Budget to let HMRC take money out of people’s bank accounts are a shocking way of avoiding due process, as the Commons Treasury Select Committee spotted last week. It does not follow, because money is due to the Revenue from X, that X’s money now simply belongs to them. In the row about tax avoidance by Gary Barlow of the band Take That, the BBC quotes an HMRC spokesman as saying that ‘anyone who uses a scheme which HMRC deems to be against the rules owes them money’. If he is correct, then the concept that people’s money is theirs until a court rules otherwise is replaced by arbitrary power.

GoveThis is an extract from Charles Moore’s Spectator’s Notes in this week’s magazine. Click here to read for free with a trial of The Spectator app for iPad and iPhone. You can also subscribe with a free trial on the Kindle Fire.

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  • lauralouise90

    I don’t agree with HMRC taking money directly from bank accounts as there may be a reason why they couldn’t pay in the first place.. or even worse the tax calculation by HMRC may have been wrong! Laura | Wolverhampton Tax Advice

  • Agrippina

    Lady Longford’s Hist Biog of Wellington is brilliant. You were lucky to have known her a wonderful woman and very interesting with more to say than any modern ‘celebrity or popstar’.

    Hopefully, the dipping into our bank a/c won’t actually see the light of day,(17,000 individuals who are persistent non-payers) but it does happen elsewhere, Australia apparently.

  • Fergus Pickering

    Everybody avoids all the tax they legally can. Of course they do. Anyone who says he wants to pay tax is a fool or a liar

  • you_kid

    As if there weren’t already enough loop hopes for this nation’s used car salesmen.
    When will ‘avoidance’ finally be linguistically reclassified for what it is?

  • Baron

    You’re spot on Mr. Moore.

    Not that it would carry much weight today, but Baron never forgets, can recall easily the ruling of a judge from Britain’s ‘barbaric’ past: No man is required to arrange his affairs so as to pay the largest possible amount of tax’.

    Both the language as well as the sentiment appeal.

  • an ex-tory voter

    We best get used to “arbritary power” as our elected politicians are either turning a blind eye to it, or to their eternal shame, are in favour of it.

  • right_writes

    Good idea Mr. Moore…

    The thing about tax avoidance is that whilst I cannot see a problem with following the tax rules to the letter, it is definitely a game for the rich and powerful. We have muddled along for a long time in these conditions and it doesn’t do anywhere near as much damage as our membership of the EU, for instance.

    The possibility of engineering one’s accounts in such a way that tax is avoided, is a direct result of government applying so many ifs, buts, wherefores and so many different types of tax and duty, that there is no chance of any clarity…

    …And the reason for this, is that government (of all hues so far), really doesn’t want the “great unwashed” to know just how extortionate their total take is.

    I seem to remember the Adam Smith Institute suggesting that most people pay something around 70% of their income in taxes.

    I don’t know whether UKIP will make any changes in this regard to their policy in the 2010 manifesto, but that policy was about simplifying the tax code, which would have the effect of embarrassing high taxing governments, ensuring that everyone pays their fair share, and that by reducing the cost of collection, staff numbers can be lowered through a process of natural wastage (as staff leave or retire, not replacing them).

    Oh and either more services can be provided, or tax rates can be reduced, obviously which of the two depends on who is masquerading as our leaders at a given point in time.

  • HookesLaw

    A clever and indeed fun idea. I nice bit of levity. But I doubt such a ploy would stand up in court and I doubt the tax rules on prizes would last for two minutes if it were tried on.

    As a country we expect to be defended we expect to be educated and we expect health care. We see that as being in our individual and collective interest. As workers we see the benefit to ourselves in unemployment pay and see the benefit it along with welfare brings to us in maintaining to the cohesion of society. We also see the concept of being governed by laws as being better than no govt and anarchy.

    This raises an obligation on us to pay taxes and it obliges clever people, who might otherwise be able to avoid the taxes which we poorer less bright and active ones are lumbered with paying, to pay their share. It justifies the government in acting against such people in the interests of fairness to the rest of us.

    Of course it also requires the government to be prudent in its spending and fair in is taxation policy, two concepts which ought to preclude anyone from voting for a socialist – let alone for a cryptomarxist.

    • right_writes

      I would argue that there is very little real benefit to benefits claimants, the only benefit is to government being able to point the finger at the lowest 15% of the population.

      In Switzerland, an unemployed worker receives a substantial percentage amount of their last employment income, while they look for a new role.

      So if you are a burger flipper, or a banker, you lose 10% of your income, just enough to make you look for a new role, but not enough for you sit back and relax, especially since there is a time limit on those benefits.

      There is nothing quite so demeaning as losing everything you worked for, and having to go cap in hand for a subsistence existence.

      Of course in any jurisdiction, there will always be a percentage who are happy to bump along the bottom, but it won’t be at the hand of government, it will be their own fault.

  • Jock

    This is the thin end of a dangerous wedge. Doubtless intended to be used in a limited number of circumstances but likely to be used in wider and wider ways. Bit like the imaginative ways people find to extend tax avoidance by inventing clever ways to exploit tax allowances and exemptions designed for much narrower purposes. Irony meets unintended consequences – not unusual outcome of political action – but in this case, add sinister to the equation

  • DavidL

    It’s a natural reflection of a shift in the fiscal balance of power. When capital was – for the most part – held in one country, the State held the upper hand, and tended to over-play it, creating sympathy for the victims of confiscatory taxation. With the freeing of capital (which I support, by the way) and the growth of social media, massive-scale tax avoidance can be done, and is easily seen to be done, creating a combination of envy and justified resentment, which, in turn, empowers and emboldens the State. Naturally the State will go after the softest targets, rather than the powerful Corporations. So it’s a bad time to be thinking of going into creative tax avoidance schemes, assuming one is lucky enough to be able to contemplate doing so.
    It’s hard to see how this will play out. The only way to rein in tax-dodging multilaterals would be through international collaboration amongst governments and/or trading blocs. But Corporations know, or think they know, that they can rely on governments’ desire to gain competitive advantages in securing inward investment.

  • Mynydd

    ‘The proposals in the Budget to let HMRC take money out of people’s bank accounts are a shocking way of avoiding due process’
    This is one of the ways Mr Cameron/Osborne are making us the new USSR. It follows on from recording telephone/text messages and Emails. There must be a Westminster department to dream up excuses for such dictatorial policies. No doubt there will be such comments posted here.

    • HookesLaw

      Garbage. The notion that we should stand by whilst rich and clever people spit in our eye is ridiculous.

      • right_writes

        I rather think that it is the political elites that have the monopoly on eyespitting.

        • HookesLaw

          Politicians come up for election. If you think the likes of these schemes which rich entertainers join in with are fair then there is something wrong with your thought processes. They take money out of other people tax paid income and then avoid tax themselves on huge sums.
          Thats a disgrace.
          I do not believe in 50% tax or 45% tax or even 40% tax. but this govt have started the route to lowering it and get attacked from the left for doing so. Meanwhile the rich and famous delve into these schemes which are basically built around lies and cheats.
          I know full well who is doing the spitting.

          • right_writes

            As I pointed out in my first comment at the top…

            Simplify the tax system, and nobody will be able to avoid tax…

            Of course, the net result will be that governments will be embarrassed about adding to the burden, and collection will be far simpler, with lower overheads.

            Tax avoidance is the tool of rich and powerful people, I don’t really blame them, they are being asked to pay far higher rates in the first place…

            Any middle class (income of £16,000 or more) person that attempts to do this will either pay more, but to a combination of their accountant and the government, or they will be charged with tax evasion.

      • Baron

        There’s a way out, HookesLaw, become rich, as it seems nature has failed to endow you with a thing called the brain.

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