Wednesday, July 09, 2014

Ker-Ching! (Part 2 of a Never Ending Series)

The Times has a first class scoop today about a sophisticated tax-avoidance scheme that has been used by public figures. The Times sits behind its paywall but the Mail picks up the story this morning, under a headline that included doctors and judges among the would-be evaders. That is suspicious - for one thing the press are very free with whom they style a judge (eg Ms Briscoe) and the person involved might well be a deputy District Judge at Mudtown-on-the-Wolds County Court. Secondly, judges earn a fraction of the sums that the people named by the Times are pulling in. A Circuit Judge won't  bring in much more than £130,000, and that is petty cash to most of those named by the Times.

This story will run for a while, I suspect.


  1. Luckily I have a sub to the Times and on reading the article they take great pains to emphasise that at the time of the 'investments' the scheme was absolutely LEGAL. It is only with hindsight and a bit of retrospective posturing that HMRC is investigating because they have just cottoned on that they've "lost out" on oodles of wonga!! (allusion intentional!!)

    While I feel slightly uncomfortable at this type of goal post shifting the Press maintain the belief that somehow the great British public think tax avoidance (as against evasion) is a heinous crime. It isn't. It is human nature not to want to pay tax if one does not legally have to. Morally there may be arguments to be made about fairness but that does not warrant lurid stories and thankfully the court of Daily Mail public opinion holds no sway for me.

  2. Judges might well have earned much more when they were at the Bar.

  3. Yes, a lot of judges are well healed since an awful lot of them come from the silverspoon end of society.

    However, its a bit rich all this handringing and moralising about avoinding tax: any one with haldf a brain doesn't want to pay a penny more thna they have too, but the reason they can is because of poor tax law. The answer is simpler, more straightforward provisions and ruthless enforcement.

    These millionairs who don't like it and want to go abroad to avoid the tax should lose their passports if they are not prepared to pay the tax here.

  4. I am one of those who think tax avoidance is at least a moderately heinous crime.

    While I can see the technical distinction between "avoidance" and "evasion" I can't help noticing how little scope ordinary people have to reduce their tax bills, and how many ingenious contrivances are available to very rich people to enable them to avoid payments they could easily afford.

    1. Sorry, anaymous, but the distinction is greater than you care to acknowledge. it's not just that people want to avoid paying more tax than they have to - but the Government actively encourage it. ISAs, pensions, and so on *are tax avoidance schemes*. The Government wants to use tax avoidance to encourage behaviours - in these cases, to encourage saving and providing for our retirements. We can all choose to avoid tax by not buying cigarettes or alcohol, too - the tax is loaded on these items with the direct intention of encouraging lower consumption rates, i.e. encouraging people to not pay more tax, to avoid the tax by not purchasing. A variety of investments in film and creative industries have been encouraged by governments various by offering tax breaks - it's encouraging something the government thinks is a good idea with a tax avoidance scheme. Tax avoidance is actively encouraged by the government, and cannot be a crime of any description.

    2. It's moved on another step this morning (Thursday) with The Times reporting that the taxman has missed the demand date for repayment of these sheltered funds. Under the front-page headline 'Bungling Taxman Costs Public Millions' it reports "Revenue & Customs has spent more than a decade investigating the Liberty tax scheme, but it can now be revealed that the HMRC inspectors failed to challenge the tax returns of at least 26 Liberty investors within the time 12-month limit required by law." Will civil servant heads roll? Of course not, our society rewards failure.

    3. EVASION is a crime
      AVOIDANCE is an occupation of the rich

  5. The Times talks about "a judge" (or at least the edition that reaches me in the sticks did!), and as someone else has already pointed out, a QC who has earned a few million in a lucrative commercial law set before going full time as a judge may well have decided that this was a reasonable and apparently entirely legal way of ensuring her (or his) money was put to productive use whilst she pursued her judicial career - because it was after all invested in a fund cleared by HMRC... I'd frankly much rather HMRC devoted rather more of its resources to getting Vodafone, Amazon, Starbucks and the like to cough up even a fraction of what these individuals already pay in taxation, and would love to see corporations made subject to preemptive seizure of assets on the basis of an assessment of amounts owed, whether from the main or related company accounts.

    Any lawyer who decided to go into the judiciary after a health scare would have my heartfelt sympathy, even if they find it more stressful than they may have believed. I would certainly hope that they were "well healed" before they made the move, whether in their Louboutin's or Lobb's!

  6. "would-be avoiders", not "evaders". Get it right.

  7. A lot of people get all self-righteous about those that engage in tax avoidance, but I don't know anyone who, when offered the choice of paying £50 or £500 tax, would choose to pay the higher amount. It’s easy to be morally right when you’re not making the choice.

    In respect of the celebrities and other high profile people involved, I'm fairly sure they aren't experts in taxation and will have sought advice from elsewhere. The question is whether the recipients were acting in good faith or not, and that's something we don't know.

  8. ISAs and pensions are not tax avoidance schemes at all!! they are legitimate ways allowed by the governement for individuald to invest their money in a way that does not make them subject to tax- they are above board and legal.

    These avoidance schems fabricate a scheme which effectively launders the money in such a way as to avoid tax- some might say evade tax. As long as they can squeeze it into the rules they will( the rich) get away with it.



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