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The summer of avoidance
Summer 2012 was a watershed moment for the profession – a time when tax avoidance hit the headlines and came home to roost.
Ever since Chancellor George Osborne declared in his Budget speech that aggressive tax avoidance was “morally repugnant”, the issue has remained a fixture on the news agenda. By May, after packs of baying reporters had unpicked Osborne’s Budget measures, Philip Fisher asked whether tax was the new football and plucked out eight “prime-time” tax stories.
The list included the much debated “pasty” and “granny” taxes, charitable donations tax relief, top rate tax reduction, the publication of cabinet minister tax returns, the sharing of tax return information for claiming tax credits, tax issues at Rangers and Portsmouth football clubs, and finally Harry Redknapp’s high profile tax trial.
But it was the following month that the single issue of ‘tax avoidance’ stepped into the spotlight. The ensuing media maelstrom would make sure the profession, and how the profession is widely perceived, would never be the same again.
The Times led this charge with “naming and shaming” some of the country’s top celebrities and politicians, and their legitimate tax avoidance arrangements.
AccountingWEB discussed the revelations, looking at schemes involving loans to employees, an Employer Funded Retirement Benefit Scheme (EFRBS), personal service companies and film partnership schemes, among other legitimate tax planning.
Politicians from all parties weighed into the debate, and it wasn’t long before Jimmy Carr, Gary Barlow, Terry Venables, Moira Stuart, Frankie Boyle and others received a dose of unwanted publicity.
This tax avoidance fad has turned the spotlight on the accountancy profession. A few years back tax campaigners such as Richard Murphy became the scourge of the profession when he said accountants should be more ethical and get people to pay an appropriate level of tax, and not just the bare minimum they can achieve by exploiting clever avoidance techniques.
This point continues to be a hot topic on the pages of AccountingWEB where leading tax commentators such as Rebecca Benneyworth and Simon Sweetman have adopted this position in recent months. The ICAEW Tax Faculty recently issued guidance on what accountants should bear in mind when reviewing tax arrangements.
Times have changed to the point where we’ve now got a Conservative chancellor proselytising about "aggressive" tax avoidance and “moral repugnance”.
LexisNexis director, Chris Jones, took an interesting view on the avoidance debate in Tax Journal, suggesting it could actually be an opportunity for tax professionals.
He said taking a stand against behaviour that brings the profession into disrepute was to be welcomed: “The real issue for most advisers is the increased perception by the public that the tax profession is a threat to the tax revenues of the UK. Nothing could be further from the truth.
“The tax profession is a vital component of the UK tax system. Under self assessment the burden of administration falls on the taxpayer, as does the responsibility to interpret the law. Tax professionals meet both these needs for the taxpayer. Whilst HMRC is responsible for enforcing our tax system, the accountancy, tax and legal profession make it work.”
Now the issue has gained so much public attention, perhaps it is time for the profession to set its moral compass and take charge of the avoidance campaign.
Do you think tax avoidance has been the issue of the year? Will the introduction of the long-awaited General Anti-Abuse Rule change our tax landscape forever?