<b>Tax Feature:</b> Halifax ' the end of avoidance? By Rebecca Benneyworth

Rebecca Bennyworth asks whether the judgement will have any bearing on UK direct taxation.

There is very limited harmonisation of direct taxation. The Halifax judgement is one of interpretation of Community Law - see paragraph 68. The VAT legislation puts into effect the requirements of the 6th Directive and the domestic provisions are required to give effect to the provisions of the directive. It would seem to undermine the scheme of Community Law if the domestic provisions were then to be interpreted in a way that is not consistent with the interpretation of the directive, which is Community Law.

But, except for the few matters of direct taxation addressed by directives, there is no reason that I can see to import purposive interpretation generally into UK law except where the taxpayer is relying upon one of the Treaty freedoms, generally Arts 43 & 56. The recent Marks & Spencer decision was based on a claim for relief from an unlawful restriction in the group relief provisions and that claim was made under Art 43. That is Community Law and one would expect the ECJ to deny relief under the freedoms if artificial arrangements are put in place to enable the taxpayer to seek relief under the Treaty Freedoms. That is how it could impact on UK direct taxation but I do not see how it could otherwise (contrary to the Author of the article).

I confess that I am not a PHD student although I am having a try at an LLM.

Alexander, good luck with the phd - i still have fond, if somewhat nightmarish, memories of my 20K word thesis for my masters - never again.

Perhaps what would interest me more than "fraud,bribery & corruption within UK public & private entities" would be the correlation between stated policy and method to reduce and increasing incidence thereof. This is against the background of working in a profession where personal ethics are held in high regard internally, but with suspicion externally. My thesis being that only high personal standards can reduce the incidence, and overreliance on systems and monitoring is counter productive.

Who decides what the "Spirit of the Law" means and indeed is there such a thing (just like tax avoidance). All these gimicks are devised to pull the wool over tax payers eyes that we should pay the most amount of tax possible. However paying the most amount of tax is sometimes not legal!!!!!!!!!!!!!!!
As I have previosly said we need a completely different system of collecting money to pay for the running of the country, because it is quite obvious that the present system is falling around our ears and it can only get worse. To get EU involved in any countries' tax affairs is paramount to disaster.
Come on you whiz kids out there, surely someone can come up with a "user friendly" collection system.

Alan, you state that tax is "moral in its purpose". Surely the purpose of tax is to raise money to pay for spending by Government - how can that be moral? Governments may argue morality for (some) of their spending programmes, although what they really mean is that there is perhaps some moral (they more often mean political) justification for the ends of some of their policy decisions.

Alexander, you state that the "UK tax system is run by the big four accountancy firms". I would be interested to hear of any evidence you might have to support this contention.

Perhaps more to the point is the European agenda to take ownership of fiscal policy from the member states, the actions of the European Court of Justice being one of the tools available to effect this. It concerns me that a Court ruling that an action that is within the law may be deemed to be "abuse" and thus disallowed, is effectively not open to challenge. This is surely an example of executive power being abused.

As a user of professional accountants rather than one myself I have watched the system grow in complexity over the past ten years to the extent that I now have to take professional advice on almost every aspect of personal and corporation tax.

Surely the case of the Halifax indicates an inadequate tax regime rather than abuse. Make a system overly complicated and loopholes appear. The solution - KISS - Keep It simple Stupid - often closes all the avoidance gates and leads to a system which works smoothly. We will probably never influence the government but that does not mean that we should not try to achieve a simple unambiguous system of taxation.

I agree with the new ruling. Taxation is a moral obligation and the sooner the legislation reflects this the better.I wish some of the so called intelligent tax experts would realise that that by helping wealthy clients to minimise their tax bills all they are doing is increasing the tax that the rest of us will have to pay, or reducing the money the government has to spend on the NHS etc. Furthermore identifying loopholes is not clever it just leads to more and more legislation from the government to try and block the loopholes, at the moment thousands of experts are engaged in a game of cat and mouse couldn't these efforts be better deployed elsewhere. The end result of this is a taxation system that is more and more complex and costly to administer.

Ian,
Chartered accountant

Tax is moral in its purpose and legal in its application. Morality and legality cut both ways. Power rests with the Government to pass tax laws and with the Revenue as the executive of that power - and they use it. Unlimited use (abuse?) of that power necessitates some defence. Furthermore, as long as the Revenue are legalistic in their application of the law, which they unquestionably are, the taxpayer has a right to rely on it similarly.

An interesting collection of links. Unfortunately it is mostly a collection of political opinion or reporting of political opinion - no evidence as such to support your thesis that the "UK tax system is run by the big four accountancy firms".

I just wish there was as much scrutiny applied before the Treasury wasted another £100m on some hare-brained NHS or HMRC IT project.

Taxpayer-value avoidance: that's OUR money you're wasting !!