Tax avoidance can change your life by Simon Sweetman
Simon Sweetman has received an advertisement for a "self improvement" book this week; he doubts the veracity of the book's claims, and wonders whether this will come back to haunt those taken in by the puff. And how gorgeous is the Isle of Man?
Just this week I had an email offering me various books that, it told me, might change my life.
“Non Resident and Offshore Tax Planning shows you how to use non-resident status to reduce your tax bill to virtually zero.
Continued...
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But this is what the offshore practitioners think...
I agree with Simon, David and Mark. It is obviously legally impossible for any person to reduce their tax bills to nothing.
But, when we talk about direct taxation of your practitioners do like to suggest that this is possible. I see it too often. They satisfy themselves that no tax is due within their jurisdiction. They ignore the possibility that the structure they create may well be taxable elsewhere. They cover their risk by asking their client to take tax advice in the jurisdiction where they live, but will not check the quality of or comment upon the accuracy of that advice.
The result is that much of this tax avoidance rapidly shifts into evasion and, for which they deny any responsibility at all
"Paying tax is entirely a question of personal choice"
I so agree with you Simon and hate the way that some authors and publishers of tax books mislead their target audience with hyperbole.
Where this happens it will sometimes be due to a deliberate ploy ; other times due to naivety. I appreciate that some publishers may fall into the latter category. But there is no excuse when an author claims to be a tax expert and has evidently written the hyperbole themself. It is the deliberate intention to mislead that I hate.
Last year I came across adverts that used the heading "Paying tax is entirely a question of personal choice"and wrote a blog post about it as the adverts were continuing dispite a damning report by the Advertising Standards Authority.
Reduce your tax bill to zero
"there is no legal (or even quasi-legal) way that I can reduce my tax to zero".
Well, there is one which I often tell my clients about when they point to schemes and books like these. But it is not to be recommended.
The simplest way to legally pay no tax is not to earn anything. Great for tax planning. Not so good for maintaining a lifestyle.
Reminding clients that tax planning is not always the best way to drive your business does sometimes fall on deaf ears though. I am sure we all have clients that have done things (legitimately) to keep their tax down, which has had adverse effects elsewhere in their business.
The Isle of Man is a tax haven
Yvette
I have just finished writing a book on tax havens for Cornell University Press. in the course of doing so I have looked at lists of tax havens created over the last 30 years or more. Less than 10 jurisdictions appear on every single list that I had been able to find during that period. The Isle of Man is one of them.
Now that either means that every single person who has looked at tax havens has got you wrong, or that you are in denial of the truth. Crowds, of course, are not always right. In this case though it is not one crowd, it is many crowds over many years to have come to this conclusion.
They had done so for a variety of reasons. I do it because of the way in which I, and my two colleagues who worked on the book, have defined a tax haven, or a secrecy jurisdictions we would prefer to call them. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction and that, in addition, create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
This is a very accurately describes the secrecy that pervades the activities of the Isle of Man.
It also happens to describe the secrecy that pervades the activities of very many of those places that you would describe as tax havens, whilst saying that you are not.
I'm sorry: I think you need to face reality. Bluster is not enough. You can swear that black is white for as long as you like but when the rest of us know that it really is black you're just wrong.
Richard Murphy