Charity begins

Simon Sweetman
Tax Consultant
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Well, we all agree that it is everyone’s right to arrange their tax affairs however they like in accordance with the law (actually lots of people don’t but let’s start from there), says Simon Sweetman.

Much of the professional comment about the appearance of tax skippers from the Big Four in front of the PAC misses the point badly. They are not accused of breaking the law (well, not deliberately, though they sometimes misjudge it) but of legal practices which in a time of comparative hardship for ordinary people (and ordinary workers have not seen their position improve for 20 years – all the new created wealth was scooped up by the rich) are seen as deeply offensive and as a way of avoiding taking just their fair share. That feeling goes well beyond MPs.

And then we have the story of the Cup Trust, revealed by the Times. Here we have a supposed charity which raised £176m in donations and managed to give £55,000 of it to charity, with the balance going back to its donors one way or another – but still enabling them to claim gift aid relief. Now this may or may not succeed in the long run, but it appears to be as blatant a piece of manipulation of the tax law as one could hope to find (bearing in mind that there could be stones to be turned over out there with even more unpleasant things lurking underneath). Somebody – somebody with a substantial knowledge of tax law – set this up. Now, to be fair, it looks like something with a tax barrister’s sticky fingers all over it, but the people who have subscribed to it are very likely to be Big Four customers and certainly have taken their advice. So if you see a client doing something profoundly unethical and (perhaps more to the point) with what seem like slim chances of success, what do you advise?

Nobody asked that question at the PAC and commentators are right to point out that MPs don’t know very much about tax compared to those of us who don’t know much about nothing else: but it’s not really the point. What MPs do know is which way the wind is blowing.

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08th Feb 2013 12:36

I think it comes down to selfishness, and greed

Call these schemes what you may ... manipulation of the law, exploitation of loopholes, or whatever. These schemes are used solely by the higher earners in our society who surely have enough for a comfortable life without having to avoid all tax, or take tax from other taxpayers, etc.

I feel so sorry for the lower earners, as they seem to always pay the price for bank cockups, aggressive tax avoidance, etc. The majority of the not-so-high earners who are on PAYE are the ones paying the cost.

Maybe we should open these schemes to the lower earners. When the politicians haven't got the captive PAYE people to fall back on for much needed taxes, they may actually do something about it, instead of just talk about it.

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08th Feb 2013 14:13

I don't lecture my clients about ethics & morals

I can advise, but my clients make their own decision ... but I do have a choice which people I want, or to keep, as clients!

Do I think everyone should pay their 'fair' share? Pretty close.

I just care about my country, and all the people in it, and the citizens who are able to make a contribution to the well being of this country, should make a contribution to the well-being of the country. Infrastructure, education, health services, defence, etc. .... all the lot rely upon taxes.

Who do you think should pay for it? Everyone, or none, or just the ones who can't avoid paying?

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08th Feb 2013 17:50

Draw the line

If I couldn't pay my mortgage, and couldn't earn additional money, then I would be living beyond my means.

Everyone has a line they won't cross. Mine may be higher, or lower, than the next person. Some accountants will embezzle and steal to fund an extravagant lifestyle. The majority won't. Some accountants will sell these schemes and not worry. I like to think that most accountants won't (if AWebbers comments are anything to go by, anyway).

I live within my means, and I'm not on the breadline. I would prefer to have a clear conscience and do without the luxuries. If I (and my family) were starving then I may have to put my ethics aside, but I would try to find an alternative first.

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08th Feb 2013 19:03

You're making assumptions

I am not sure that many of these schemes are 'legal'. My personal opinion is that they haven't yet been tested in the courts and may well be illegal. I don't want to make a judgement as to their legality and be responsible for the end result, which is why I don't want to participate.

What is the point of hiding these schemes? They are widely advertised. I won't promote them, but I will point clients in the direction of further information so that they can make an informed decision. 

Please don't assume that I impose my standards on others. It would be a waste of time and a big disappointment if I tried.

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10th Feb 2013 19:40

One sided discussion?????

No, I haven't gone bonkers :)

The person who was 'arguing' with me has been removed.

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10th Feb 2013 20:32

No problem, Shirley

You'll get more sense talking to yourself :)

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11th Feb 2013 12:53

Someone had the audacity to argue ....

with you. I must admit if I thought that there was a tax planning scheme there for me that succeeded why wouldn't I take part in it like every other human being that tries to feather their nest to best effect.

The only trouble is that I haven't found one yet where I could conclude (on the overview) that I could reasonably lay everything out in the tax return white box and sleep at nights. Of course if I withheld any relevant fact or misrepresented it or created documents purporting to show that something is what it is not for a tax benefit then I could see HMRC alleging fraudulent conduct and providing me free of "charge" a different 4 walls to look at.

Tax avoidance and Tax evasion - the difference is the thinkness of the walls around you for a number of years and MP's would be best to try and put proper perspective between legal and illegal. Of course a lot of them have had difficulty in seeing it the other way in their past dealings (and even some now will inevitably be acting to the detriment of the normal taxpaying public - with fancy trusts and wealthy tax advisers). It's just that nobody can whistleblow with immunity on them. 

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11th Feb 2013 13:06

Legality v ethics

I'm not against ethics in business far from it. However, I don't think that 'appealing to a sense of fair play' is any way to run a tax system.

From Starbucks, Amazon on one side to ABF in Zambia on the other compnaies use the tax laws that politicians enacted albeit on advice from the 'pros' (pardon the pun). Re-write the rules!

RE Cup Trust specifically, having read a bit but by no means all, it appears to me that tax law might be satisfied (initially) but that charity law looks as though it was compromised. If that is so, then by definition the tax law wasn't satisfied (i.e. purpose). I am not a lawyer!

And Barclays tax unit closure. According to the new chief the unit had designed 'legal schemes' that had not purpose other than the tax reduction. Excuse me I though we already had legal precedent that could succesfuly overrode circular and 'no commercial puropse' arrangements (Ramsay principle, Furniess v Dawson). Come on HMRC sharpen your pen!

Any doubt about my ethics. I was the MLRO for a firm and had to dish on one of my own clients. Not a happy place to be.

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