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Tax professionals are out of touch

5th Jun 2015
Tax Consultant freelance
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So Des Hudson has unleashed a micro-storm among the tax professionals, to the point that some felt the readers of the Daily Mail were the ones condemning it, which would indeed seem to be Satan rebuking sin.

It is not hard at this point to draw a parallel between the reaction of tax professionals here and that of Sepp Blatter a few days ago. Yes, there may be a few rotten apples but we’re all right really.

However, the common factor is that some practices which have been accepted for years are no longer acceptable because the public and moral perception of them has changed. How long this will last is anyone’s guess: Is this a paradigm shift?

How far this now goes can be seen by recent articles attacking the tax treatment of landlords as over generous and a suggestion (in the Daily Telegraph) that HMRC is being too kind with its attitude to appeals against late return penalties.

In the case of landlords it is not so much that the treatment is unreasonably generous (though the allowance of interest where the capital is not directly borrowed for the “business” seems to go beyond what is reasonable) as that ‘buy to let’ is coming to be seen as a social ill in a country where 80% of wage earners could not qualify for a mortgage on their own.

Which gives us a clue, should we need it. If people could believe “we’re all in this together” it might be different, but if your boss earns fifty times what you do and is not paying his full whack of taxes then tolerance of those practices becomes unlikely.

Even members of the government now feel a need to preach against tax avoidance – and they mean avoidance, not evasion. And if the Daily Mail really is preaching against it then the game for tax avoidance is well and truly up.

Where the new boundaries of acceptable behaviour will rest we don’t know, but the more tax professionals protest the further the backlash. And don’t forget there are as many accountants in the UK as in the rest of the EU put together.

Time to retrain, lads and lasses?

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Replies (7)

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By Duhamel
05th Jun 2015 11:45

Language
Simon,

I agree that most AWeb commenters were missing the point, but you have also missed the importance of language. You haven't defined properly what you mean by avoidance and it is generally agreed that the public does not understand the difference between that and tax planning.

What most people on this website do is legitimate tax planning, I see no reason for them to re-train. I do see a need for someone to explain planning in a clear way to the public. Your post suggests you do not understand the difference either.

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By k743snx
05th Jun 2015 12:46

post

Agreed, Duhamel.

The usual cheap shots at "Those Who Disagree With Me", as a poor substitute for clarity and substance in the arguments.

 

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By Duhamel
05th Jun 2015 13:40

One other thing
"And don’t forget there are as many accountants in the UK as in the rest of the EU put together."

I haven't seen where you obtained this, but judging by the difficulty Greece and Italy have collecting their tax, Europe could do with more accountants rather than the UK doing with less.

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Replying to SXGuy:
By k743snx
05th Jun 2015 21:26

"judging by the difficulty

"judging by the difficulty Greece and Italy have collecting their tax"....

... plus of course getting the accounts signed off for the whole damn shooting match...

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By ireallyshouldknowthisbut
05th Jun 2015 18:56

.

"the allowance of interest where the capital is not directly borrowed for the “business” "

Eh?

If you borrow in excess of the capital invested it is not deductible.

 

I can only assume you are taking the case where an investor puts down a deposit to buy a house, then at a later date borrows money such that this deposit is repaid to the investor.  The interest on the new borrowing is deductible, yes, but under what scenario would you suggest this is in anyway unfair?  I agree it would be unfair if a sum in excess of that first invested was deductible, but...........this is not the case.

I keep seeing comments like this in the papers about landlords tax written by people who clearly don't know how it works.

 

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By ComanCo
06th Jun 2015 19:03

"the allowance of interest

"the allowance of interest where the capital is not directly borrowed for the “business” seems to go beyond what is reasonable"

I cannot find anything unreasonable about a business owner securing funding against his property.

If someone owns a home and a rental property, why should they have to forfeit tax relief on interest simply because they are seeking to obtain a mortgage on the most favourable terms.

"members of the government now feel a need to preach against tax avoidance"

Governments have have preached against tax avoidance at many times in the past.

"Tax professionals are out of touch."  I am supposing that this includes "Simon Sweetman."

Perhaps I should go and work in the EU.

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By DHillside
08th Jun 2015 13:18

I'm a HUGE tax avoider

I dont smoke so am avoiding tobacco duty on a massive scale. Sepp Blatter has nothing on me! Maybe I'll get an APN or a follower notice. If you think that sounds ridiculous its nothing on some of the comments I see written by so called 'top lawyers' who seek to preach to the accountancy profession about morals. So yes, I dont get Des Hudson's arguement - never could and never will.

 

D Hillside

Tax adviser since 1981

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