They're extinct! Outdated! Even lawyers now accept that to remain competitive (and perhaps even in business and norecognise that they have to move away from a time spent on the clock basis to a more value added proposition
Tax avoidance that does work - the fourth category
jon_griffey wrote:
It still puzzles me how although we have tax avoidance and tax evasion, we have this third category of 'tax avoidance that is perfectly legal but doesn't work'. Reading through the Icebreaker Judgement and others you have to wonder why the participants and promoters aren't facing criminal prosecutions.
We also have a fourth category of tax avoidance that does work. The cases in the third category are the types of cases that HMRC takes to Court, wins and they are then widely reported in the media. The cases in the fourth category are the types of cases that HMRC does not take to Court because they are not confident of winning and they don't want losses because that will spoil the sound bite "we win 80% of tax avoidance cases". Actually 80% isn't impressive given HMRC chooses the cases and goes for the low hanging fruit. An example of a tax avoidance scheme ruled in favour of the taxpayer (in 2 Courts) is the Rangers EBT case. HMRC has appealed (again!). To date this is a fourth category case with limited media coverage, admittedly more coverage than most other fourth category cases, no doubt because it is a high profile football club - more difficult to hide that one!
The tax avoidance market flourishes (or rather it did, it remains to be seen to what extent the APN regime has an effect) because the UK tax code is complicated and there are many areas of 'grey' (ie: an interpretation is not always black and white). Tax avoidance focuses on the grey areas. A Court will then decide whether the grey should be regarded as black (ie; it doesn't work) or white (it does work). Until the grey is tested no-one really knows whether the scheme is category 3 or category 4. Because of the uncertainty of the grey, surely it is right that participants and promoters are not facing criminal prosecution. The UK tax code is long overdue for an overhaul to produce clearer, more concise and less ambiguous legislation.
The correct application tax law (as any other law) should be tested in a Court of Law and not in the Court of Public Opinion. The integrity of our legal system depends upon that basic premise. It is outrageous for MPs to preach morality given the expenses scandal.
The Government can change the law if its correct application proves not to work out as it had intended; indeed the new GAAR is an attempt to stem the flow of new schemes. It might do the trick; or it might not in which case further provisions may be needed.
There are often injustices in law, family law is littered with disgrunted ex-spouses in what the UK family law system has been defined as a Gold-Diggers Charter. Similarly there are injustuices in tax law - the power of democracy is that laws can be changed.
As a tax advisor, we are to advise on what the law is and our view on its interpretation, the risks of it being held to apply differently, potentially giving a client an adverse outcome etc.. Our moral view on tax avoidance and schemes is irrelevant; our clients are entitled to(and pay handsomely for) balanced advice based upon the law without bias.
My answers
They're extinct! Outdated!
They're extinct! Outdated! Even lawyers now accept that to remain competitive (and perhaps even in business and norecognise that they have to move away from a time spent on the clock basis to a more value added proposition
You've got an exotic bird picture on your profile - perhaps it should be a dinosaur!
Tax avoidance that does work - the fourth category
We also have a fourth category of tax avoidance that does work. The cases in the third category are the types of cases that HMRC takes to Court, wins and they are then widely reported in the media. The cases in the fourth category are the types of cases that HMRC does not take to Court because they are not confident of winning and they don't want losses because that will spoil the sound bite "we win 80% of tax avoidance cases". Actually 80% isn't impressive given HMRC chooses the cases and goes for the low hanging fruit. An example of a tax avoidance scheme ruled in favour of the taxpayer (in 2 Courts) is the Rangers EBT case. HMRC has appealed (again!). To date this is a fourth category case with limited media coverage, admittedly more coverage than most other fourth category cases, no doubt because it is a high profile football club - more difficult to hide that one!
The tax avoidance market flourishes (or rather it did, it remains to be seen to what extent the APN regime has an effect) because the UK tax code is complicated and there are many areas of 'grey' (ie: an interpretation is not always black and white). Tax avoidance focuses on the grey areas. A Court will then decide whether the grey should be regarded as black (ie; it doesn't work) or white (it does work). Until the grey is tested no-one really knows whether the scheme is category 3 or category 4. Because of the uncertainty of the grey, surely it is right that participants and promoters are not facing criminal prosecution. The UK tax code is long overdue for an overhaul to produce clearer, more concise and less ambiguous legislation.
Quality of comments
Alas it would appear not. Ignorance is bliss.
State of the nation
And we have the gall to criticise Vladimir Putin and his Stalinist state!
BIS Select Committee - what a joke.
It's called the GAAR
They have - it's called the GAAR.
Fit for purpose
I would suggest that there is a better argument to suggest the Public Accounts Committee itself is not fit for purpose.
From the tone of your post and the mention of yacht / mansion, duty fuelled with the required dosage of "green eyed" bias no doubt.
Follow the law
The correct application tax law (as any other law) should be tested in a Court of Law and not in the Court of Public Opinion. The integrity of our legal system depends upon that basic premise. It is outrageous for MPs to preach morality given the expenses scandal.
The Government can change the law if its correct application proves not to work out as it had intended; indeed the new GAAR is an attempt to stem the flow of new schemes. It might do the trick; or it might not in which case further provisions may be needed.
There are often injustices in law, family law is littered with disgrunted ex-spouses in what the UK family law system has been defined as a Gold-Diggers Charter. Similarly there are injustuices in tax law - the power of democracy is that laws can be changed.
As a tax advisor, we are to advise on what the law is and our view on its interpretation, the risks of it being held to apply differently, potentially giving a client an adverse outcome etc.. Our moral view on tax avoidance and schemes is irrelevant; our clients are entitled to(and pay handsomely for) balanced advice based upon the law without bias.