Simon Sweetman analyses the culture of tax avoidance in the sporting community and beyond.
Sometimes you start with something and realise it is the tip of the iceberg. I wrote about the possible tax consequences if the Indian Premier League had been held in the UK and suddenly there’s more tax in the sports pages.
First we have Arsenal director Danny Fiszman selling some of his shares in the club for £42.5 million. Danny Fiszman is resident in Switzerland, and so will pay no CGT (despite the fact that most of his business activities appear to be in the UK). That’s nothing to do with avoidance; it’s because (unlike almost everybody else) the UK only charges CGT on residents and does not charge non-residents disposing of UK located property.
Then there are complaints from the Rugby League Super League clubs that the arrangements under which they pay their imported players from Australia and New Zealand for their image rights into offshore accounts without paying tax instead of paying a wage are being closed off by HMRC. So I shall avoid the temptation to make jokes about Rugby players and intellectual property, and merely remark that it is highly unlikely that Rigby League thought of this first, since some other sports will have much more expensive tax lawyers on tap.
So what does this tell us? It tells us that the wealthy end of UK society from bankers to footballers is wholly tied into tax avoidance schemes, and that tax avoidance is a way of life. We also know that there are professional advisers out there who make a very good living out of this.
What is also clear is that all of us are going to have to pay more tax in the foreseeable future in order to pay for the rescue schemes for banks and the money being injected into the economy in an attempt to reduce the impact of the economic downturn (which has been caused by financial mismanagement in the effectively unregulated world of banking).
So as tax rates rise (as in time they must) can we expect the rich to redouble their efforts at avoidance? Or out of solidarity with the rest of us will they stop doing so, allowing all those very clever people working for tax planning departments to be redeployed to do something socially useful?
Alternatively, just in case they choose the first route rather than the second, is this time to say that high end tax avoidance is unacceptable and that it is time to write a general anti-avoidance principle into tax law and to lean increasingly hard on the tax secrecy jurisdictions? You tell me.