Only rock 'n' roll. By Simon Sweetman

Kashflow logo
Share this content

My son is a drummer in a rock band ' not, so far, an earth shaking rock band, though the Guardian said of them "if you like AC/DC but always found them a bit too cerebral, then the Mutts could be right for you" (which given previous correspondence on this site could put them right in the favoured area for accountants, since the headbanging tendency seems always to be well represented). They have recently released their second CD, and it gets airplay. They have toured in Europe and the USA. They are still a very long way from making anything like a profit, and that is the story for very many ambitious young bands. Pay tax? They wish!

But the point of this is not to advertise the virtues of the Mutts, but to look at what has lately been revealed about the tax affairs of some rather more succe...

Please Login or Register to read the full article

The full article is available to registered members only. To read the rest of this article you’ll need to login or register. Registration is FREE and allows you to view all content, ask questions, comment and much more.


Please login or register to join the discussion.

23rd Aug 2006 20:36

Nonsense yourself Mike
A lucid well argued piece (as usual) from Simon, not deserving of that intemperate response from Mike Bassy - do you really see Bono and Mick Jagger flogging off their parents' house to pay the IHT? The only thing I'd take issue with, saddo that I am, is the factual inaccuracy. George Harrison (not John and Paul) wrote Taxman in 1966, long before the unification of income tax and surtax. The marginal rate at that time would have been 95% (now THERE'S something for Mike to whinge about) hence the opening lines...."Let me tell you how it will be / There's one for you, nineteen for me /'Cos I'm the Taxman". I always find it a useful track to play clients on the way to a meeting with HMRC. Concentrates the mind wonderfully......

Thanks (0)
23rd Aug 2006 16:38

moralising nonsense
Since when did doing your best to avoid the efforts of a rapacious Government make anyone a monster ? How about siding with the tax payer for a change - or is that asking too much of the useless accountancy profession ? For instance, where is the morality in a Government which forces newly orphaned children, still grieving for the sudden death of both parents, to sell their home to pay inheritance tax ? If the real rates of tax weren't so ludicrously high in the UK, there would be less incentive to avoid them . How about putting forward that argument for a change, rather than the usual pompous moralising ?

Increasingly, accountants are beginning to sound like that Jobsworth air raid warden in Dad's Army - you know the one who enjoys enforcing silly official rules without question. What a depressing bunch. Surely there must be someone, somwhere with even the vestigial remnant of a vertebra.

Thanks (0)
By Anonymous
23rd Aug 2006 20:57

I suppose it depends how you look at it
I remember my uncle telling me of the time (back in the early sixties) when he had to visit a couple of merchant bankers in their office to give some tax advice. One of the partners had a stock exchange ticker-tape set up, and a direct line to his stock broker; and all the time my uncle was trying to deliver his opinion he was breaking off to give instructions to buy and sell.

At last the other partner lost patience and said "Solly, will you pay attention! Short term capital gains! 19/6d in the £1"

"I know, I know, said Solly. "19/6d for the government; but 6d for me!"

Thanks (0)
24th Aug 2006 15:25

face the facts
On the contrary, young children being turned into orphans after a crash on the M25 or any other motorway is comparatively common. Just listen to the traffic news each day. It's so common that such road deaths now pass without comment.

Nor are you correct about the value of the homes these poor people leave. House price indices show that by the time a married couple living in the South East have raised children to the age of 12 or 13, they quite frequently have acquired assets over £300,000. mostly in bricks and mortar.

By describing such cases as "improbable" or " very sad" you have attempted to diminish these uncomfortable and, to be blunt, disgusting effects of Inheritance Tax as mere statistical aberations quite unworthy of further consideration.

If you're so much in favour of Inheritance Tax, why not volunteer to be the one to tell these children they have to sell their family home to keep Gordon Brown happy ? I'm sure they will find your arguments about fairness in society utterly appealing.

Thanks (0)
24th Aug 2006 13:51

wrong ! but not all of it
OK, I confess. I'd forgotten that George wrote Taxman. And being of an age...the highest rate on earned income at that time was a 15% surcharge on unearned..or are we even earlier than that ?

It is very sad if orphans have to pay tax to continue to live in the family home. But it is extraordinarily improbable. Where the parents' home cops for IHT it is normally because they have lived in it a long time, and then in 99 cases out of 100 the children have long since moved away and are going to flog the old place off anyway. To deal with the improbable, there ought to be a get out in those circumstances.

And if the Stones are paying 1.6% in tax, why are they charging £100 and up to see their gigs ?

Thanks (0)
24th Aug 2006 20:31

incorrect argument
I'm afraid that's incorrect too.

The children could quite easily stay in the family home - an arrangement vital for both their physical and psychological well-being at such a devastating time.

Knowing the circumstances, any bank would allow the children as well as an appointed guardian to release equity from the family home

This arrangement would certainly see them through to an age of consent. During that time, the house would, presumably, increase in value, perhaps even to the extent of negating the equity release. Enabling children to stay in what was once a happy family home, where the memories of their parents still linger is the least they deserve.

Instead we have a Government acting like a cruel, heartless, ruthless brute. Levying Inheritance Tax in these circumstances is a national disgrace. Arguing that this rarely happens - which is untrue - misses the point. The fact that it can happen at all is a blot on our civilised society. It shames us all.

In fact the only thing which shames me even more are commentators who have indulged in torturous moral gymnastics to justify the unjustifiable. And suggesting that the children somehow deserve to be thrown out of their family home because they " can afford it", well that beggars belief.

Why am I pursuing this topic so relentlessly ? Accountants are often the adminstrators of these laws. Who better qualified to stand up and say that they are wrong ? Isn't it about time that some of you banded together to have this shocking state of affairs changed ? Tell me what you can do to help.

Thanks (0)
By Anonymous
24th Aug 2006 17:53

If two minors are orphaned by a crash on the motorway, then unless their parents have lots of other income producing assets, then they are going to be out of the house anyway in order to raise sufficient cash to live on.

If their parents are the sort of people who have that sort of spare cash, then one would expect that their wills are so drafted as to have mirror image trusts for the surviving spouse, raising the tax free proportion to above £570k anyway. (I think when both parents die together the older is assumed to die first for tax purposes)

If the parents are dying with more than £570k of equity in the house (don't forget that the mortgage is deductible for IHT...) then firstly we aren't talking about a large number of cases, and secondly the poor kids have got over half a million quid to play with, so perhaps we should reserve our concern for the more needy members of society?

Thanks (0)
25th Aug 2006 16:03

Depends how you phrase it.
"a simple hatred of the well-to-do is the main motivation for IHT rather than any form of fairness." is the perjorative way of putting it. I prefer to use the phrase progressive taxation which I think of as fair. You think progressive taxation as a concept is fair or you don't.

I wouldn't have to hunt very hard to find circumstances where the taxation system can produce unkind results in a number of areas. In an ideal world the Treasury would be able to legislate for circumstances, but sadly any legal get-outs to protect innocents from tax being levied on them would simply be used as loopholes by our industry. The only concept I can think of is some form of appeal that the way in which tax is being levied produces a cruel and unnecessary result but that's a hard bit of law to install.

Thanks (0)
25th Aug 2006 15:17

IHT - one man's meat...
I'm afraid I'm with Adam and Simon. I think you have to seriously hunt around to find a set of circumstances in which a bunch of minors inherit family home and precious little else, with no insurance cover for the parents and no other funds with which to pay the tax. You also need to have domestic circs in which it makes sense for them to remain in that family home.

It's not impossible and there will be people who are in this unfortunate position. But should the government legislate for the very few or the many?

I think deep down, you are a fan of IHT or you aren't. If you see taxation as having any redistributive motive (collect more and proportionately more from the 'rich') then IHT is fine - it collects from rich people but not from poor ones. By rich I mean people with assets above £200K which excludes most of the population.

But if you begin from the premise that IHT is wrong, then the 'poor orphans' argument is just another stick with which to beat IHT.

Thanks (0)