There is a great deal of blather about the difference between tax evasion and tax avoidance. Those who defend companies and people who will not pay their tax insist that avoidance is legal. Sometimes they go further and they say that companies are required to minimise their tax liability, as a matter of duty to shareholders. Coupled with this kind of nonsense there is a lot of focus on the letter of the law and a denial that anyone can be expected to bring any moral or ethical considerations to bear. These people insist it is for government and the inland revenue to write the law in such a way that there are no "loopholes"; and what that effectively demands is that every conceivable way of avoiding tax should be specifically legislated for without any expectation of cooperation from those to whom the law applies. I have said elsewhere that when a child does something they know they should not do, and then tries "you didn't tell me not to do it" they do not get away with that: at least not in my family. In my family that is called cheek. And so it is for tax "avoiders"
Lest anyone should think that folk involved in this are actually moral incompetents, it is very instructive to read the transcript of hearings before the Public Accounts Committee when they questioned some of those folk.http://www.publications.parliament.uk/pa/c...8-i/uc78801.htm
It is quite long and it is vastly entertaining in its way. Let me quote some selected highlights from on of them for you.
Aiden James is the director of a company which sells tax avoidance schemes. He is very keen that we should understand that his company does not devise those schemes: he only sells them. He cannot tell us the names of any such schemes, because the people who do devise them insist on confidentiality, and there is an agreement to that effect. Note that Mr James has to sell schemes which he cannot name, to people he cannot discuss them with: well not unless they also sign a confidentiality agreement. That is a very highly skilled salesman of pigs in pokes.
Mr James says that the people who devise the schemes have them vetted by lawyers who are QC's, to ensure they are legal. Not content with that, Mr James' company does its own "due diligence" and will not sell schemes they are not satisfied are legal. All very laudable. And there is more. Mr James told the committee that he always advises his clients to pay the tax they are seeking to shelter just in case it turns out the scheme is not legal. I am not clear whether he means pay it: for later he seems to suggest he advises them to hang on to the money, rather than pay it. But no matter. What is clear is that he is very well aware indeed that such schemes may not be legal. As he says in this exchange
Q59 Chair: You advise them to pay and then you help to shelter?
Aiden James: Yes. That way, their taxes are paid. If the structure subsequently fails-
Q60 Stephen Barclay: In essence they are taking a punt. You say that there is a high risk around the scheme-we know that it is at risk of being artificial and at risk of being found at odds with the intent of the legislation, therefore donít spend it, put it on one side and take a gamble. We know that HMRC donít really have the resources to fight a sufficient number of them. Some of them will go through and therefore some of the time you get to keep the money.
Aiden James: Yes.
You could almost give him credit for his honesty, couldn't you? Well, sadly, no. Because later there is this wee gem
Q103 Ian Swales: How many of the schemes you have marketed are now illegal?
Aiden James: Most of them.
Ian Swales: Most of them?
Aiden James: All of them, I suspect.
Q104 Ian Swales: All the schemes you have marketed are now illegal, so you are now looking for the next loophole-is that a fair description of your business?
Aiden James: That is how it works, yes.
So much for ethics!