Tax avoidance and the media machine
Tax avoidance – a quick recap
If we cast our minds back to 2012, there was a scandal the likes of which had not been seen before. The focus of such scandal was on the topic of tax avoidance and, more specifically, the use of perceived “tax avoidance” vehicles by a number of high profile and well known celebrities. You might well be thinking why is an innovative firm of accountants and tax advisers raising this point? We do so because this signified a dramatic change in the landscape of tax planning and the principle of being able to legally structure one's affairs in a legal way to legitimately mitigate their tax liability. It opened the floodgates and was the very foundation of the media circus that has since ensued in respect of this very hot, very political topic.
The press effect
It is a controversial topic that will split the nation and is therefore bound to a lot of papers to the morally outraged public. Its appeal is that people want to find out more about the world of tax avoidance, what people are doing and what all the fuss is about generally. It’s car crash journalism. We are all curious by nature and naturally we want to know as many details as possible before we make our minds up about where we stand on this mysterious but much talked about issue.
Questioning the statistics
There have been a great number of details published which certainly do paint a dismal picture of the current landscape and bang the drum loudly that tax avoidance is taboo - and that those engaged in such pursuits be immediately taken out to the barn and shot. However when considering the stories you read in the newspapers, take a moment to ask yourself the following. Where has all this rhetoric come from? Who is providing the details of such activity? Where have all the statistics come from relating to the activity of tax avoidance? Who is providing them? For instance, there is a statistic that says HMRC are successful in 80% of the cases they pursue but what it doesn’t say is that they cherry pick their cases very carefully.
The press like to sensationalise stories – this is what sells papers. The government is now desperate to demonstrate to the public that they are cracking down on “tax avoidance”, so much so that the waters have been muddied and the lines have become incredibly blurred. Let’s not forget that it’s the same government that introduced those reliefs and initiatives to promote growth in certain industries and geographical regions (which successfully achieved their aims of regeneration) in the first place. High profile people, celebrities, entrepreneurs, in fact all and sundry who have, perfectly legitimately, put their tax affairs in order relying upon reliefs, initiatives and legislation that the government themselves have introduced are now coming under attack and being brandished “tax avoiders”. This behaviour will naturally create a huge amount of uncertainty for the taxpayers concerned and where we have an already overly complicated tax regime, this can quickly become very confusing and disconcerting.
What is tax avoidance?
As a final thought on this matter, if the current political will is to stamp out tax avoidance, firstly you must define ‘what is tax avoidance?’ . Secondly, you should consider which of the following options would be more resource effective at achieving this goal? The first option being trying to chase every single tax payer, investigate what they have done, challenge them through the courts, which is both costly and time consuming and still doesn’t guarantee success. Or alternatively follow option two, whereby you would plaster your message far and wide in an attempt to change taxpayer behaviour preventing the participation in such transactions in the first place. As the old adage goes, prevention is better than cure.
The Charterhouse perspective
The key message I would like you to take away from all of this and to understand is that whilst indeed the landscape does look bleak and that it is on the face of it a picture of hopelessness and despair, when viewed from a different angle it might not be as bad as it seems, or indeed as some commentators would have you believe. At Charterhouse, our approach is to ensure we actively talk to our clients, to understand their objectives and to view this issue from a different angle and then discuss the options in plain English. Because of this, we continue to advise our clients in the turbulent and ever changing area of taxation, we continue to promote high level tax advice to our clients, bespoke to their needs and holding the personal and commercial objectives at the heart of the advice we provide. We do not offer the kind of contrived schemes that have little or no prospect of success and as such we are confident in our advice and we are prepared to stand by this advice and defend it at the highest level. Furthermore, because of our approach to tax planning we remain successful in this field and believe that whilst this area has become more challenging, it is not impossible to achieve the right result for our clients and their businesses.
If you have any questions regarding the contents of this post or would like to discuss how Charterhouse can assist you to navigate through the mysterious world of tax to structure your affairs differently, please contact one of the team for a free initial consultation and we will be happy to discuss your needs in plain, easy to understand English.
Charterhouse is a forward thinking accountancy practice located in Beaconsfield and Harrow, providing services to many surrounding towns such as High Wycombe, Watford, Uxbridge, Slough, Maidenhead and London. Charterhouse writes blog articles to help provide insights and expert advice.