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TW Ed wonders if anyone comes out of the tax avoidance debate unscathed. 

Nobody wants to pay more tax than they have to, right? That, or more correctly “to pay only the amount of tax required by law”. It is such a fundamental and automatic assumption that it underpins the advice of almost all tax professionals, almost without thought.

And yet in Hypocrisy Abounds: Chancellor Accuses Labour of Double Standards, the Chancellor appears to have cast that notion aside in a rush to undermine his political opposition and in requesting they pay someone else’s hypothetical personal tax bill in the process.  At least when Starbucks "volunteered" to pay tax, it was their own tax they were volunteering, not someone else’s!

Last night, I sat through an advert from one of the largest companies in the world and I thought it a triumph of form over substance, which set out to sell a brand, rather than any product. I was left wondering “what’s the point?” I started to despair that I was simply too old to get it. And then came the strap line: “Designed by Apple in California”. And then I got it – I think, although I admit I could be quite wrong.

Having also now sat through a couple of sessions of the Public Accounts Committee (PAC) which scrutinised Google’s tax affairs in the UK, I developed a sneaking suspicion that Apple is simply setting out its stall early, so to speak. While more recently the PAC has focused on whether or not Google’s sales should actually be taxed in the UK and not Eire, (Apple would struggle there I think), Google initially made much play of its world-leading innovation in the US – the real profits generator, it said – although it then had to admit that much of its worldwide income flows into Bermuda rather than the US!

Is Apple so scared of the PAC that it has devised a new advertising campaign to make its point? Maybe not. Perhaps instead it is trying to sell to a patriotic home crowd. But why run the same ad overseas?  Perhaps I should get an iLife and stop thinking about tax so much.

So who is the villain of the piece, chancellor, the PAC or global corporations? I’d rather focus on the hero, and for now it is Mr. Salmon of Salmon v Revenue & Customs [2013] UKFTT 306 (TC) – an unrepresented taxpayer who did rather well recently at Tribunal, when HMRC sought to collect a surcharge on an estimated tax bill. Not only did Mr. Salmon win, but the judge saw fit to note the following from Mr. Salmon:

“There has been much in the news recently about aggressive tax avoidance; measures taken by individuals purely to legally reduce their taxes to the absolute minimum. I would suggest that this is a clear example of aggressive tax collection, and should equally be discouraged.”

It would be easy to paint HMRC as the villain. It would of course be wrong to do so. Although it is disappointing that, for an impartial government agency, HMRC is so quick to publicise the cases it wins, and so reticent when it comes to cases it loses. After all, it should be no more about “protecting the government’s revenue” than about paying no tax: it should simply be the right amount of tax, even if that proves to be less than HMRC thinks.

Regards all,

TW Ed