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TW Ed sets out to bust 10 myths about tax avoidance. And invites some of the finger-pointers to engage in a bit of double-jointedness.

Introduction

I broadly welcome pretty much any discussion on tax avoidance in the general press. It means I have a chance of understanding what the issues are, and sounding clever. Having said that, some of the guff that has been written about tax avoidance, and the slurs on innocent taxpayers, are disturbing.

Simply put, innuendo sells papers, and generates interest. Cold hard truths fare less well.

I must also clarify that I am a tax adviser by profession. I have spent roughly 20 years advising families and their businesses about tax and, yes, how to reduce their tax liabilities. Readers are, of course, free to conclude that I am part of the problem. A bargain forged in the arrogance of assuming one writes something worthy of reading. Everyone has an agenda, even if they don’t care to admit it. I think mine is to highlight the inconsistencies in some people’s logic when it comes to tax avoidance, and to try to inform the debate. The following comments reflect my perception of and opinion on tax matters, rather than official TaxationWeb policy.

Myth 1: Tax avoidance and tax evasion are basically the same thing. No, fundamentally they are not.

Fact: Tax evasion is criminal. Tax avoidance is not. That does not necessarily mean that all forms of avoidance are OK. This article is not intended to be an apology / excuse / justification for “dodgy schemes” that exploit obvious weaknesses in the tax system, and have little or no economic substance. (When I say “obvious weakness”, I mean that the legislation clearly does not work as intended, rather than one side making such a claim simply because it doesn’t work as they should like).

Myth 2: If you are a “tax avoider”, then you are up to no good

Fact: You might as well accuse somebody of driving. You’d be mad not to avoid tax: tax avoidance is something practically everybody does, to a greater or lesser extent. I know this will wind some people up, because they prefer to use the phrase “tax avoidance” to mean a class of activities that they find objectionable. Much effort then goes into a complex definition of tax avoidance that really just makes a simple phrase work too hard. It is what it says on the tin. Live with it.

Myth 3:  Structures set up to avoid tax are wrong. Nope.

Fact: Your pension fund, ISA or similar will have been carefully drawn up according to a complex set of rules, and so as to ensure that it follows UK tax criteria (amongst other things) and therefore avoids paying UK tax. It would be a bit pointless if it did not. Most people’s Wills (where they have one) are drawn up with a nod to Inheritance Tax, even if only to make sure that the £325,000 Nil Rate Band is properly used or transferred. As I have already said, it would be stupid not to. Wills can be extremely complex and carefully drafted devices, although IHT often accounts for only a small proportion of the effort.  

Myth 4: Going offshore is evidence of dubious intent

Fact: Shock, horror: Your pension fund probably has offshore investments. If you have a holiday home, then that property would ordinarily be considered also to be an offshore investment. But again, it would not normally be thought outrageous.

Myth 5:  HMRC’s position on tax is always right. Anyone who disagrees with HMRC is probably up to no good.

Fact: Not even close. HMRC has committed some howlers over the years. Thanks be to the courts, who get it right… most of the time.

Myth 6: Anyone who is investigated by HMRC is probably up to no good

Fact: HMRC looks into all sorts of things, all the time. Enquiries and investigations often result in… absolutely nothing at all. It is very common for HMRC to walk away from an enquiry without needing to amend tax returns or to assess more tax. This is one of the fundamental reasons why HMRC should continue to conduct its work in strictest confidence. Unless, perhaps, we adopt what one might call the Scandinavian approach.

Myth 7: Companies with huge turnover that pay little or no tax must be doing something naughty

Fact: If those who take it on themselves to inform the public about tax matters are unable to distinguish between things so fundamentally different as turnover and profit, then they should probably be writing about something else. Anything else.

Myth 8: Companies that pay out dividends while making losses are up to no good

Fact: That is criticising people for taking out what is basically their money, that they will, almost certainly, already have paid tax on. Dividends are paid out of post-tax profits. There’s a clue in there somewhere. Any writer who cannot spot it, or who is so unfamiliar with company accounts that they could not have worked it out already, should probably be writing about something else.

Myth 9: Trusts are dodgy; Deeds of Variation Are Possibly Dodgy – We Need to Check

Fact: Trusts are EVERYWHERE. Your pension scheme may be in a Trust – millions of people are in trust-based schemes. A standard policy for life insurance may well be written into Trust, for very good reason. Parents and guardians hold assets “on Trust” for their minor children/charges. If you want to protect your family’s assets from bad marriages, then the classic legal remedy is a Trust.

Fact: Deeds of Variation are commonplace legal devices and, like Trusts, are used well beyond simply trying to save tax. It would have been really great if our beloved Chancellor were more interested in the facts than scoring pre-election points. A quick chat with a decent solicitor could have cleared things up nicely.

Myth 10: Accountants / Tax Advisers / Lawyers spend most of their time devising dodgy tax schemes

Fact: As if we have the time. Most of our time is spent on helping clients with very mundane tax matters, telling them how something should be taxed and helping them to fill in forms or make tax returns. Any time left over is spent also dealing with HMRC enquiries, dissecting reams of new legislation, whingeing about HMRC cutbacks meaning they never answer the phone and catching up on case law. Simply put, there’s neither time nor inclination in the average tax adviser’s working day to kick back and contrive a dodgy scheme. That’s not to say that such specialist advisers do not exist. But they are in a vanishingly small minority.

The rest of this article considers some of these myths in more detail, and tries to shed some light on why tax avoidance is so problematic.

Myth 1: Tax avoidance and tax evasion are basically the same thing

One is criminal, the other is not. If you accept that as being an important distinction, then you might think you are on relatively safe ground here: most people know that tax evasion is a criminal activity. And, with that in mind, I should like to say “you would know if you were doing it or not”. Unfortunately, and with mind-numbing myopia, the government and HMRC conspired recently to introduce a “strict liability” offence for tax evasion. This means that HMRC has only to prove that you did something, and not that you were guilty - that you knew you were doing something wrong.

We are not talking about parking tickets here, but the possibility of ending up in jail. I have previously warned (Strict Liability – Innocence is No Excuse) that, in its own guidance, HMRC recognises that innocents can be caught by the new regime – and seems to be perfectly at ease with the prospect.

I think that the new strict liability regime was not intended to make it easier to catch the Al Capones of tax evasion but to make it much easier for HMRC to criminalise taxpayers, with minimal effort. All this nonsense about “safeguards” when you have deliberately abolished one of the most fundamental safeguards in UK criminal law, cuts no ice with me or the vast majority of tax advisers, so far as I can tell. In the context of tax avoidance v tax evasion, it serves to blur what should be a distinct and easily recognisable line.

Myth 2: If you are a tax avoider, then you are up to no good

Firstly, what is “tax avoidance”? There are numerous definitions of what constitutes tax avoidance, depending on who is doing the accusing.

Definition #1 – [The difference between avoidance and evasion] is the thickness of a prison wall – drily funny, but not really helpful to define avoidance simply by reference to evasion. Almost like saying “well done for trying”.

Definition #2 – Using tax law to achieve savings NOT intended by parliament – From memory, this is what is currently favoured by HMRC. While it sounds reasonably straight forward, this is not really the case, because:

• It is left to HMRC to determine “on the ground” what it is that parliament intended and, as we shall see, they have come to some rather strange conclusions in the past.
• Parliament frequently doesn’t know what it intended. It is allowed to change its mind about what it intended, and then does so.

There is very little point in having a definition of tax avoidance that means that something you do for several years is OK and then suddenly not.

Independent Taxation – Avoidance by Another Name?

Let’s take the classic scenario of independent taxation, introduced in 1990. At the time, the then Chancellor, Mr. Norman Lamont, basically said that spouses should be allowed to arrange their affairs so as to pay less tax and that this was “an inevitable and acceptable consequence of taxing husbands and wives separately". I sometimes wonder how we have managed to get from there, to where we are now: while there remain some very important provisions to protect spousal arrangements, it is also one of the most heavily mined areas of taxation that a general tax adviser is likely to encounter in an average working week.

How did we get from inter-spousal arrangements being basically fine, to the current position? Is it safe to assume that Mr. Lamont had a reasonable grasp of parliament’s intentions at the time, or was he really only on a YTS placement?

Who Creates “Unacceptable Tax Avoidance”?

Before government changed the rules, it was basically impossible for there to be tax avoidance between spouses. Now – and despite the government’s stated position at the time, anti-avoidance measures are rife. In essence, tax avoidance has been created where there was none. Conduct that used to be perfectly normal, has subsequently been deemed unacceptable. Read, for instance, the CIOT’s comments on HMRC’s introduction of its TAAR, in relation to CGT and spousal arrangements. HMRC suddenly came over all coy about whether or not certain inter-spousal transfers were actually OK. Call me cynical, but HMRC’s reluctance to confirm what everybody else thought was fine makes me infer only one thing: that HMRC would like to undermine what used to be a simple arrangement between spouses. Tax advisers generally have long voiced their concerns about new legislation that is so broad in scope that we then have to rely on HMRC guidance to see how they intend to interpret it on the ground. HMRC guidance changes.

Is it Capital, or is it Revenue? Answer: Whichever Makes You Pay More Tax

Let’s look at a further example of the wonderful inconsistencies in our tax regime and its approach to avoidance.

If I am a Trustee of a Trust, and it receives income, it will generally be charged to Income Tax. If I hold on to that income, and it accumulates to my long-term Trust capital, then it may well be taxed again – this time to Inheritance Tax. Trust law does not force me to “capitalise” the income. HMRC used to find this frustrating. So tax law was “simplified” so that, from April 2014 and purely for tax purposes, whether you like it or not, income that a Trust has not used will become taxable Trust capital after 5 years. Remember, it has already been taxed once as income. This is an additional charge, to Inheritance Tax.

If I own a company, it is taxed on its profits. I may then want to pay myself a dividend in order to extract the profits. I then have to pay Income Tax as well. The aggregate tax charge can be very substantial.  The government introduced a new top rate of tax – the “Additional Rate” – in 2010. In 2012, HMRC published a report on how taxpayers had reacted to the imposition of higher rates of tax.

The report noted that one simple measure that company owners adopted was to pay themselves very large dividends (say 2 or 3 years’ worth) before the deadline for the new higher tax rate arrived. HMRC’s report said, more than once, that this behavioural response, to avoid the new higher rate of tax, was “entirely legitimate”.

I don’t think it unreasonable to infer that HMRC had no real issue with such avoidance activities, and that HMRC was comfortable with companies either paying out dividends, or not. Of course, while those early dividends will have avoided suffering higher rates of tax, they will also have resulted in a very substantial one-off lump of tax for the Treasury.

Let’s wind the clock forwards a few years. The government has just introduced new, higher tax rates on dividends, which some may find surprising given its pre-election promise not to do so. That aside, the higher Income Tax rates on dividends mean people are less inclined to take dividends. Ultimately, when the company is sold or liquidated, the funds not paid out as dividends will be part of the value subject to Capital Gains Tax, which can be as low as 10%, when compared to the new dividend rates, which can be as high as 38%. I do not recall that taxpayers, or tax advisers, asked for such wide differences between the taxation of income and that of capital gains. But we have them, nonetheless.

If we turn to an HMRC consultation issued in December 2015, HMRC has become far less laissez-faire than it was in 2012. HMRC now thinks that any funds that the company has but doesn’t need should not be allowed to accumulate but should instead be paid out as dividends. Otherwise, there is a risk that those accumulated unused funds might be taxed at very low CGT rates rather than the brand spanking new not-higher-of-course-but-strangely-still-much-more-expensive dividend rates.

Unacceptable tax avoidance has a new face, it seems: and it is called “money-boxing”, which is where you do not take out every last penny in dividends that your company can afford, in case those funds may end up being taxed at lower rates. Or, as HMRC put it:

““Moneyboxing”, where the shareholders of a company retain profits in excess of the company’s commercial needs and so receive these profits as capital when the company is eventually liquidated.”

We have moved a long way in just a few years. Not necessarily forwards. It is worth pointing out that companies may last for decades – generations, even. Certainly longer than governments. Some company owners might be horrified to learn that habitual prudence in accumulating - in some cases over many years - reserves that are beyond a company’s foreseeable commercial needs (but that might nevertheless come in handy such as, say, in weathering a global banking crisis) might leave them open to accusations of tax avoidance.

It is one thing to say that someone is avoiding tax – acceptably or not – by taking steps to reduce his or her tax bill. It surely feels a bit strange to try to accuse someone of avoiding tax by simply doing nothing – by not paying a dividend.

HMRC would probably argue that I have twisted the report’s words because its intention is to dissuade people from deliberately converting income to capital, so it can be taxed at a lower rate. But that would then allow me to point out that that is almost exactly what HMRC has done with Trust income, the only real difference being that in the case of Trusts, it is so that HMRC can charge more tax.

And in any event, the measures that HMRC has ultimately settled on to discourage such activity do not differentiate between a conscious effort to ‘convert’ undistributed income to capital, and surplus funds that have simply accumulated over decades. If HMRC or the government were really concerned only with deliberate tax avoidance, then the measures could have been targeted very much better than they are.

In fact, HMRC has not taken steps to combat “moneybox companies” directly. Following on from the consultation, we now have a quite bizarre twist: you can still pay out low or no dividends, liquidate you company at some point and enjoy Capital Gains Tax at a rate as low as 10%. You could do that with a company that has accumulated profits over three or thirty years. But if, within the next two years, you get involved with a similar business, then new measures will be triggered that retrospectively tax your liquidation funds in the old company as income – taxable at up to 38%. The effect is that you will be found to have undertaken unacceptable tax avoidance, not by reason of anything that you did at the time, but because of something you do a couple of years later, in a completely separate business. If that seems fearsome strange, that is because it is. You have to wonder what message this sends to entrepreneurs.

HMRC initially tried to say that it wanted to protect commercial practice, as was mentioned in the December 2015 consultation document. HMRC is to be applauded for being frank and open in its follow-up summary of responses about the number of times respondents raised concerns about the adverse commercial implications of its proposals, and then putting them into effect anyway. On the other hand, I am not sure that HMRC or the government has that decent a grip on what is commercial practice, given the volte face that has taken place since the introduction of the Corporate Intangibles regime in 2002, (“removing tax distortions, to ensure that decision-making is driven by commercial factors rather than by tax considerations”), and its curtailment in 2015, because the regime that was introduced to remove tax distortions to commercial practices “can distort commercial practices”. Which just goes to show:

• Fact can be stranger than fiction
• Justifications for changes to tax legislation can sometimes be more than a little bit hard to swallow. Did I mention the renewals basis?

Entrepreneurs’ Relief – What Exactly Were You Thinking?

If tax avoidance is defined as going against what parliament intended, I don’t think it is unreasonable to point out that some tax legislation is so poorly drafted as sometimes to make it nigh impossible to work out what it actually was that parliament intended.

Entrepreneurs’ Relief is a tax break that allows capital gains to be taxed at only 10% instead of the more common 28% (now more likely 20%). The regime is reasonably permissive and, having been introduced in 2008, is almost a decade old. Various measures were introduced in 2015 to restrict access to the relief. Further legislation had then to be introduced, with retrospective effect, because the government was warned that the restrictive anti-avoidance legislation went too far. Or, to put it another way:

“We are introducing rules to ensure that taxpayers cannot benefit from Entrepreneurs’ Relief in a way that parliament never intended. No, wait, we are now changing the rules again, because we have just realised that we didn’t know what we, parliament, intended last year, when we were deciding what parliament actually intended in 2008.”

On the one hand, it serves to illustrate that “what Parliament intends” is not written in stone, but can and often does change over time. And that is not a useful way to define unacceptable avoidance if the parameters can change so easily. On the other, we should welcome the fact that HMRC/the government were listening, so that some aspects of the new anti-avoidance rules were effectively reversed. This does not always happen.

Definition #3 – Tax Avoidance is simply not paying tax, when it is not necessary to do so. What is acceptable depends on whom you are asking.

This covers a wide spectrum of activity. Some of it is perfectly acceptable to the vast majority of people, HMRC and the government. The more artificial/contrived the arrangements in place to ensure that tax is not paid, the less people like it.

I am entirely comfortable with this as a definition. So, for instance:

• You avoid paying tax when you queue up to buy petrol before the price (duty) rises traditionally on Budget Day midnight. This does not make you a bad person. (But it does make you a bit of a traditionalist, given that it’s been put on hold for the last few years).
• Ditto booze and fags
• Making a pension contribution to reduce your exposure to higher rates of Income Tax
• Taking salary sacrifice arrangements in exchange for childcare vouchers, which will reduce your Income Tax and National Insurance liabilities
• Taking an employer pension contribution, instead of a cash bonus that would be subject to tax and National Insurance Contributions
• Likewise dividends before a new tax rate is introduced.
• Gifting money to your children now, to avoid Inheritance Tax on death. Remember, it’s already been taxed once in your hands, either as income or capital gains.

I don’t think that many people would object to the measures taken to reduce tax that have been described so far. Except perhaps HMRC, which has for some time now been threatening to attack salary sacrifice arrangements, such as in the 2015 Budget Red Book: “The government will actively monitor the growth of [salary sacrifice arrangements] and their effect on tax receipts.” And has already substantially curtailed pension contributions for very high earners.

For what it’s worth, I am also comfortable with the notion that contrived or artificial schemes should fail. In other words, there exists a spectrum of tax avoidance: at one end live those simple tax transactions that could be undertaken by most taxpayers. At the other end are the complex, packaged schemes that rely on fairly abstruse interpretations of tax legislation, and may require steps or arrangements that one might struggle to justify on economic grounds. But given that I am a tax adviser, I suspect that my comfort zone extends further than the average taxpayer’s, whose exposure to our wonderfully complex tax code is much more limited. I do not think it is my place to tell people what is the tipping point. I do think it is right, though, to try and cut through the smoke and mirrors.

Myth 5:  HMRC’s position on tax is always right. Anyone who disagrees with HMRC is probably up to no good.

HMRC is often wrong. You might not necessarily know this from HMRC’s press releases, which rarely mention cases that HMRC has lost. Sometimes HMRC has to be told by the courts, and sometimes the law is changed before cases get to court.

Creating a Tax Liability Out of Nothing

While many contrived tax avoidance schemes arguably create an artificial tax cost that has no real economic substance – a challenge often brought by HMRC in tax cases – let’s not forget that HMRC is, just occasionally, a little imaginative in its own right.

Investing Offshore: Who’s in the Wrong? Holiday Homes from Hell

Aside from pension funds, a common offshore investment might be a holiday home, somewhere nice and warm (basically, anywhere except the UK would probably do). Hopefully, the property will increase in value over time.  Although one does have to be reasonably wealthy to be able to afford a holiday home, sharing arrangements to lower the threshold to ownership are also available. It was not unusual for UK investors to acquire their holiday home through a local company. This was often the case with former Eastern Bloc countries, where personal ownership by foreigners was proscribed.

Some holiday homeowners were then assessed by HMRC for a “benefit in kind” – Income Tax on the rental value of the overseas property. In effect, HMRC was saying that the holiday home was like a company car provided by an employer, (in this case the holiday homeowner’s own company) and should be subjected to tax and National Insurance Contributions as well. “Benefit in kind” tax legislation is supposed to tax non-monetary earnings from employment. I am pretty sure that parliament never intended for it to be applied to holiday homes bought by individuals (albeit through their own company) out of their own taxed income.

Thankfully, the government introduced legislation in 2008 (to include new sections 100A / B to ITEPA 2003) that put beyond doubt that using a company to own an offshore holiday home was not subject to the “benefit in kind” legislation. Proof that HMRC had been happy to charge tax (and NICs) thereon up to that point, is in the refund regime that then had to be introduced for those whom HMRC had targeted. I harbour a flight of fancy that HMRC was doing nicely up until the point that they tried to assess an MP on his or her Bulgarian bolthole. Or maybe it was HMRC itself that decided enough was enough?

When is Property Letting a Trade? When HMRC Says So

Another instance of questionable judgment on HMRC’s part may be found in its fairly recent attempts to assess property investors to Class 2 National Insurance Contributions. Seasoned landlords may appreciate the irony: HMRC is adamant that property letting is a passive activity, generally requiring no more effort than, say, leaving funds in a bank deposit account. As a result, landlords are prevented from accessing most of the loss and CGT reliefs available to traders. And yet this has not prevented HMRC trying to charge those same landlords to self-employed Class 2 NICs. HMRC is well aware that property letting is not a trading activity for Income Tax purposes, but points to perceived discrepancies between the categorisation of self-employment in Income Tax legislation and earnings in NIC legislation. The fact that the tax case of Rashid v Garcia 2003 SSDC 36 quite categorically found that Class 2 NICs were not due in the case of a property investor seems not to have dissuaded HMRC at all. Here’s the twist, though: in that tax case, it was HMRC that argued that property investment was not subject to Class 2 NICs! HMRC has not yet offered a decent explanation of its complete change of heart. Fearsome strange.

Further examples include:

The legendary Wick letters. It seems highly unlikely that parliament intended that the special tax relief to encourage investment in film schemes might actually cost those investors money. This did not prevent HMRC from attempting to find that complete strangers, who had never met, were nevertheless operating “associated companies” that should as a result be paying a lot more tax. I am not sure whether HMRC reeled back because

• They eventually saw sense
• The tax profession was up in arms and there were calls in some quarters for open rebellion (I exaggerate. But not by much)
• An MP, having received his Income Tax rebate from HMRC’s accidentally assessing him to a Benefit in Kind on his Bulgarian holiday home and then invested it into a Film Scheme, suddenly found that HMRC wanted even more money from him, this time for Corporation Tax, because his arts and crafts business was now deemed “associated” with a few dozen companies owned by other equally bemused investors, that he’d never even heard of, let alone met, let alone done business with.

I kind of hope it was the third one.

An Unreasonable Interpretation of “Reasonable Excuse” for failing to file a tax return by the statutory deadline. This is where a taxpayer is excepted from late filing penalties if they can give a good reason. It seems that everybody except HMRC knows that HMRC sets the bar too high, and that alien abduction is not actually a pre-requisite. Aside from unrepresented taxpayers, of course, who will probably pay penalties when they don’t need to. Because they will simply assume HMRC is always right.

Myth 7: Companies with huge turnovers that pay little or no tax must be doing something naughty

Turnover is not the issue. Companies are taxed on profits: how much is left over after expenses have been claimed. Lots of companies (and unincorporated businesses too) have very small profit margins, so they may have very large sales but small profits, or even losses. It is totally misleading to look at a company’s “top line” in order to work out what someone’s tax bill should be. That is why we talk about a company’s “bottom line” – its profits – as being important.

Even if a company makes losses for several years, it may have good reasons for carrying on. The press is currently awash with stories about the UK steel industry, that has struggled financially for a number of years. But that does not mean that its companies are mired in dodgy tax schemes.

Somewhat closer to home for me, I advised a company that spent several years building sites and investing millions on R&D equipment, at the bleeding edge of medical research. The directors and shareholders did not expect to turn a profit for several years after the sites were finished, let alone started. But, in the long term, they expected to make a commercial return. The work they did was so innovative that they were very lucky to avoid a visit from some high-profile ministers sporting pristine hi-vis jackets and pointing determinedly at pieces of equipment whose function they wouldn’t fathom in a month of Sundays. (They got me instead). The company was, through and through, exactly the kind of business that the UK wants and needs. Loads of early year tax losses and not a dodgy tax scheme in sight.

Having said all of that, multi-nationals are able to introduce costs from other countries into their UK accounts. Which in turn means that UK profits can be reduced, and the same business can divert that money to a country where it pays much less tax – a “tax haven”. At the end of the day, you have to ask why a company that is continually making losses wants to carry on (or is even allowed to do so, according to company law). It either expects realistically to make serious profits here at some point in the future, or maybe it is already making profits elsewhere, thanks to its UK venture. In the latter case, some of its profits are really derived from UK activities and should be taxed accordingly. I cannot think of any tax advisers whom I know, who would disagree with that principle.

Myth 8: Companies that pay out dividends while making losses are up to no good.

A company can pay out dividends only if it has the accumulated profits to do so. This basically means that, over the life of a company since its inception, it must have made sufficient profits – over and above any losses made now or in the past – to cover all dividends paid out so far and that it now hopes to make.

The company has to pay its Corporation Tax first, before it is allowed to pay out any dividends. This means that any dividends paid should already have been taxed in the company once, and may therefore end up being taxed twice – once in the company, and then again in the hands of the individual receiving the dividend.

Summary

It will come as no surprise that I do not think tax avoidance is wrong per se. It is a phrase that is used by some to mean something more specific – more disreputable – than simply not paying tax where one doesn’t have to and I don’t think it is helpful to promote the narrower meaning, or we end up with people agreeing on completely different things. There was a prominent conservative who at the beginning of 2015 said that “everybody avoids tax” and I fear the press who reported the story were either incompetent or deliberately misconstrued his meaning.

I would suggest “unacceptable” or a similar adjective, in the same way as one may drive, as do most people, but one may also undertake “dangerous driving” which is clearly wrong and unacceptable to the vast majority of the road-going pulic. Of course, not everyone agrees on what exactly constitutes "dangerous", but some antics are clearly "out there" - beyond the pale.

I do not at all agree with the argument that, at some level, all avoidance is morally wrong. But nor am I clever enough to point to a specific mark on the spectrum and say “there it is: that’s the dividing line everyone should really want not to cross”. I also recognise that there may be more than a little self-interest in a tax adviser commenting on tax avoidance. But then, it could be argued that even governments and tax authorities have chips in the game, too.

In that vein, one or two last points:

A recent article in a national newspaper said that individuals and consumers were being forced to plug the corporate tax gap because companies were becoming increasingly successful at paying less business tax, so greater demands were being made of individuals. I would say that this may be true. But that is not the whole story.

The fact is that the UK is happily slashing its headline Corporation Tax rate at an incredible …rate. The 2020/21 rate will be 17%, not far off half what it was a little more than a decade ago. This massive saving has really fallen only to the wealthiest companies, that the Chancellor wants to entice to relocate to (or to remain in) the UK. The vast majority of UK companies have profits that are too small to have benefited from the significant rate change over this period. (The hitherto separate Corporation Tax rate for small companies has hovered around 20% for the last 2 decades). Some final points:

• The UK is essentially beating so-called tax havens at their own game but in our case we are simply being “competitive”, not “dodgy”. Some of our G20 neighbours may disagree with the distinction.
• The UK tax burden is being shifted away from very large businesses and onto ordinary individuals who, clearly, are generally less able to threaten to up sticks for Luxembourg, Shanghai, or the Cayman Islands. But I do not find that this is simply down to multi-national corporates employing dodgy tax schemes: it is, in fact, a key plank of the UK government’s economic policy – the Chancellor happily admitted as much in his 2015 Summer Budget Speech. I am not sure I buy into the rationale… no, on second thoughts, I really do not.
• Some of the Chancellor’s latest tax-raising measures are going to prove very expensive for hundreds of thousands, if not millions of taxpayers in family companies in roughly 18 months’ time. Already, many of those in the firing line have asked me an obvious question: "How can I avoid paying so much more tax every year, from now on?"