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Are we now obliged to pay as much tax as we possibly can, in any circumstances? Should we deliberately not claim expenses or tax reliefs to which we are legitimately entitled, to help shore up the country's ailing finances?

It would seem so, according to the Chancellor Mr. Osborne, who roundly criticised Labour for avoiding tax and bizarrely, according to the Telegraph and several other sources, asked them to settle the supposed liability of one of its main donors, in a letter which was publicised yesterday. This evinces a complete misunderstanding of the fundamental principles of how personal tax is assessed and charged - unfortunate, given Mr. Osborne's role as Chancellor.

The background appears to be that In a simple transaction, a "major donor" gave some of his shares away to the Labour party. The value of the shares was very substantial but this kind of transaction is one which shareholders in family companies have undertaken countless times for very many years. The tax relief on such transactions is there for a very good reason, although it is unusual to see the beneficiary as a political party, rather than a friend or relative.

To be clear, on the facts as reported this is not some kind of contrived or artificial "scheme" with several steps and lacking in commercial substance: this was on the face of it a very real, straight forward and absolute gift which should be specifically relieved under legislation designed for that purpose. It is perhaps avoiding tax in the most literal sense but one of the major problems with using the word "avoidance" is that it is too broad a term. 

Of course Mr. Osborne might claim that his letter was intended merely to highlight Labour's "double standards" in such matters, given that they have frequently sought to chastise big business recently for failing to "pay their fair share". (Something in which he too has participated, if not quite so energetically). And of course Mr. Osborne has a far better appreciation of tax matters than this most recent correspondence might suggest; as regards both, Mr. Osborne might do well to bear in mind that the Internet, if not he, has a long memory, as this clip of Mr. Osborne publicly recommending the avoidance of Inheritance Tax demonstrates - George Osborne Advises on How to Avoid Tax. Perhaps if the Chancellor spent less time trying to score political points and more time on the economy..?