Well, we have got our knickers well and truly twisted around tax avoidance, haven’t we. You can’t open a paper without reading about interrogations of the head of HMRC, HSBC et al. And we’ve all witnessed the mud-slinging in the Commons. Yet I’m willing to bet there isn’t a single MP who doesn’t avoid tax to some degree.
There’s barely a day go by when I don’t get into a heated debate about tax avoidance. I’ve spent the best part of my life protecting my clients’ money from hostile attack. Because I firmly believe their family, not the tax man, should benefit from their life’s savings. So no prizes for guessing which side of the fence I’m on.
The problem is there are degrees of tax avoidance, and of acceptability. 50 shades, so to speak. Most of us accept there’s a difference between tax avoidance (legal) and tax evasion (illegal). Millions of us take advantage of ISAs and Pensions that avoid tax. Thousands take advantage of Government encouraged investment schemes such as Enterprise Investment Schemes and Venture Capital Trusts.
Ed “All Tax Avoidance Is Immoral” Milliband has come under fire because his family is accused of using a Deed of Variation. If someone who already has an Inheritance Tax liability (i.e. is worth more than £325,000 on death) inherits – they can re-direct that inheritance to avoid another slice of tax when they die. And save 40% tax instantly. But still retain access to the inheritance. For me, it’s a no brainer. Perfectly legal and acceptable tax planning which we recommend all the time. Who in their right mind wouldn’t.
The right to arrange your affairs to pay as little tax as possible has been validated in court again and again. “No man in this country is under the smallest obligation, moral or other, so as to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores”, said Lord Clyde. Judge Learned Hand said much the same – “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”