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Thwarting the tax man

Thwarting the tax man Editor's comment revised set-up, would it forego the THAT promising current affairs series, word to those tempted to go in tor opportunity to avoid paying £750,000? The London Programme, transmitted these "artificia" tax avoidance by London Weekend Television, got I think not. schemes. They may be invalidated at its pocket calculators working over­ What a subject like tax avoidance a later stage in court, leaving the time recently in a spirited effort to defendant with a bill for back tax. evokes is not a feeling of immorality but unfairness. The bigger and more penetrate that most secretive of But, as one accountant specialising ingenious the scheme, the better practices—tax dodging. Or, to give it in tax avoidance explained, each the semantic description used by chance it stands of success. scheme is scrutinised by lawyers and lawyers and accountants, "tax avoid­ part of the fee for putting it into For the ordinary wage earner, the ance". practice is set aside for a fighting fund constraints of PAYE afford no such opportunity. No buying a sumptuous yacht and in case it should be challenged before the courts. As the saying has it, there's one law offsetting the cost against business for the rich...... entertainment, this. Or taking the Nigel Broakes of Trafalgar House wife, with her faltering knowledge of appeared on the programme to say he French, on a trip to Nice to see a client wouldn't touch such schemes with and putting her down as a tax Nelson's Column, while Jan Hildreth, deductible expense for translation of the Institute of Directors, took a work. reactionary view which is becoming So, what's The London Programme went into increasingly characteristic of the IoD the big time, where the choice between since he took over as Director General. new? writing a cheque for the Inland In a curious example of logic, Revenue for the odd million pounds Hildreth argued that if a company was If the Manpower Services Commission or so or pocketing the cash depended able to retain £80m normally due for wants to retain any degree of credi­ on the legal legitimacy of a commo­ tax by using an artificial avoidance bility, it really must do better than dity dealing scheme or a merry-go- scheme, it demonstrated that the indulge in the sort of survey that came round bank loan. company — and, indeed, industry to my notice the other day. generally—was paying too much tax. In case you are, at this stage, biting Looking at unemployment among In calling for more tax advisers to your nails in frustration at not having young people, the survey came up seen the programme, don't worry. propagate avoidance schemes, he with the unstartling fact that a high completely missed the point that their The way in which these financial proportion came from families in the manipulations are carried out is none­ use is intended not to minimise the tax lowest three social classes and have burden but to shed it completely. theless baffling for having seen it fathers employed in manual occu­ explained. Indeed, the complex Morally, it's difficult to draw a line pations; 79 per cent had friends arrangements which some companies unemployed, 14 per cent had fathers between avoidance with a million are prepared to undertake to thwart pounds at stake and evasion with an unemployed and 19 per cent lived in the Inland Revenue left me wondering extra pound or so claimed for business households where no one was whether it was not better to cough up mileage when in fact the car was used employed. and at least go to bed having some for weekend jaunts with the family. Continuing on this theme of the idea of how one's business was being And until someone comes up with blindingly obvious, the survey found run. that many of these young people had figures to demonstrate a relationship Naturally, for a fee which can vary little success at school and left at the between tax levels and avoidance from £10,000 to £2m, there are practices in sampled countries, I don't earliest opportunity with few or no accountants eager to nit-pick their believe that a reduction of the tax qualifications. Those with no qualifi­ way through the latest Finance Act burden in this country would lead to a cations are likely to stay unemployed provisions looking for loopholes. And longest and experience unemploy­ withering of the type of scheme since it is humanly impossible to cover ment most frequently. discussed on the London Programme. every contigency in something as If, for example, by some change in tax Mercifully, the Manpower Services maze-like as tax law, the accountants law, a company previously indulging Commission either do not know — or usually beat the Inland Revenue. in avoidance to the tune of £1m was will not disclose — what this non- Tax inspectors put in a cautionary liable for 25 per cent less tax under the revelatory exercise cost. 4 INDUSTRIAL MANAGEMENT http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Industrial Management Emerald Publishing

Thwarting the tax man

Industrial Management , Volume 78 (1): 1 – Jan 1, 1978

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0007-6929
DOI
10.1108/eb056822
Publisher site
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Abstract

Editor's comment revised set-up, would it forego the THAT promising current affairs series, word to those tempted to go in tor opportunity to avoid paying £750,000? The London Programme, transmitted these "artificia" tax avoidance by London Weekend Television, got I think not. schemes. They may be invalidated at its pocket calculators working over­ What a subject like tax avoidance a later stage in court, leaving the time recently in a spirited effort to defendant with a bill for back tax. evokes is not a feeling of immorality but unfairness. The bigger and more penetrate that most secretive of But, as one accountant specialising ingenious the scheme, the better practices—tax dodging. Or, to give it in tax avoidance explained, each the semantic description used by chance it stands of success. scheme is scrutinised by lawyers and lawyers and accountants, "tax avoid­ part of the fee for putting it into For the ordinary wage earner, the ance". practice is set aside for a fighting fund constraints of PAYE afford no such opportunity. No buying a sumptuous yacht and in case it should be challenged before the courts. As the saying has it, there's one law offsetting the cost against business for the rich...... entertainment, this. Or taking the Nigel Broakes of Trafalgar House wife, with her faltering knowledge of appeared on the programme to say he French, on a trip to Nice to see a client wouldn't touch such schemes with and putting her down as a tax Nelson's Column, while Jan Hildreth, deductible expense for translation of the Institute of Directors, took a work. reactionary view which is becoming So, what's The London Programme went into increasingly characteristic of the IoD the big time, where the choice between since he took over as Director General. new? writing a cheque for the Inland In a curious example of logic, Revenue for the odd million pounds Hildreth argued that if a company was If the Manpower Services Commission or so or pocketing the cash depended able to retain £80m normally due for wants to retain any degree of credi­ on the legal legitimacy of a commo­ tax by using an artificial avoidance bility, it really must do better than dity dealing scheme or a merry-go- scheme, it demonstrated that the indulge in the sort of survey that came round bank loan. company — and, indeed, industry to my notice the other day. generally—was paying too much tax. In case you are, at this stage, biting Looking at unemployment among In calling for more tax advisers to your nails in frustration at not having young people, the survey came up seen the programme, don't worry. propagate avoidance schemes, he with the unstartling fact that a high completely missed the point that their The way in which these financial proportion came from families in the manipulations are carried out is none­ use is intended not to minimise the tax lowest three social classes and have burden but to shed it completely. theless baffling for having seen it fathers employed in manual occu­ explained. Indeed, the complex Morally, it's difficult to draw a line pations; 79 per cent had friends arrangements which some companies unemployed, 14 per cent had fathers between avoidance with a million are prepared to undertake to thwart pounds at stake and evasion with an unemployed and 19 per cent lived in the Inland Revenue left me wondering extra pound or so claimed for business households where no one was whether it was not better to cough up mileage when in fact the car was used employed. and at least go to bed having some for weekend jaunts with the family. Continuing on this theme of the idea of how one's business was being And until someone comes up with blindingly obvious, the survey found run. that many of these young people had figures to demonstrate a relationship Naturally, for a fee which can vary little success at school and left at the between tax levels and avoidance from £10,000 to £2m, there are practices in sampled countries, I don't earliest opportunity with few or no accountants eager to nit-pick their believe that a reduction of the tax qualifications. Those with no qualifi­ way through the latest Finance Act burden in this country would lead to a cations are likely to stay unemployed provisions looking for loopholes. And longest and experience unemploy­ withering of the type of scheme since it is humanly impossible to cover ment most frequently. discussed on the London Programme. every contigency in something as If, for example, by some change in tax Mercifully, the Manpower Services maze-like as tax law, the accountants law, a company previously indulging Commission either do not know — or usually beat the Inland Revenue. in avoidance to the tune of £1m was will not disclose — what this non- Tax inspectors put in a cautionary liable for 25 per cent less tax under the revelatory exercise cost. 4 INDUSTRIAL MANAGEMENT

Journal

Industrial ManagementEmerald Publishing

Published: Jan 1, 1978

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