One of the many many tax publications I read is the newsletter of law firm Pinsent Mason. In the latest edition chartered accountant heather Self, who is a partner there, says in the editorial:
In his 2002 Budget speech, Gordon Brown introduced the substantial shareholdings exemption (SSE), which had the clear policy objective of enabling UK-based trading groups to restructure and reinvest without being hindered by tax charges.
SSE is, of course, not relevant to the Vodafone sale of its Verizon interests,since that is a disposal by a Netherlands company of a US shareholding. However, Vodafone has confirmed that SSE would have applied to a direct disposal by the UK, and it is therefore nonsense to claim that UK tax has been ‘avoided’ on this deal.
And she adds:
This is so self-evident to any tax specialist that it would not be worth commenting on, were it not for the very different view taken by some media commentators – and, notably, Margaret Hodge.
I am afraid that, as is often the case, Heather has got this completely wrong.
First, I am the world’s greatest tax specialist and I did think the issue was worth commenting on – I estimated the tax lost was £25.2bn (if you ignore the law as it actually is and pretend that the law is completely different but that Vodafone would still perform the transaction in exactly the same way).
Second, whilst it is undoubtedly true that the law did not require that tax be paid and that therefore Vodafone did nothing wrong as such, though it is quite clear that they were doing something completely wrong given that if the law was different they would have acted differently, it is also equally undoubtedly true that those with an interest in the political economy of tax have a right to howl in protest at such losses and to say – as beneficial shareholder of steel company Stemcor Margaret Hodge has done – that the law needs to be changed.
I howl in anguish every time I put money in mine and my wife’s ISAs and my children’s junior ISAs, I do.
Margaret Hodger is completely correct to blame Vodafone for the Government that she was a member of passing the legislation that would have been applicable in this instance were it not completely irrelevant in this instance. It would be completely neoliberal for me to suggest otherwise.
Third, let me be quite clear: I can read Heather Self’s thoughts and that of or her firm. I know what they are thinking. Oh yes, I read minds.
I am sure, have no hesitation in saying, can guarantee without any doubt, that they think Labour is wrong to scrap the cut in corporation tax for big business that Osborne is planning.
That’s what this is all about, despite the fact that it seems completely unrelated.
Therefore, I think that what they are thinking is also engagement in the political economy of tax – and it’s time that these advisers admitted that what I think that they are thinking is actually meddling in the political process.
They should drop all their claims of puritanical objectivity. Because I think I know what they are thinking when it comes to issues such as avoidance. Major law and accounting firms are about as objective on tax as the average football supporter is when it comes to their club and its local rival.
To put it another way the tax profession is completely and utterly partisan and all pretence that Margaret Hodge can be dismissed ‘because she has got tax wrong’ in a way ‘no self respecting tax adviser would’ should be seen for the self serving sophistry that it really is. It’s blatant, albeit not actually blatant political economic positioning, political economic positioning to point out that Margaret Hodge is factually unsound.
There’s nothing wrong with saying Margaret Hodger is factually unsound. It’s probably true.
But if the tax profession is to be accepted as credible it has to drop its supposed ‘holier than thou’ suggestion of ‘independent observation’ and admit it’s engaged in blatant lobbying by providing factual accounts of events which contradicts the story that the Justice for Taxes movement is trying to spin!
When it does admit that, people might accept what it says with more open minds. Because I have never ever argued that somebody’s opinion are undermined on account of who might ultimately have been paid by.
*Cough* Judith Freedman *Cough*
Right now people rightly, and very largely, dismiss the tax profession because it refuses to validate their world view by telling them exactly what they want to hear.
People buy the newspapers because they print what they want to hear.
People watch television programmes because they broadcast what they want to hear.
People buy books because they print what they want to hear.
People ignore tax professionals because they don’t go around making ad hominem attacks at people who might make a perfectly factual statement in a newsletter aimed at fellow professionals who are interested in facts rather than indulging in the political bullshitting that the proles are interested in and will pay handsomely to have fed to them.
But, if you, dear reader and learned member of the public, want to hear what you want to hear, and are willing to pay to do so, you could hardly do better than buying Cashing In by Murphy Richards from Amazon, Google Play Store, iTunes or from selected Starbucks outlets.