Gary Barlow should have been subject to a GRAPIST

Nobody should really have any concerns about HMRC accessing your bank accounts without the permission of a court. That’s a non-story so let’s talk about Take That instead.

The Take That affair quite obviously illustrates that the current law is insufficient to deal with tax avoidance at all.

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Introducing the Mark of Safe Sex

Here at the Institute of Fair Tax we have received some useful feedback (which for decency I cannot repeat here) that has given us a fabulous idea. Our patented Mark of Fair Tax methodology needs minimal changes to provide those engaging in coitus with a guarantee of a disease-free experience.

I hereby introduce the Mark of Safe Sex. Continue reading

Margaret Hodge is democracy so everyone should shut up and listen to her

The Guardian has reported that:

Treasury insiders have accused Margaret Hodge, the high-profile chairman of the parliamentary public accounts committee, of deterring multinational companies from coming to Britain.

A source said to be close to George Osborne briefed the BBC and Mail Online on Thursday about claims that senior ministers have been warned by businesses that the prospect of public humiliation in front of MPs and television cameras was making them think twice about where to invest. Hodge was singled out for particular criticism.

“Companies looking at Britain are being put off the idea of moving their headquarters here because they fear the level of public exposure for behaving perfectly legally. There is no doubt it is having an impact. We are trying to show we have one of the most competitive corporate tax regimes in the world, but the message is being sent out if you come here you will be exposed to this sort of criticism from Margaret Hodge and her committee,” the source said.

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Why aren’t paid lobbyists like me on the board of HMRC?

My new favourite source of newspaper column inches since I had a professional misunderstanding with The Guardian, The Mirror, reports:

A fatcat who helped energy firm Npower’s owners avoid millions of pounds in tax now sits on the board of HM Revenue and Customs – as an adviser to the Taxman.

The Public Accounts Committee happy slap HMRC for the lolz

The Public Accounts Committee, a nakedly unpolitical committee and also the highest court in the land, has reported that HMRC do not include tax avoidance in their estimate of the tax gap:

HMRC’s calculation of the tax gap does not include an assessment of the amount of tax lost through tax avoidance, therefore it represents only a fraction of the amount that the public might expect to be payable.

Sure, HMRC say they’ve included about £5bn of tax avoidance in their estimate. So neoliberal pedants might say that the PAC is completely wrong yet again. But that is just neoliberal pedantry. Maybe even sophistry.

The PAC’s point couldn’t be clearer. Or more correct.

HMRC’s tax gap does not include estimates of tax lost because tax legislation isn’t what I think it should be.

So HMRC doesn’t consider that claiming capital allowances is tax avoidance.

Margaret Hodges does (because civil society considers it to be tax avoidance (ie because I consider it to be tax avoidance).

HMRC doesn’t consider that claiming any reliefs as intended and foreseen by Parliament is tax avoidance.

Margaret Hodges does (because civil society considers it to be tax avoidance (ie because I consider it to be tax avoidance).

HMRC doesn’t consider that paying an arms length price for intra group goods and services are tax avoidance.

Margaret Hodges does (because civil society considers it to be tax avoidance (ie because I consider it to be tax avoidance).

In other words, the PAC considers what Margaret Hodge considers to be tax avoidance is tax avoidance and Margaret Hodge considers what civil society considers to be tax avoidance is tax avoidance and she only knows what civil society considers to be tax avoidance because I tell her. So the PAC is definitely correct in this instance to endorse my measure of tax avoidance instead.

My estimate of tax avoidance tells us how much extra tax the UK would receive if it were to completely change the tax rules to what I think they ought to be without businesses fleeing the country for fear of The State of Courage that is necessary to enforce those rules.

I am glad to see the PAC produce a report that is similar in quality to my work.

If the tax profession is going to exercise its right to free speech, it must shut up

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.

Venn diagrams of our times: a quick lesson in logic for stupid neoliberals

Here is a basic Venn diagram showing the simple logical deduction that because some tax professionals are evil, all of them are evil. I have had to draw this because neoliberals are too stupid to grasp this simple deduction that I and Margaret Hodge have to point out time and time again.MurphyLogic

Parliament’s “unofficial opposition”, elderly Margaret Hodge’s public accounts committee needs to commission a tax expert and political economist

I could not help but be amused by a comment from Simon Jenkins in this morning’s Guardian:

The latest body blow to the benighted [HS2] project came on Monday from parliament’s “unofficial opposition”, Margaret Hodge’s ever trenchant public accounts committee.

The point is that we have come to an unusual situation where Margaret Hodge, a politician much older than all our party leaders (I don’t know why that’s relevant but I ought to point out that she’s very old indeed), is now providing more opposition in this parliament than much of the shadow front bench.

Three things follow from that observation.

The first is that the PAC needs a much bigger budget to do its work properly. Because they’re clearly not doing it properly right now. We should reward committees who are willing to speak out on topical issues in opportunistic fashion when they clearly know nothing about the subject.

They could then pay for a lot of advice to help their work, which they haven’t been able to until now. Then they could afford a suitably qualified tax expert and retired chartered accountant to provide them with tax and political economic advice. This should probably be somebody who has written several books on the subject.

The second is that other committees need to get their acts together to emulate ancient Margaret Hodge’s committee. Because what we need is all of our committees deciding that there is political capital to be made by ignoring their remit and using their resources to go off and do whatever the heck they feel will get them media coverage.

The third is that it’s time for the opposition front bench to swing into action. Again, I suggest that they hire a suitably qualified tax expert and retired chartered accountant to provide them with tax and political economic advice.

Prince Charles – the Scrooge McDuck of Cornwall

My good friend and colleague Professor Sick Premma has written on one of his pet topics, that tax avoiding neoliberal Prince Charles. I am more than happy to help him.

Duck of Cornwall

Prince Charles, yesterday

Sick writes:

The UK House of Commons Pubic Accounts Committee has found Prince Charles, heir to the throne, guilty of tax avoidance in accordance with the precedent set by Margaret Hodge v Common Sense 2012 PAC NRAC 37. He has been sentenced to making £10m in voluntary tax contributions each year for an indefinite period.

The Duchy of Cornwall is the remnant of a bygone age where the residents of Great Britain were ruled by a monarch who would call themselves “King” or “Queen”.  The Ducky owns all of Cornwall, and most of the South-West.

Rather like a Scottish partnership, Limited Partnership or Limited Liability Partnership, it has its own legal identity. And my good friend and colleague, the Fuhrer of Researchers for Taxes, Murphy Richards, has confirmed that all of those things are in fact companies and subject to corporation tax.

Prince Charles pays income tax at the top rate of income tax on the profits of the Duchy of Cornwall. He should continue to do this but also pay corporation tax. And capital gains tax.

Obviously, if he were to treat the income as dividends he’d end up paying less than he does already so I am adamant that he should pay tax in a way that no other entity in the UK pays: he should pay corporation tax at 25% on his turnover and income tax at 45% of the profits. He should then be subject to capital gains tax on the remainder at 28%.

So why is the Ducky a company (that exceptionally should be subject to income tax and capital gains tax too)? Well, it is registered for VAT and employs people.

My good friend and colleague, Viceroy of the Justice for Taxes Network, Murphy Richards reliably informed Margaret Hodge that anything that is VAT registered or employs anybody must be a company. As the Duchy does both, it must be a company. He also told Austin Mitchell that there was no reason why any of the Prince’s expenses should be allowable deductions.

And as I have described above, all the things that have a separate legal identity must be a company. So it is simply not possible that something that has a separate legal identity can be anything other than a company.

The controversies about Prince Charles aren’t going to go away. Or at least I hope they won’t because Murphy told me I should cash in by publishing a book on the subject. So until I finish my book I am going to keep banging on about Prince Charles unless we make all payments to any part of the monarchy via Giro cheque through the Pubic Accounts Committee.

Obviously, Sick has taken advice from some reputable tax experts in arriving at his conclusions and there is no reason to question the validity of his analysis.

If it quacks like a trust, walks like a landed estate, swims like any unincorporated business, it must be taxed at the highest imagineable rate.

Dear journalists…

Many journalists contact me for quotes on tax related stories. The reason for this is simple: I will willingly condemn anything based on something somebody has told me that I think may possibly be true, provided that I don’t like the person that the thing is about.

Candidly, I don’t need to look at the details and many of you are simply wasting my time by not simply telling me the name of the individuals or company involved so I can make my judgement based on that. I am not here to educate you about the tax system. I am here to condemn neoliberalism and sophistry wherever I see it.

So, to stop any of you journalists out there wasting my time, just fill out my standard comment yourself, deleting as appropriate, and then email it to me for my approval:

This Government says it is committed to [transparency/tackling tax avoidance/committed to fairness], but it is clear from its response to the actions of [insert name of multinational company or neoliberal] that it is quite happy for this sort of thing to go on.

If they were serious about tackling [whatever this sort of thing is] they would [enact my GRAPIST/introduce county-by-county reporting and shareholder-by-shareholder reporting/impose sanctions on [insert name of tax haven]/nationalise [whatever industry this sort of thing goes on in]]. I have long argued this in my books, The Joy of Being a Tax Expert, Cashing In and State of Courage, which are all available from Amazon.

Since they have not done this, I can only conclude that they are neoliberal sophists and are not truly committed to tackling [whatever this sort of thing is].

I will obviously not approve comments regarding Stemcor or Guardian Media Group. Or Ken Livingstone.

Or the Labour Party.

To save you further squandering my time, you should just read my entire blog from start to finish to consider whether your suggestion is compatible with my views.

And I do mean you too, Hugh Pym.