Taxpert advice
In response to Tax and the City – is our only duty to obey the law? – 12th April 2016
I am a Head of Tax for a multinational company which has some structures in what some might define as tax havens. I have worked in both the UK and US and seen a multiplicity of tax systems over the past 20 years.
The problem with a view that there is an overriding “moral” code which should be followed is that everyone’s morality is different, and society’s perceptions change over time. Tax planning which was viewed as perfectly normal, and even necessary to remain competitive, only five years ago is now viewed as “abusive”. This means that when tax authorities, the press, public, or investors come along and look at things which were put in place a number of years ago, they are inevitably applying a different perspective than that which applied at the time. That is not to say this approach is necessarily wrong, but it does mean that you can’t fairly say that someone did something wrong five years or more ago if at the time it was viewed as normal.
The only principle I think can apply is “was it legal” and was it consistent with what position you or your company was taking. It is, for example, a bit rich for the Guardian to object to corporate tax planning given it is the only thing which has ensured that newspaper is still in business. Equally, David Cameron’s posturing on morality and being seen to do the right thing is what makes him vulnerable. The involvement in offshore structures would not have been a problem for him had he been open and unapologetic from day one. The mystery of his approach to these issues over some years is that everyone knows he is from a privileged background, and he still got elected, but having got elected he tries to pretend he isn’t.
It seems the inevitable outcome from all of this will be greater transparency and openness. The only rational response to the release of the PM and Chancellors’ tax returns was “is that all they earn?” particularly when compared to what most of those commenting on their positions in the media are taken into account.
Matthew Hewitt, London, UK | @mhewba
Sir,
In your article ‘Tax and the City’ you explain how you wrestle with a great conundrum when it comes to the law and morality. Is our only duty to obey the law?
I would argue there is no debate. Without a moral driving force in politics one must question the purpose of our politics, and without a moral driving force in society we turn our backs on millions who have campaigned to change the law over the course of history because their own sense of morality was not reflected in the laws of the time.
If our only duty is to obey the law, then we outsource our very human, deeply personal, sense of right and wrong to our lawmakers. If they too see their only duty as being to obey the law then it effectively renders them redundant as lawmakers.
If our lawmakers define ‘right’ and ‘wrong’ exclusively in terms of our existing legal parameters, the only logical conclusion is that we, as a society, have reached some sort of moral zenith, that this is perfectly reflected in the laws we have established, and that any changes to the law are unnecessary. This would be an absurd, and arrogant, position to take. Among the reasons I’d put forward are that humans are imperfect by nature, and that morality is subjective.
Without a moral driving force in politics, something in which many in our current cohort of politicians seem lacking, there can be no appetite to change the law besides reasons of personal gain or boredom. A moral driving force in our politicians is not only desirable, but essential. But crucially, when we debate changing the law, we cannot then cherry-pick which aspects of the law our irregular, ever-changing, subjective sense of morality should apply to, whether civil rights, employment, or taxation.
Keumars Afifi-Sabet, London, UK | @Keumars
This pre-dates the big bang by a long way and does appear to support the claim that what is the only consideration is that of the law.
Lord Clyde, in the case of Ayrshire Pullman Motor Services v Inland Revenue [1929] 14 Tax Case 754, at 763,764:
“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue.”
David Ballinger, North Yorkshire, UK
Response to David Cameron has done nothing wrong on tax – 11th April 2016
It’s not envy which drives the anti Cameron bandwagon, it’s resentment. Which is even worse being entirely negative; a dog in the mangerish attitude that if I haven’t got it (money) then he shouldn’t have it either.
I think the problem for David Cameron is not in doing it (tax avoidance), but in doing it having already complained about others doing it. “Don’t do what I do, do what I say” is always a difficult line for politicians to defend.
Mike Ferro, Bexleyheath, Kent, UK
P.C. Ness
Excellent article spoilt at the end with the use of ” unmanly”. This is nothing to do with gender and to associate inappropriate criticism with ” manliness” harks back to the 1950s.
There was a brilliant article in the Spectator last week by Simon Barnes called ” In praise of Political Correctness’. The writer has a son who has Down’s and is now treated with compassion and respect whereas his experience in the 1950s would have been quite different and he would have labelled with an offensive name. Let’s put Unmanly in the same category and let our language reflect genuine differences not those contrived to aggrandise men and diminish women – appropriate criticism is not a male preserve.
John Williams, Hampshire, UK
Bernt fingers
I’m going to say this for the last time. Socialism and democratic socialism are not the same thing. Sanders and his fans do not plan on seizing the means of production anytime soon. The fact of that matter is that democratic socialism is capitalism that is checked by the government so as to avoid things like the 2008 collapse. I am not a socialist. I am not a communist. I don’t want to create a classless society. Read about the governments of Denmark, Norway and Sweden and you will understand what it is that we want. Don’t think that we support what the socialistic countries of the past have done. We look to the future while you continue to write about the past.
Cole Sawyer, Rapid City, SD, USA
In-N-Out
It doesn’t matter who has been designated to lead the leave campaign as all are fighting for the same cause . The British people don’t want or need infighting within the groups and we don’t want anything to delay the referendum. The answer is for all the out campaigns to work together to achieve Brexit.
A disruption within the leave side just might be be a catalytic turn off.
We must vote on the 23rd June 2016 and we will only do that together.
Vicky Abbott, Nottingham, UK
Robert Salisbury is absolutely correct in his response to Bruce Anderson, the EU is on a downward slope, slipping fast. If only the Out campaign could point out the consequences of a backwater Europe that may occur within a century or so. Long – term, there is a real risk from staying in – a continent as powerless as 19th century China or 20th century Africa. Surely this would resonate with the public!
Geoffrey Hicking, Leicestershire, UK
Titonium
Victoria Bateman has provided an interesting discussion of the market distorting effects of workers’ control of the factories in Tito’s Yugoslavia. Another test case might be the socialist kibbutzim of Israel at roughly the same period.
A family member was the kibbutz accountant who had to present the kibbutzniks with yearly options for the future of their factories – in broad terms, an immediate pay rise with no investment in new plant, or plant modernisation funded by a pay freeze. They always voted for the former, with disastrous results. The factories became uncompetitive and closed down, leaving the workers (and my relative) jobless.
Alan Hayman, Colchester, UK
