As we all know, the government is skint. Therefore over the last year or so the government and its bureaucratic arm, HMRC, have been doing their best to promote the idea that tax avoidance (which, unlike tax evasion, is perfectly legal) is somehow akin to tax evasion and morally wrong, and have attempted to whip the media up into a moralistic crusade against avoidance.
In January this year Cameron said the following:
"I think we need a tougher approach and one of the things we’re going to be looking at this year is whether there’s going to be a more general anti-avoidance power that HMRC can use, particularly on very wealthy individuals."
This of course is rather hypocritical, given that many MPs sit on boards of companies that operate tax avoidance schemes.
Anyhoo, imagine my amusement last night when coming home from the pub and settling down to watch Newsnight only to discover that the government and HMRC have happily signed off on a tax avoidance scheme.
Ed Lester, the CEO of the Student Loans Company, is happily receiving his £182K per annum without deductions for tax or National Insurance.
How?
He is using a tax avoidance scheme, whereby his pay is is transferred gross to his private service company, which has been signed off by HMRC!
This is the same HMRC that has been bleating that tax avoidance is somehow morally wrong!
In classic damage limitation mode, feigning surprise and shock, Danny "Beaker" Alexander has ordered an inquiry. Rather pointless given that the state signed off on this deal, ie the state knows about it.
Bollocks!
Mr Lester's deal
was signed off by Universities Minister David Willetts and was passed
to the Chief Secretary to the Treasury Danny Beaker Alexander for approval
because his salary was above the prime minister's pay.
By the way, those in government and HMRC who are claiming that this is a one off had better take a stress pill or two, there will be others outed in the coming days who also have a similar arrangement.
Hypocrisy from the state and its bureaucratic arm (HMRC), who would have thought it?
Therefore, despite the bleating by HMRC and the anti avoidance campaign pushed by the state and HMRC, have no qualms about using tax avoidance schemes; the fact that the government and HMRC signed this one off shows that they perfectly happy that people use them, they just don't have the guts to admit it.
UPDATE
In the fallout from this clusterfuck of hypocrisy, the government has just announced that Ed Lester will now have his tax deducted from his income at source!
Tax does have to be taxing.
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This does not come under "tax evasion" or "tax avoidence", it's "tax efficiency" apparently.
ReplyDeleteMy son is in his last year at university and then I will never again have to deal with the Student Loans Company, thank God. I have never seen such a useless and utterly incompetent pile of crap in my whole life.
ReplyDeleteI do not have any problem with somebody avoiding tax, as you have said many times, it is legal. However, this man is caught by the rules on personal service companies known as IR35. The indicative element for me is that there is clearly no right of substitution. I presume that he ticked the correct box on his self-assessment form in which case, especially since his situation has received so much this publicity, I would expect HMRC to investigate forthwith.
ReplyDelete