Thursday 21 June 2012

K2 The Savage Mountain - Cameron Castigates Carr's Morality

It would appear that David Cameron did not read my article yesterday, about Jimmy Carr's K2 tax avoidance scheme, in which I warned David Gauke that:
"Avoidance is a perfectly normal human thing to try to do, the politicians are not in a position to lecture the rest of us on "morality".
Cue David Cameron who, wading in without thinking for one moment about the consequences, boldly proclaimed to the world that Jimmy Carr's tax arrangement "isn't morally right". 

Rather amusingly it does seem that Ed Miliband has in fact read my article, for in the Telegraph he is quoted as saying:
"I'm not in favour of tax avoidance obviously, but I don't think it is for politicians to lecture people about morality."
He is quite right (bloody hell, I'm agreeing with Miliband!), a politician lecturing us on morality is as natural as a cat walking on its hind legs.

I would remind Cameron that, whilst none of his income (from his job, his trust funds, his inheritance etc etc) may not be reduced by "morally repugnant" perfectly legal tax arrangements, many of his fellow Tory MPs and indeed many of his party's donors may well use such schemes themselves (eg Sir Philip Green). 

I would also remind the Prime Minister that raising a hue and cry over tax avoidance (eg in the form of the investigation of civil servants on off payroll schemes) is all very well, but what happens when your proud boasts to end these schemes come to nowt?

I refer to two issues:

1 The fact that HMRC pay some of its own staff off payroll, yet will not be investigating them:
"Given that some of HMRC's staff are also "off payroll":
"HM Revenue and Customs (HMRC) announced that nine staff has been paid ‘off-payroll’ and that since the discovery by Exaro News three of these positions have ended. 350 contracts that have paid civil servants ‘off-payroll’ have also ended; 35 civil servants have continued working under new terms and conditions." 
I wonder if HMRC will also be investigating them?

I suspect not, as HMRC have the get out clause of "high risk" and also will not be pursuing those whose arrangements have been sanctioned by HMRC.

In other words HMRC has placed itself outside of its own investigation."
2 The HMRC investigation into the hundreds of council officials who are working off payroll has been blocked.

Exaro News reports that despite pledges from ministers to crack down on councils paying senior staff through personal-service companies, they have been powerless to halt such tax-beneficial contracts. Instead, they have merely issued fresh Whitehall guidance on pay arrangements.

Eric Pickles, communities and local government secretary, wrote to the Local Government Association (LGA), which represents councils in England and Wales, about officials’ contracts.

However, no one has asked the LGA to find out which council officials had tax-beneficial contracts.

Does this matter?

Yes, because it means that without such a review HMRC will not be able to carry out the similar exercise that it is doing for the 2,400 civil servants on off payroll schemes (excluding its own staff of course!).

Cameron has got himself well and truly stuck on top of the Savage Mountain (aka K2), not only will his "promises" to deal with these schemes come to nowt, but he has effectively declared open season on every Tory MP, every Tory candidate and every Tory donor. The media and other interested parties will pore over their finances with a fine tooth-comb, and one by one every single tax avoidance scheme (that the PM finds "immoral") will be made public (I guarantee there are hundreds of Tory MPs and Tory donors etc using these such schemes).

Cameron has lost touch with reality, in a desperate attempt to grab a soundbite and pander to the anti avoidance lobby.

To repeat what I said yesterday:
"Avoidance is a perfectly normal human thing to try to do, the politicians are not in a position to lecture the rest of us on "morality."
A politician lecturing us on morality is as natural as a cat walking on its hind legs. 

Tax does have to be taxing.

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  1. All very interesting but rather misses the point about the reason taxes exist at all. Contrary to most popular beliefs they have not been designed to help the poor but instead mainly serve to direct money from relatively humble producers to unproductive elites. The government is simply the mechanism by which this transfer takes place which is why it invariable dominated by a relatively small and well connected group within society. Unfortunately, this only works so long as those at the top do not get too greedy. It was the reluctance of French aristocrats to pay any tax at all while heaping levies on the peasants and small tradesmen that ultimately led to the French Revolution. In the end governments that can not raise any tax cease to exist. Moreover, any new regimes that replace them may not feel constrained by the former tax code or even due process of law. It will probably simply just confiscate all the wealth that lies in the hands of the old guard just as the Jacobins did in the 1790's. The simple truth is that the toffs need the masses to keep paying taxes and rents without provoking them to revolution.. Cameron understands that for this to continue at least the facade of a fair tax system needs to be maintained. For this reason alone tax dodgers like Jimmy Carr, who are simply not very important, will be sacrificed.

    1. When I heard Mr Carr's apology etc, I could not help but think of George Orwell's 1984 and how a very humble and broken person that had under gone attitude adjustment, would go onto the state's broadcaster and grovel and say how they were ashamed and had made mistakes etc.....

      I hope that all those that are banging on about people that avoid paying some tax, which is legal, will actually make donations to HM government just so that they too pay more than they have to.

  2. Interesting comments about the 'off-payroll' council and civil service workers.

    Again, however, providing certain criteria are met, it is perfectly legal for a company or body to give work to self-employed contractors or companies. If those companies employ ex-Government employees, there is a mechanism known as IR35 to stop any unfair tax advantage but on the whole the IR 35 rules are relatively easily circumvented OR HMRC just do not have the time or appropriate man-power to look into these arrangements.

    Or they COULD be turning a deliberate blind eye but that of course would be against the taxpayers charter.......

    1. Another possibility is that HMRC staff don't understand IR35.

    2. Yaaaaaaaaaaawwwwwwwwwwwwwwnnnnnnnnnnnnnn.

    3. Ringing telephones keeping you awake are they?

    4. No.

      I'm one of the 90% of staff who have nothing to do with phones and or call centres. But of course, simpletons like you just latch onto the latest trendy argument.

      And I understand IR35. Very well.

  3. The Chancellor has been very quiet lately?

    There again HMRC is a total mess whether its IR35, answering phones or having a large contract with V*daf*ne and a director of tax who left to join..........
    The sheer scale of data loss is frightening as is the total lack of accountability for its managers.

    Wonder where Moira Stewart pays tax or not?

    1. Keep up,