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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To find out more, please use this link Taxwise



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Click the link to read about: Tax Investigation for Dummies

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Gauke Gets Trapped On K2 (The Savage Mountain)

I see that our old chum Treasury Minister David Gauke has vented his spleen on the Jimmy Carr K2 tax avoidance issue.

His comments come after The Times sent an undercover reporter to a tax seminar, which outlined a scheme known as K2. The Times says comedian Jimmy Carr is one of those who uses the scheme, although his lawyers stress he has done nothing wrong.

Avoidance and, for the moment, the K2 scheme is perfectly legal.

However, that did not stop Gauke from commenting (based on what he read in the media, rather on what he actually has discussed with HMRC or other tax/legal experts) saying that he would describe the K2 scheme as fitting into the chancellor's description of "morally repugnant".

He is quoted by the BBC:

"Where there are arrangements that are artificial, that are contrived, that are not undertaken for any genuine commercial reason, but are purely designed to reduce tax liability, then that is something that we want to address.

Graham Aaronson has rightly highlighted his proposals for a general anti-abuse rule, which we are taking forward and, actually, the government is doing an awful lot in this area.

If you look at international comparisons actually HMRC performs pretty well in terms of yield and the size of the tax gap, but there's more to do.

My understanding is that HMRC were already investigating this particular scheme and, although I don't want to be drawn too much into the specifics, a lot of what has been said about how this scheme operates is the sort of thing that actually doesn't work any more.

Very often you get these promoters who will be, of course, selling their product... it doesn't always work quite as effectively as they like to make out to their potential clients. So I know HMRC are on the case on this particular matter."

I would remind Gauke, and his fellow cabinet ministers, of what I wrote in April, on another site, about the dangers of politicians digging themselves into holes wrt tax avoidance:

"David Cameron dug himself into another hole today, by discussing his dislike of "aggressive tax avoidance" (which of course is perfectly legal).

Tax Journal reports that John Humphys noted on this morning’s Today programme that the Chancellor said in the Budget that he regarded tax evasion and ‘aggressive tax avoidance’ as ‘morally repugnant’.

He was trying to clarify, he said, what the government meant by ‘aggressive tax avoidance’ and offered Cameron a case study:

 "A very successful businessman (you’ll know who I’m talking about) creates a structure that transfers most of the ownership of [his] company to his wife through offshore companies based in the Channel Islands. She lives in Monaco, he takes a huge dividend – it’s paid to her, it’s estimated that this reduces his tax bill by hundreds of millions of pounds.’

Humphrys asked: ‘Is that “aggressive tax avoidance” and therefore morally repugnant?’

Cameron declined several times to answer the question, saying he was not going to discuss an individual’s tax affairs. Humphrys said Cameron knew that the individual was Sir Philip Green, whom Cameron recruited to advise the government.

Cameron said he did not know Green’s tax affairs and offered his own definition.

‘There are things that people do that reduce their tax liability, for instance they put money into a pension scheme.’

‘Rather than Monaco,’ Humphrys said.

‘Absolutely,’ Cameron said. ‘I think putting money into a pension scheme is a sensible thing to encourage people to do and that doesn’t count as aggressive tax avoidance … I’m very clear about the difference between putting money into pension schemes or Enterprise Investment Schemes to help start-up businesses, and there is that form of tax avoidance where people are almost specifically setting up a company in order to avoid tax rather than actually wanting to invest in start-ups and the rest of it.’

The government had taken a lot of steps to try to reduce ‘this sort of activity’, Cameron added. ‘For instance we have put £900m extra into HMRC to enable them to go after aggressive tax avoidance.’

Aggressive tax avoidance was wrong, he said. ‘It’s right that the government is going after this activity. Everyone should pay their taxes properly.’

Generally speaking, he told Humphrys, it was ‘sensible’ for a Prime Minister not to have dealings with people engaged in aggressive tax avoidance."

So there you have it folks, "aggressive tax avoidance" is whatever the government chooses to define as "aggressive tax avoidance"; the fact that it is perfectly legal seems to escape them.

Georgie Porgie and Cameron need to be reminded of the wise words of Lord Templeman in 1992:

"There is no morality in a tax and no illegality or immorality in a tax avoidance scheme.""

I leave the final word to Christie Malry who tweeted:

"If tax was voluntary and paid by the consumer, none of you would opt to pay it. So, seriously, shut the hell up about tax avoidance."

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".

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"