Articles

Tax avoidance schemes cause public outcry

15.07.2012

A drive against tax avoidance schemes by HMRC, was one of the high profile measures in the Budget in March 2012, but what has grabbed the public interest so much recently is the highlighting of tax avoidance schemes, by the outing of a small number of tax avoiders and the speculation about how many others might be engaged in this activity. In particular the outing of comedian Jimmy Carr, as a tax avoider by the Prime Minister, has stirred up the country.

At the time, on his Channel 4 programme ‘8 Out of 10 Cats’, host Jimmy Carr shamefacedly apologised for his use of the K2 scheme. The show’s ratings nearly doubled to its highest in two years and lifted Channel 4 into a top three position on the Friday evening’s viewing figures! Mocking the host’s tax arrangements, panellist Sean Lock said:

“We all like to put a bit of money away for a rainy day, don’t we? But I think you’re more prepared than Noah.”

Inevitably there is a question – was Jimmy Carr so abjectly apologetic because he felt guilty or because he had been found out and needed to recover his popularity with the viewing public? Some of the media commentators felt that the Prime Minister had not ‘played fair’ in identifying Jimmy Carr, whilst suspiciously keeping quiet about a number of other celebrity tax avoiders. Maybe so but to some extent the cat is now well and truly out of the bag!

Increasingly, tax avoidance and tax evasion seem to be regarded by many people as morally unacceptable and corrupt. What has stirred public anger is the sense of scale. When many people are facing public spending cuts, job losses, benefit cuts, business failure, tax increases and austerity, it sticks in the craw to find that the rich and famous can apparently flout tax liabilities. The long-held view that tax avoidance was not morally wrong, but was rather a sensible behaviour, is rapidly losing credibility.

When illustrating tax avoidance, examples such as taking advantage of the allowances available through pension plans, ISAs and duty free imports to defend the morality of tax avoidance, seems to be avoiding the issue. Such opportunities are open and available to any tax-compliant taxpayer, within the law.

The national perception of tax avoidance is shifting towards one that is about tax evasion by the rich. This is not surprising – recently, ordinary people have been fed a continuing train of perceived wrongdoings – MP’s expenses; ‘cash for questions’; bankers pay and bonuses; bank rate manipulation and corporation tax avoidance arrangements. It may be that increasingly in our materialist-capitalist world, profitability and morality are in danger of being seen as mutually exclusive commodities.

It seems obvious that the current sense of public anger is not going to disappear: indeed, it is likely to grow. That being the case, high-profile figures may want to consider moving more towards tax compliance than tax avoidance when arranging tax planning.

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