Adrian pearson is A VETERAN UK CHARTERED ACCOUNTANT AND the founder of ledgerscope - A SOFTWARE COMPANY MAking great tools for accountants in practice.

The tax gestapo

The UK is skint. We have a huge national debt and a government trying to get the annual increases to our borrowing (the budget deficit) under control. Since the deficit is the difference between what the government spends and what it receives by way of taxation, and since we are (supposedly) "all in it together", tax is now a political football.

The tax regime in the UK is complicated. Too complicated. It has got this way because, historically, politicians have either not been interested in it or have been unable to understand it. So when we get a situation as now, when every politician wants to use tax as a platform for their own agenda, we have the recipe for confusion, dis-information and the scapegoating of individuals and companies.

The phrases "tax avoidance" and "tax evasion" are being thrown around by people who don't really know what they are talking about: or are being abused by those who should know better but have their own political dogma to serve.

The Government are thinking about introducing a "General Anti-Abuse Rule" or "GAAR", which could in essence mean that it would become illegal to plan one's affairs so as to reduce the burden of tax - even though one would still be following all of the tax rules.

If a GAAR was implemented, we would have the prospect of a board of directors sitting down to budget and plan for a coming financial year and asking themselves the question: "Right, is there anything we can change in the way we do things so that we can make sure we are paying as much tax of all kinds as possible?"

Yes, it is nonsense.

I'm with Lord Clyde on this. He said:

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.

Ayrshire Pullman Motor Services v Inland Revenue [1929] 14 Tax Case 754

Those vociferous and accusatory voices of the growing UK "Tax Gestapo" should read the above words. Twice. Then shut up.

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