Tax avoidance or tax planning?
An interview given by Dave Hartnett, the Deputy Chairman of HM Revenue and Customs, to Accountancy Age magazine has thrown further light (if that were necessary) on the UK tax authorities' current attitude to the tax avoidance "industry".It was reported that Mr Hartnett had claimed during the interview that he expected that tax avoidance would be "not worthwhile" by 2008. Mr Hartnett apparently also complained that some tax advisers had taken the view that the House of Lords decision in Macdonald (HMIT) v Dextra Accessories Limited did not apply to all Employee Benefit Trusts. He is quoted as saying that the case "Â…may not be an easy decision for the tax planning industry. If people won't pay or want to start a new argument then we will oblige them."
It is interesting, and frankly worrying, to note from Mr Hartnett's views (the mode of expression of which is more suited to a Wild West sheriff than to a supposedly impartial senior Civil Servant) that he does not distinguish between tax planning (which the Courts have always accepted as legitimate) and tax avoidance. It seems that that is a convenient stance for him to take because it makes it altogether easier for the Revenue and the Government to go back on earlier reassurances and to recategorise straightforward tax planning (as undertaken, for example, by Mr & Mrs Jones of Arctic Systems "fame" and thousands of others in a similar position) as heinous avoidance actuated by naked greed.
This exemplifies the Revenue's general attitude to tax planning and the current Government's attitude on a whole raft of issues. They are right, everybody else is wrong and there is simply no need for debate or discussion. Their apparent willingness to characterise the partial defeat which the Dextra decision in fact represents as total victory is proof of their ability to overlook inconvenient facts in their relentless pursuit of the Government's objectives.
