John Kavanagh in pugnacious form

Dennis Howlett blogged the following on 13 April 2008:

"John Kavanagh is in pugnacious form over the Tesco/Guardian libel match:

(Then quoting my earlier blog:)

"It seems that we have reached a stage where the rhetoric of journalists, fuelled by their constant pursuit of scandal and inspired by the tendentious writings of self-appointed experts like Richard Murphy, Prem Sikka and their like, has been so successful in persuading the public that tax avoidance is immoral and unethical that merely to state that someone is a tax avoider is seen as libellous if untrue."

The fact of the matter is that Richard is an expert in his field - he doesn’t need to be self appointed. Check the organizations that support and sponsor his research. Strike 1.

If John read what Richard and others say, he would find it isn’t about avoidance per se but the use of what Tesco already admits is a highly complex structure that has allowed it to provisionally avoid (at the very least) stamp duty. Ostensibly, that goes against HMRC’s general position of substance over form in the creation of tax planning arrangements. Strike 2.

John goes on to say:

"I rather like Tesco’s approach to this case. If the Guardian argues successfully that their article is not defamatory, then Tesco loses their case but regains the moral high ground. If the article is defamatory if untrue, the Guardian will have to show that it got its facts right in order to win, and only Tesco can know whether they have.
John has got this the wrong way around. Anyone remember the MacDonald’s case? As Alex Hawkes correctly points out:

"Richard Northedge has a similar view: that Tesco could be entering into a MacLibel situation.

"This battle has the appearance of a Goliath versus David fight – and remember who won that. Tesco should look at the MacLibel case: after years of dispute, the hamburger giant won but it was the protestors that gained the sympathy and McDonalds is still regarded as a representative of big bad business.

Alex then goes on to argue that justice is blind and therefore the courts will not take the moral/ethical issue into consideration. I’d prefer that it does because if you think about the basis for common law, it is built on an unwritten but well understood code of ethics. Even if the courts rules in Tesco’s favour (assuming it ever gets that far), then Tesco is in a no-win position.

If, as I suspect, Tesco is forced to reveal what it has done, then the MacLibel issue takes on greater poignancy. I see a growing concern for issues that have an ethical flavour and which go to the heart of issues around sustainability, risk, compliance and social responsibility. It seems to me that you can hardly fly the flag of supporting issues around say Fair Trade while at the same time engaging in tax avoidance on the scale that Tesco already admits. That makes you a hypocrite. Strike 3.

Endnote: You wouldn’t expect John to agree with the position taken by Alex Hawkes, Richard Murphy, Prem Sikka and myself. His bio says: “I am Director of Private Clients in the London office of Shaws, Chartered Tax Advisers. I advise on all aspects of tax affecting private clients, with an emphasis on non-domiciliaries and offshore strategies.”

My response:

John Kavanagh on April 14th, 2008 4:37 pm

Unless you are much bigger than me, Dennis, I think I am going to have to ask you to step outside! Seriously, though, I will try to address your strikes and see if I can persuade anyone reading this that I have in fact hit a home run.

Strike 1

Richard Murphy is an expert in a field which he and journalists have created - analysing the tax charges in published accounts and comparing them with the headline rate. Not rocket science, and it hardly makes him an expert on tax avoidance any more than staring into the night sky makes one an expert in astronomy, but a chap’s got to make a living. Neither, as far as I am aware, is he an expert in ethics, and it is his (and seemingly your) blunt assertion that tax avoidance is immoral and unethical which seems to me to be unproven and which should be, and currently isn’t, the subject of considered debate. Whether the Guardian is in the wrong or Tesco is in the wrong in this little spat is not such an important question to me.

Strike 2

So now you’re telling me that if I don’t like being taught ethics by Richard Murphy, I should take lessons from HMRC instead? I fear we are not moving towards rapprochement, Dennis.

Strike 3

We would hate hypocrisy to come into this, wouldn’t we, Dennis? But then if one discovers that Guardian Media Group has entered into substantially similar transactions to those entered into by Tesco, that rather pulls the moral high ground from under their feet, doesn’t it?

Thanks for the headline, though.

Regards

John Kavanagh

PS Isn’t your reference to my bio a slightly low blow from someone who“specialised in providing…(inter alia) …offshore tax services” in a previous incarnation?!