Contractors using tax avoidance schemes should be named and shamed alongside the scheme promoters. This is the latest rallying cry from the Public Accounts Committee (PAC) chairman, Margaret Hodge MP, who demanded: “HMRC should publically name and shame those who sell or use tax avoidance schemes in order to discourage such activity.”
That tax avoidance scheme promoters and users are doing something perfectly legal is only one of the issues raised by this latest, and rather wearying, rabble rousing designed to maximise media headline-grabbing potential and dupe the financially naïve. Because isn’t there a more fundamental issue driving this ongoing anti-avoidance witchhunt?
Let’s not get too hung up on Hodge and her committee. Yes, they’re influential, but they are just a committee with a role to advise parliament. The main impetus behind the witchhunt appears to come from the top of government itself.
The Prime Minister has publicly declared war on corporate tax avoidance, and the Chancellor has successfully managed to shift the focus from the government’s economic record onto individuals and companies that are doing well – generating lots of wealth, hiring lots of contractors, employing lots of people and helping keep the economy going.
The ‘moral’ element of all this is an issue to sort out between individuals, brands and their customers, not between politicians and the corporates that invest in the UK. And it is not for the government and MPs to impose their moral code on us, their constituents. That’s particularly true as even some of those at the top of government were drawn into the MPs expenses scandal. Indeed, our self-appointed Moral Arbiter in Chief, David Cameron, himself had to pay taxpayers back for highly questionable expenses, such as the money he claimed for such essential constituency work as having wisteria removed from the chimney of his family home.
There is a social contract that it’s important for brands/companies to manage with their own stakeholders and – most importantly – their customers. It could certainly be argued that many of those brands ‘named and shamed’ by the government have broken this social contract by pushing the envelope too far on legal tax avoidance, but that is for them to sort out with their customers. If the government is unhappy, it can change the law.
And it is to the law we return with a mantra that is now equally as wearying as the PAC and government’s anti-avoidance rhetoric, but distinguished because of its truth: tax avoidance is totally legal.
Rather than using cheap publicity tricks, perhaps the PAC could divert public attention onto its more sensible solutions, such as adequately resourcing HMRC to do its job properly. If tax inspectors were not under such pressure to generate high yields through their investigations, there might be fewer innocent contractors whose lives and finances are destroyed as a result – often when they are entirely innocent but can’t afford to ‘fight the system’.
And if the UK’s tax code were not so complex, there might be fewer opportunities for those seeking to push the tax avoidance envelope. Perhaps the Treasury could properly resource the Office of Tax Simplification (OTS) to do more than simply tinker around the edges of our awesomely complex tax legislation.
Or does the government prefer things the way they are, providing easy targets and plentiful ammunition that seeks to divert our attention away from the more serious problems our economy is facing than tax avoidance? After all, it’s far easier to point an accusing finger at a wayward hairdresser or plumber than it is to have the media focus its attention on your own woeful stewardship of the economy.