Like two bare-knuckle prizefighters wearily squaring up for the next bout, the ‘taxed’ and the ‘taxers’ are preparing for a long, hard and no doubt bitter fight.
The government, which depends on tax revenues to get things done, are now so desperate for them that they’re taking desperate measures. In fact, they’ve just given their ‘blunt instrument’, also known as HMRC, an enormous £1 billion stick with which to beat those trying to avoid paying any more tax than they should.
Of course, tax avoidance is perfectly legal (as opposed to tax evasion), yet despite this the taxman has made it plain that a great deal of its £1 billion windfall will be used to target contractors.
If this huge sum being squandered on attacking our sector wasn’t bad enough, now that details of MP’s expenses are starting to be made public we have just been given the evidence of the shocking double standards by which our politicians run their personal financial affairs.
Let’s put this into context. If I buy a second home and rent it out, I can claim as a legitimate expense deductible against tax the interest paid on the mortgage. Let’s say I am a 40% rate taxpayer. I can save a bit of money, assuming I let the property, and when I come to sell it, HMRC comes after me for capital gains tax (CGT). Should I fail to pay CGT, HMRC will be after me for tax evasion.
Fair enough, some might think. But let’s look at the way our politicians can play the system. They can buy a second home and don’t have to let it out to fund the mortgage. We pay their mortgage interest from our taxes and, for some bizarre reason, they don’t have to pay CGT when they sell their second home.
So, here’s the irony. We’ve got MPs and ministers who feel it is perfectly acceptable to spend £1 billion enforcing tax rules that don’t apply to them. Obviously, what’s sauce for the goose is a loophole for the gander.