Members of the UK200Group of independent chartered accountancy and law firms have today commented on news that 59 per cent of the British public think legal tax avoidance is “unacceptable”.

The figures, taken from a new YouGov poll, also showed that only 32 per cent think it is reasonable to try and legally avoid tax.

The wording of the YouGov question, answered by those who took part in the poll, asked:

“As you may know, there is a difference between tax AVOIDANCE, whereby companies/people use artificial, but legal methods to minimise the tax they pay, and tax EVASION, where companies/people act illegally to pay less tax, or no tax at all. In general, do you think it is acceptable or unacceptable to LEGALLY avoid paying tax?”

In response to the poll David Whiscombe, director of tax at UK200Group member firm BKL, said:

There are many things which people do, which I’d much prefer them not to do. But you cannot sensibly treat people who haven’t broken the law as if they had, just because you find their lawful activities distasteful; this applies to tax as much as to any other area of the law. 

Now, if you want to change the law to make unlawful certain things, which are currently lawful, that’s an entirely different proposition. But the law must be clear; and it’s a whole lot more difficult to pin down the protean concept of “tax avoidance” and to legislate against it, than it is to grandstand about it.   

Jonathan Russell, partner at UK200Group member firm ReesRussell, said:

The YouGov poll, when asking the question about tax avoidance, where 59 per cent said they thought it was “unacceptable”, narrowed the question to when people used ARTIFICIAL, but legal methods to reduce their tax.

The big question is what is artificial – the Ramsay case (1982) and the ruling in Furniss and Dawson (1984), which are both long established tax rulings have always made it clear that any arrangement which is simply put in place purely to save tax can be, and most would say, should be set aside. By putting the word artificial in the question many tax practitioners might feel that 59 per cent was a low percentage to be in favour.

John Watkins, senior partner at UK200Group firm Dickson Middleton, said:

The reason why 59 per cent of people found it “unacceptable” to legally avoid paying tax is found in the wording of the question as seeing tax avoidance as a means to “…use artificial, but legal methods to minimise the tax they pay”. 

We have had clients who have been approached by the offshoots of rival accountancy firms to use such schemes to save massive amounts of tax for a large fee, guaranteed tax enquiry and eventual settlement sum with HM Revenue & Customs. 

The introduction of the Accelerated Payments regime last year appears to have cooled the heels of the most ardent supporters of these artificial schemes.

Robin John, director at UK200Group member firm Wellden Turnbull, said:

Nobody in his right mind would organise his affairs, or do a transaction, in a way that maximised his tax bill. Neither would he not take advantage of the reliefs that Parliament has provided.

The question is what is tax planning, and what is tax avoidance. In practice, it seems to me that tax planning is what you do; tax avoidance is what other people do.

www.twitter.com/uk200group

 

Established in 1986, UK200Group is the leading mutual professional association in the UK with some 150 offices of quality-assured member accountancy and lawyer firms throughout the UK totalling over 550 partners, 150,000 business clients and global links in over 50 countries. UK200Group provide services and products that are designed to enhance the business performance of its members.  Telephone 01252 401050, email admin@uk200group.co.uk or visit www.uk200group.co.uk 

Disclaimer:

UK200Group is an association of separate and independently owned and managed accountancy firms and lawyer firms. UK200Group does not provide client services and it does not accept responsibility or liability for the acts or omissions of its members.  Likewise, the members of UK200Group are separate and independent legal entities, and as such each has no responsibility or liability for the acts or omissions of other members.

 

Back to News