We have received a number of emails from supporters of the UK UnCut movement asking what can be done to curtail tax cheating in Britain. We are happy to contribute the following ideas to the melting pot.

Britain has a particular problem with tax cheating. London lies at the centre of a global tax haven empire and tax cheating has become the norm at boardroom level and among rich people. It is not helpful that so many politicians are themselves users of tax havens. This has meant that despite years of promises of action, ordinary people in Britain have suffered a generally deteriorating situation as the business community has become more aggressive in its tax avoidance and British banks have become more devious in supporting tax cheats.

Stirring stuff about how UK is stuffed full of tax cheats and how 'ordinary people' want to do something about it.

Let's suppose that Ritchie and UKuncut are right. Wouldn't you expect them to be able to produce some absolutely cast-iron cases of tax cheating that would lead to action being taken by HMRC?

Instead, we have as the two cases they have chosen to lead on:

• Vodafone, of which both the company itself and HMRC say the allegation of tax dodging is an 'urban myth'; and
• Topshop, where campaigners seem to have a complete confusion as to whether they're talking about Arcadia's corporate taxes or Sir Philip Green's personal taxes.

These are so pitifully weak, you can hear the sounds of a giant barrel being scraped. Are these really their strongest cases? Just how poor are the rest?  As this excellent piece over at Mark Lee's TaxBuzz blog explains, their entire campaign is based on a catalogue of fallacies and inconsistencies.

Rather than having proved that there's a culture of tax cheating, their campaign highlights their own political bias. It's fine to want to undermine personal property rights, to steal other people's hard-earned money, if that's what you believe. It's pretty far from okay to dress that up as a campaign against tax cheating, when it's so obviously based on a tissue of lies. Their response to criticisms of their facts over Vodafone and Topshop has been to claim that the specifics don't matter, it's a general problem. If that's the case, we need to see some specific cases, otherwise we can legitimately claim that they're a bunch of liars who are using misinformation to fuel their own political prejudices at our expense.

Merry Christmas to all!

Filed under: Current issues, Taxation with tags idiots, lies, mark lee, richard murphy, sir philip green, tax avoidance, topshop, ukuncut, vodafone
45232 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Ftime-to-stop-lying-about-tax-cheating-in-the-uk%2FTime+to+stop+lying+about+tax+cheating+in+the+UK2010-12-24+09%3A16%3A05Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D4523

So you don't get bored over Christmas, and to celebrate another year of the constant amusement that is Ritchie's disengagement with fact, here's something to do. It's a Ritchie googlewhack.

Your challenge is to find phrases of the form: "richard murphy" "<your phrase>" that, when entered into Google, give a single result. You can enter your suggestions here in the comments or on Twitter (suggested hashtag #ritchiegooglewhack), but please also provide the link, which you may shorten using your favourite link reduction service.

Here are some to get you started:

"richard murphy" "choked on a bag of drugs" http://bit.ly/f5nfEh

"richard murphy" "stung by a jellyfish" http://bit.ly/hcxUMw

"richard murphy" "almost spontaneously combusted" http://bit.ly/eg7utf

Clearly, as with all Christmas diversions, the whackier and more snork-inducing, the better ¹.

Filed under: Entertainment with tags christmas, google, richard murphy
371453 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Fa-christmas-diversion-googlewhacking-richard-murphy%2FA+Christmas+diversion+-+googlewhacking+Richard+Murphy2010-12-22+16%3A15%3A33Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D3714

The head of tax at Smith and WIlliamson, Richard Mannion, has suggested that everyone should be required to complete a self-assessment tax return in order to ensure that taxpayers don't accidentally or deliberately underpay tax on some of their income.  He suggests that a simplified form could be used to make it easier for the simplest of taxpayers.

I have another idea. How about Richard Mannion go jump in a lake? The current system works pretty well and, for all their faults, is living proof that HMRC does have a human side.  For sure, sometimes a little bit of tax might get underpaid, or indeed overpaid.  But the system as currently enforced means that most people pay mostly the right amount of tax, and those who don't only over/underpay by tiny amounts.

His proposal stinks of naked self-interest.  Who is likely to pick up extra self-assessment work off the back of his policy? Why, tax advisers such as... Smith and Williamson!

Screw that for a game. Let's leave the current system as it is, and he can scrounge for work elsewhere.

Filed under: Other blogs, Taxation with tags accountancy age, hmrc, idiots, richard mannion, self assessment, smith and williamson
45091 Comment »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Ftax-advisor-calls-for-increase-in-tax-regulation%2FTax+advisor+calls+for+increase+in+tax+regulation2010-12-22+15%3A50%3A18Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D4509

On the one hand, you've got the banks, whom many have criticised for telling lies in their financial reports and elsewhere in order to sustain the economic boom for as long as possible, just so they can trouser their millions of pounds of bonuses. Politicians, none moreso than St Vincent of Cable, have lined up to put the boot into the bankers for telling lies just so they can hold on to their highly paid jobs.

On the other hand, you've got Vince Cable himself.  Up till yesterday he seemed a fairly happy member of the Cabinet, give or take a couple of gripes.  But then he spilled his guts when gently prodded by two pretty constituents who just happened to be undercover Telegraph reporters in disguise.  And we find out that Cable is a man who really thinks that what the Coalition is doing is wrong. Yet, he seems prepared to lie about it in public, presumably merely so he can hold on to his highly paid job.

What, honestly, is the difference between them? Is it too much to ask that people tell the truth to keep their jobs? Why are bankers excoriated while Cable is celebrated?

When we've finished with the bankers, can we reuse the piano wire?

Filed under: Politics with tags banks, idiots, lies, politicians, telegraph, vince cable
4501No Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Flies-damned-lies-and-politicians-the-cable-edition%2FLies%2C+damned+lies+and+politicians+-+the+Cable+edition2010-12-22+15%3A38%3A29Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D4501

The ukuncut campaign rumbles along. Last Saturday, on paper at least one of the busiest shopping days of the year, protestors once again disrupted shops across the UK, including Vodafone and Topshop.

This is unacceptable. I've explained before why the ukuncut cases against Vodafone and Topshop are unfounded. The case against Vodafone is so flimsy that even Richard Murphy won't validate their figures.

Given that their two specific cases are so pathetically weak, you might be wondering whether their general campaign holds water either. But, this being the season of goodwill and all, I recognise their right to protest. Yet, in these circumstances, their current methods are completely unsupportable.

Their chosen tactics don't hurt David Cameron. They don't hurt the coalition. Nor do they hurt HMRC. They barely scrape Vodafone bosses or Sir Philip Green. Nope. Instead they frustrate and wreck one of the final pre-Christmas shopping days for thousands of ordinary people. And they make work even more hellish for thousands of retail workers, as if their conditions aren't bad enough already.

To base an entire tax campaign on two utter howlers would be bad enough. But their methods betray the rank cowardice in the hearts of the ukuncut protestors. They know their figures don't stand up to scrutiny, so they're merely trying to be as disruptive to ordinary people as possible. This is a disgrace, and we should resist these selfish Grinches. They're not on our side; they are bullies who will do anything - even wreck Christmas for thousands - to get their way. 

Written on my Android mobile phone. Article may be edited later.

Filed under: Current issues, Ethics, Taxation with tags christmas, david cameron, hmrc, idiots, richard murphy, sir philip green, topshop, ukuncut, vodafone
45042 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Fthe-grinches-that-want-to-ruin-christmas-for-ordinary-people%2FThe+grinches+that+want+to+ruin+Christmas+for+ordinary+people2010-12-20+09%3A51%3A25Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Fthe-grinches-that-want-to-ruin-christmas-for-ordinary-people%2F

Meet Toby Ord. He's an Oxford academic who believes that people can and should donate much more money to charity over their lifetimes.  He is aiming to give away £1 million over his, despite earning £25,000 (soon to be increased), an amount many might consider to be paltry.

So, as someone who also loves philosophy, who appreciates off-the-wall thinking, and who believes that the Big Society can work, why - in thinking about Ord's campaign - do I find him to be the most insufferable tossbag?

Firstly, I cannot accept that it's right - whether economically, socially, or rationally - to encourage people to give so much of their own earned money away to charity before they've been able to put the prospect of their own poverty beyond reach.  It seems daft to me to give lots away only to have to turn to other people's charity at some later date.

Secondly, Ord's campaign rests in no small part to his university flat which, at a monthly rental of £416, is significantly below the market rent, even in a slum city like Oxford.  It's all very well to call others to arms, but it's unfair to do so using privileged access to assets from which others can't benefit.

Thirdly, and most seriously, I strongly object to the mixing of "savings and tax" in the BBC graphic.  Savings are totally different to tax.  They could hardly be more different.  Savings are amounts put aside from current earnings to fund your own future expenditure.  Tax represents amounts put aside from current earnings to fund society's current expenditure.  That's not to say that some taxes weren't at one time savings-like.  National insurance, for example, started life as a scheme to encourage people to provide for their own retirement benefits via a national scheme.  Over time, though, we can see that the scheme has been totally subverted by government meddling, such that now it's just another tax.  You have to pay national insurance, but it now really doesn't purchase you any direct benefits over and above what other people can get.

I would be happier if Ord were encouraging people to make generous bequests in their wills.  It's better to get people to save up their own money and then donate from that, rather than getting them to hand it over now when they might need it later.

And with tax representing the biggest bill for virtually every citizen as well as being an individual's donation to society, it would be better to treat tax payments as part of one's lifetime donation to charity.  If you did that, you'd see that lots of higher earners already donate £1 million or more to other people.  Why the ukuncut protestors and other left-wingers can't appreciate that, is a much better question to be asking.

Filed under: Ethics, Other blogs, Taxation with tags big society, charity, national insurance, oxford university, philosophy, toby ord, ukuncut
4499No Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Fthe-deluded-and-irritating-world-of-toby-ord%2FThe+deluded+and+irritating+world+of+Toby+Ord2010-12-14+09%3A48%3A42Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D4499

The Guardian has a strange editorial today in which it praises ukuncut for "making a tricky, worthwhile argument about tax instead of taking cheap shots".

So this is how I responded:

Eh? Instead of taking cheap shots at Cameron, they're taking cheap shots at low-paid shop assistants who rely upon that income for their livelihood. And at hard-working taxpayers who can only get to the shops on one day of the week - Saturday.

This would be bad enough if their campaign were well-informed, but it's based upon two flimsy quarter-truths and a great big dollop of error and miscalculation (courtesy in part of the tax bungler-in-chief, Richard Murphy). In the case of Vodafone, it's down to a bit of law that would likely get struck down if it were tested in European Courts and which, accordingly, HMRC is loath to enforce. Blame HMRC for a lack of guts or previous government for a lack of legal nouse, if you like. In the case of Topshop, the company has paid all its taxes legally, as far as I'm aware. So blame Sir Philip if you believe that it's right that he owns all his wife's income (what are you, a neanderthal?) or blame his wife if you want to criticise her personal choices in tax residency. Or, maybe you can blame HMRC again for a tax system that might be seen as being full of loopholes.

But don't take it out on ordinary people. The UKUNCUT crowd are cowards and morons, who pick soft targets who have no other options. They - and you, for supporting them - should be totally ashamed.

Filed under: Current issues, Taxation with tags guardian, hmrc, idiots, sir philip green, tax avoidance, top shop, ukuncut, vodafone
44733 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Fthe-guardian-on-the-ukuncut-campaign%2FThe+Guardian+on+the+ukuncut+campaign2010-12-13+07%3A42%3A15Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D4473

The magic bullet for those wishing to stop tax avoidance is the General Anti Avoidance Rule, or GAAR. This aims to look through the way the law might actually be written to get at what it was that Parliament intended. GAAR, it is suggested, will prevent companies exploiting all sorts of loopholes that were never meant to be abused like that.

I say yarbles to all this GAARballs. Who's to say that, had a GAAR been in operation, recent high profile cases would have ended up differently? Take Vodafone, from which HMRC wanted lots of money because UK tax law goes all extra-territorial when it comes to foreign companies owned by UK companies. HMRC settled because the law has to be fairly woolly to avoid being struck down immediately by the European courts. How would a GAAR help HMRC do something that European law basically frowns upon?

Or take the delightful Mrs Green, she of Arcadia and Sir Philip fame. How will a GAAR judge whether transfers between husband and wife, permitted specifically by law, are okay or abusive? How will it help HMRC get more tax from a dividend paid from post-tax profits to a foreign national living overseas?

Answer: it won't. We have the rule of law for a reason: to protect ordinary people from the thuggery of other people, in particular government. You can't sweep aside centuries of tax law with an airy fairy principle that one's tax liability becomes what HMRC/Ritchie/ukuncut says it is, no more and no less.

Yes, government will introduce one, because politically it has to. But it will achieve very little.

Written on my Android mobile phone. Article may be edited later.

Filed under: Current issues, Taxation with tags general anti avoidance rule, hmrc, richard murphy, sir philip green, tax avoidance, topshop, ukuncut, vodafone
44821 Comment »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Fyarbles-to-gaarballs%2FYarbles+to+GAARballs2010-12-07+12%3A49%3A25Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Fyarbles-to-gaarballs%2F

Another weekend brings more news of protests by the ukuncut crew about perceived tax avoidance. Clearly they've got bored of Vodafone, or perhaps they're finding their prices on iPhones too hard to quit ¹, so they've moved on to Topshop as their new target.

The rap sheet for Topshop is fairly well rehearsed.  Topshop is the success story of Sir Philip Green.  In 2005, the Arcadia group, which owns Topshop, paid a dividend of £1.2bn to Sir Philip's wife, who is the owner of Arcadia. Only she isn't UK resident or domiciled (she lives in Monaco), so no income tax was payable by her on the receipt.

Critics, led by that dribbling rent-a-tard Richard Murphy, claim that by paying the dividend in this way Green saved £285 million. But let's unpack the assumptions that make such a claim possible.

For as far back as anyone can remember, the UK has had as a core principle of taxation that transfers between spouses are completely tax exempt.  A husband can transfer assets to his wife without triggering a capital gain. The only exceptions are where a UK resident spouse transfers assets to a non-UK domiciled spouse, where a lifetime limit applies.

The UK has also moved strongly against the principle that a husband and wife are to be treated in any way as a single unit for income tax purposes.

Mrs Green lives in Monaco, and is pretty obviously resident and domiciled there. Given that the UK has no ability to tax people who don't live there, what exactly does the charge of tax avoidance made by Murphy and others mean?  Note how Murphy says that (Sir Philip) Green has saved £285 million of tax.

So, perhaps the concern is:

• it's somehow improper for one spouse to transfer assets (in this case Arcadia) to the other.
• it's somehow improper for one spouse to do all the work but for the other to receive the benefit.

Are there other reasons?  I don't know.  Dividends, you will recall, are only payable out of retained profits, which accumulate from post-tax income.  That means the income used to pay to Mrs Green has already been taxed in the hands of the company once.  OK, so higher rate taxpayers must pay an additional amount when they receive dividends. But dividends are the main way that companies distribute benefits back to their owners.  Corporation tax is our mechanism to ensure that foreign owners of UK companies don't escape their tax obligations altogether.

So the tax protestors seem to be arguing that Mrs Green hasn't really earned her £1.2 billion but that Sir Philip has. And therefore that it ought to be taxed as part of his income instead.  As he is (according to Worstall) UK resident, this would mean additional amounts of tax to pay.  I find this incredibly insulting.  The divorce courts in the UK have long fought against the pernicious idea that women are useless accoutrements for their richer, more intelligent, more able husbands.  Woe betide the millionaire husband who tries to argue in a UK court that he brought all the money into his marriage.  Many have found that 'homemaking' is seen as the vital cog in a marriage that makes the husband's earnings possible, and the split of resources on divorce typically reflects this.  I know as much about Cristina Green as any tax protestor (i.e. nothing) but I am offended that it's assumed that she's thoroughly worthless.

Instead, is it the asset transfer between spouses that tax protestors wish to attack?  This exists for the very good reason that spouses are expected in law and reality to look after each other.  Exempting transfers removes an obstacle from them doing that.  Do we really want a tax regime that penalises a spouse from doing the right thing, even if it sometimes also benefits rich people?  For sure, we could introduce some sort of lifetime limit for UK domiciles too, but only at a cost of unwanted complexity.  And, the reasons above notwithstanding, we do think about married couples as a single unit in some social contexts, and continue to do so in the welfare benefits system.

We have always known that the left wing are a bit thick.  Yet it seems that they're desperate to grasp the mantle of 'nasty' from the Tories as well. They're well on the way.

Filed under: Politics, Taxation with tags arcadia, domicile, hmrc, idiots, iphone, monaco, richard murphy, sir philip green, tax avoidance, tim worstall, topshop, twitter, ukuncut, vodafone
44614 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2010%2F12%2Fthe-neanderthal-social-views-of-the-ukuncut-protestors%2FThe+neanderthal+social+views+of+the+ukuncut+protestors2010-12-06+09%3A36%3A24Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D4461