Saturday, 3 May 2014

Tax avoidance

Part of my twitter feed exploded the other week at the news of Bernie Ecclestones tax dodging - details here, but in essence he seems to have avoided paying something like 2Bn in tax, by agreement with HMRC.

Emma Kennedy (@EmmaK67) was especially fuming. And quite rightly too. Let me explain by example:

Someone goes into an Oxfam shop, and finds a series of books he wants, valued at £103.56. So he goes to the till, and says "Look, I am very rich and famous, so how about I pay just £1 for them."

"That makes no sense," they reply. "Why should you pay less, because you are wealthy?"

"Well, if you don't, I will go away, and tell all my rich friends not to come here. Surely you should be grateful that you get some money, and my continued patronage. So ungrateful." And walks out.

Of course, the next day, someone else comes in, and purchases the books. They are let off the final £3.56, and are grateful.

The thing is, the tax money that HMRC gather is not their money, they are not a business who have to make a profit. They are a gathering money on our behalf. To be letting people off large payments when we seem to have insufficient money to look after our poor is a disgrace.

The thing is, tax avoidance is perfectly reasonable and valid. We all do it - the personal allowance, is reasonable tax avoidance. I am all for this, for a tax structure that allows people to earn money and keep a good proportion of it, at least up to a limit.

But, as a starter, HMRC should not be allowed to "let people off" paying portions of their tax. Some arrangements for paying tax off over a period make sense. I would not expect Ecclestone to pay 2Bn just like that, without notice. Arrangements are fine - as long as they result in the complete payment of the tax debt over a reasonable period.

Nobody likes paying tax. But I have to, that is part of my responsibility as a citizen of this country, and a citizen of the world - to pay my tax.

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