Take That and Get Real!

Invoice Finance

I love Spain – I spend a lot of time there – but in many ways it is still slightly backwards as countries go. Utilities will cut you off without warning for non-payment when they don’t correctly process your direct debit. If you’re lucky enough to be in a broadband area and can afford the extortionate cost, you’ll typically get a fraction of the advertised bandwidth. Maybe I’m being unfair, but those are my personal experiences. And in no way is it more apparent than when driving a car. So complex, arcane and far reaching are the laws of the road that it is, as far as I can tell, almost impossible to drive a car legally in Spain – you can’t drive in certain types of shoe, you can’t drive without a t-shirt, you must have a spare pair of glasses in the car, parking spaces on different sides of the road are varied by reference to which day of the week it is, and on and on the list goes. And of course there are (hopefully a small number of) police officers mainly in tourist areas who are more than happy to exploit the lack of local knowledge.

My point – well before we laugh at Spain, it seems we need to get our own house in order. I’m not suggesting corruption is rife in the British Transport Police (nor the Spanish for that matter) – the problem here is far more insidious. In this country it seems now that if you are “rich” – by which most people mean anyone that earns more than them – and you engage in perfectly legal tax avoidance then you should be criminalised, publicly vilified and have your reputation trashed. Honestly there are violent criminals who are treated better! The degree of hypocrisy of those doing the vilification notwithstanding, the number of ways in which this is simply wrong are too numerous to list here. In fact I have covered many of them in previous blogs but let’s consider the specific recent case of Gary Barlow and his Take That colleagues that only this past week found themselves on the wrong end of a court ruling into their “Icebreaker” tax avoidance scheme investments.

Let’s start by conceding that the judge, after considering all of the facts, reached what seems like the reasonable conclusion that the scheme was not a real commercial investment and that it had been structured purely to create losses that would help the investors avoid tax on their other “real” income. Even allowing for that, provided the investors now pay their revised much increased tax bills, they are not doing and have not done anything remotely close to criminal or worthy of being asked to hang back honours (http://www.mirror.co.uk/news/uk-news/gary-barlow-tax-avoidance-take-3533192).

I’d contrast the behaviour of Take That with the countless (and nameless) people who, when hearing what I do for a living, ask me whether they can (insert their version of what they know is really illicit tax evasion). And yes the numbers involved are usually tiny by comparison to Barlow and his friends but they and I know that what they are really saying is “I know this is wrong but do you think I will get away with it?” That is illegal activity and to the extent those people go on to ignore my warnings then they should be criminalised! I’d also ask those who are so concerned about the tax affairs of the rich and famous whether they have ever paid cash to a plumber or builder knowing that he was unlikely to declare the income? Or walked through Customs with a few cigarettes too many? Or increased the price of fixtures and fittings in their new home to reduce the stamp duty payable? Or transferred savings into their spouse’s name to pay less tax on the interest? Or moved into a second home briefly to avoid capital gains tax on the disposal? Some of those are legal – some aren’t – but you can bet that we can all quote examples of all of them happening around us. So on advice these guys invested in something which they believed would save them tax. It didn’t and now they will pay. Had it been successful – and let’s be honest, a different judge may well have ruled differently – then they wouldn’t have. Should Gary Barlow be asked to hand back his honour if that had happened? Plenty of people would say yes – just for trying to save tax he should be told that his kind is not wanted at the top table. All I’ll say is that I do hope that those people follow the example set by Starbucks and volunteer to pay more tax than they rightfully owe each year just to avoid the stain of potential impropriety!