Monday, 25 June 2012

We need real action on tax avoidance

My article for this week’s Cornish Guardian will focus on the tax avoidance of the super-rich. It is as follows:

The tax affairs of the rich and famous are once again under public scrutiny. This follows the shocking revelation that millionaire TV comedian Jimmy Carr and others have been using a “legal loophole” to dodge paying taxes.

It has been reported that Carr used a “wealth management” scheme called “K2,” in which high earners sign employment contracts with offshore companies that take their earnings. The companies then pay the “employee” a much lower salary each month, but “loan” the individual many thousands of pounds. These loans, which obviously do not get repaid, are written down as liabilities, substantially reducing tax payable to the Government.

It has even been reported that some rich individuals have paid as little as 1% tax on their earnings, while working people struggling to make ends meet are still paying their tax bills in full.

It is unbelievable that such scams have been allowed to continue, with the perpetrators stating that their tax arrangements have been fully disclosed to HM Revenue and Customs.

Put simply, it is a disgrace that individuals such as Carr have been able to divert millions from the public purse into their own pockets. Instead of the money being used to fund public services such as the National Health Service, it was presumably used by Carr for things such as the purchase of his £8.5 million eight-bedroom home with cash – no mortgage needed!

The comedian has since apologised for a “terrible error of judgment” and promised to change his ways. But he has subsequently been exposed as the Director of another tax avoidance scheme called Romangate that was closed down by HMRC in 2009, and cynically he has made no offer to pay back any of the money he has amassed by underhand means.

It is to be welcomed that the Prime Minister has strongly condemned the actions of Carr as “morally wrong.” But it is ridiculous and hypocritical that he has since declined to condemn other individuals, such as prominent donors to the Conservative Party, who have used equally complex schemes to avoid paying tax.

I presume that David Cameron’s inconsistent approach to this issue has been influenced by the fact that his own father was one of the first Britons to move money overseas to avoid tax, thereby increasing the family fortune.

It is simply wrong that certain wealthy individuals, and those with access to well-paid accountants, can be treated differently to the rest of us when it comes to payment of tax.

Now, for once and all, the Government must take decisive action on all tax cheats and it must eradicate all avoidance schemes. 

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