We discussed if that gap could all be capital allowances as accounts and some of my critics imply – and he laughed at the implausibility of that. He knows – and said he knows – that this is is also an issue of transfer pricing, of non-remittance of profits captured outside the UK, of genuine tax avoidance – which he admits exists – but towards which he takes a different moral stance.
We all agree that there is tax evasion: that there is tax avoidance. Even that there is tax compliance and tax planning.
What we are saying is that your estimate of the size of (with respect to corporation tax specifically, and if you make this error there we assume you make it elsewhere) tax avoidance/tax evasion is wrong because you have included in your numbers the entirely, even by your standards, righteous use of such things as capital allowances and others (like the R&D credit) when even you agree that these are either tax planning or tax compliance.
It is the very method you are using to make your estimates, your look at the difference between headline tax rates and effective tax rates, which is at fault.
Think through this for a moment. If the current government goes ahead with lowering the headline rate and paying for that by scrapping some set of those allowances, as they claim they will, then the tax gap, as measured by you, will shrink.
Which really, really, isn\’t what you\’re trying to show, is it?