Now this is truly gorgeous from Richard Murphy

No, really, quite, quite, gorgeous.

He\’s written a paper (another!) for the TUC. About how we should have a General Anti-Avoidance Principle written into English Law.

As he says, the sort of thing this GAntiP would crack down upon is the following:

The idea behind a General Anti-Avoidance Principle is simple: it would say that if one or more steps are added into a series of transactions with the sole or principle aim of securing a tax advantage (which is defined as a saving in tax) then that step in the transaction is ignored when it comes to calculating the tax due on the transaction. In other words, it tackles pre-meditated attempts to subvert the intention of the tax system that might artificially exclude income from account for tax or that provide tax reliefs that do not reflect the substance of the transactions otherwise undertaken.

Transactions this might tackle include:

Income shifting between spouses;

Recategorisation of the payment of labour reward from companies as dividends, so avoiding national insurance;

Now, who do we know who has used company tax law in, at least in my opinion, in this manner?

Oh, yes, that would be Richard Murphy, retired accountant from Wandsworth and writer of papers for the TUC, wouldn\’t it?

Altogether now children, can you say \”hypocrite\”?

14 thoughts on “Now this is truly gorgeous from Richard Murphy”

  1. “Recategorisation of the payment of labour reward from companies as dividends, so avoiding national insurance;”

    Wasn’t that IR35? See where that led, total complication, bueacracry and uncertaintity for small one man companies. They setup as small companies because of the limited liability benefits with the tax advantages a bonus on top.

    And hopefully now to be repealed.

  2. We might also say that it would be extremely difficult to prove that steps had been added to a transaction “with the sole or principle aim of securing a tax advantage” rather than for some other purpose. We could add that if HMRC had the power to make such arbitrary decisions there would be numerous mistakes and injustices. We could even say that this would have a significant impact on economic growth, because businesses and individuals could no longer calculate their future tax liabilities with any confidence. Everyone would have to plan on the basis of the worst-case scenario, and would therefore have to reduce their spending.

  3. It’s perfectly consistent to think anti-avoidance legislation would be a good thing and not be the one mug who behaves as though that legislation’s already in place.

    No hypocrisy here, just your bog-standard tragedy of the commons.

  4. Pete,

    The hypocriscy comes when you also bleat on about following the “spirit” of tax law and not what it actually says.

    As Richie believes the “spirit” of tax laws says everyone should pay the headline rate at all times regardless of circumstance or use of allowances I’d say this is yet another open and shut case.

  5. This sort of ‘double-think’ is all too common among middle-class socialists.

    We have friends who would enthusiastically support RM’s suggestion; but their huge wealth is off-shore, their company registered in Belgium (not sure why!), and they enjoy their 6-bedroom house, 3 cars (including a vintage Aston Martin), 15 acres, lake with island, helicopter and ‘plane…

    Suggested tart responses to these Bollinger Bolsheviks most welcome! (PS. Poor, I’m not.)

  6. Income shifting between spouses

    So a man gets taxed on his wife’s income, whilst his wife pays none? Who makes the call whether the wife has a legitimate job or not? Yeah, I can see this working out well.

  7. I worked with a (very nice) guy who was always agitating against the existence of private schools.

    The main target of his animus was another chap who sent his son to a small school where the fees were around £4,000 a year.

    I pointed out that the 5 litre Range Rover Vanden Plas that guy A drove cost more than all the school fees guy B would pay over the educational lifetime of his son, but guy A didn’t seem to see the contradiction.

  8. So Richie is still railing against the independent taxation of husband and wife. How very progressively liberal of him.

    Anyway, bring it on. All that uncertainty and years of the courts grinding out case law to define the details of his “GAntiP” will do wonders for my efforts to sell Tax Enquiry Insurance to our clients.

  9. The great man makes a big deal about compliance with the wording AND SPIRIT of the tax law.

    But how good is he at compliance with the objects of the TUC Constitution?

    See here. http://www.tuc.org.uk/the_tuc/tuc-16855-f0.cfm and see the objects in rule 2.

    Of course, the ‘spirit’ of the objects of any organisation is to ensure the management sticks to the knitting, and doesn’t spend time and the organisation’s resources on their private hobbyhorses.

    And one would suggest the ‘spirit’ of a trade union is to protect its members.

    The only tax issues it should get involved in is taxation of the members, and (possibly) taxation of their employers (from the angle of reducing their tax burden – to ensure they have more money to improve wages and conditions). Any other involvement in tax is plainly beyond the language and spirit of the objects of the Consitution and is ultra vires, and is nothing short of a hobbyhorse of the union bigwigs.

    Sure, the breach is theirs, not his. But he is presumably aware of the Constitution, and is happy enough to bank cheques made in breach of it.

    Stinking, rotten hypocrite.

  10. Phil,

    “Bleating about the spirit of the law” still doesn’t make you a hypocrite in itself. It’s just acknowledging that loopholes are a bug rather than a feature.

    I’ve not read enough of Murphy’s stuff to know, but is he attacking the players or the game here? If it’s the former (“only bad people depart from the spirit of the law”) then sure, he’s a bad person by his own lights. But if he’s just saying that we’d all be much better off if the letter of the law was brought more in line with the spirit of it, then that’s a perfectly coherent position.

  11. He certainly bangs out the ‘papers’ doesn’t he? Must be quite a nice little earner. Perhaps I should start. All it seems you have to do is write what your client wants to hear, and the cheques roll in. Objective you don’t have to be. He who pays the piper and all that.

    Are there any unions out there who fancy a bit of pro-market, libertarian report writing doing? My rates are very reasonable.

    Actually what do you reckon the going rate for a ‘report’ from RM is?

  12. One presumes that the TUC expects all their members to take a pay cut in order that their employers can actually pay more tax. Have the members been consulted do you think?

  13. Just wait until Mr. Murphy realises that working part-time or not at all also is a form of ‘tax avoidance’….

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