Ritchie and the law

But perhaps most important is the fact that a limited liability company gives its shareholders in whose interest Roger Carr says it must be run the most phenomenal economic privilege: they cannot be sued for the debts the company incurs if all goes wrong even though they get all the benefit if things go right. That’s an astonishing privilege. It is not a right. I stress, it is a  privilege – and one that is granted by parliament on behalf of the people of the UK.

The privilege carries with it at least two implicit responsibilities. The first is to account for how the privilege is used – which means putting full and proper accounts on public record so we can know exactly what our companies are up to. The second obligation is to pay for the privilege – and that means complying fully and willingly with the tax (and other) laws passed by the UK parliament that creates them using exactly the same authority that they use to grant the privilege of limited legal liability.

And given that, by definition, tax \”avoiders\” do obey the law as written by Parliament and interpreted by the courts, then tax avoiders are indeed living up to their part of the contract implicit in their grant of limited liability.

Makes you rather wonder why he\’s whining really.

9 thoughts on “Ritchie and the law”

  1. If there wasn’t limited liability, you would find that investors would invent it and accept a lower rate of return than would be offered to those who were prepared to let someone put a charge on the mortgage of the house..

  2. What he misses is that the privilege was granted so that people would invest more capital and more widely than otherwise.

  3. It’s a little bit like vegetarianism: widespread vegetarianism doesn’t mean better conditions for cattle – it means no cattle at all in the first place.

  4. Also, would someone who is willing to bet YOUR house on a scheme likely to be the sort of person you would want to invest your money – let alone your house – in?

  5. they cannot be sued for the debts the company incurs if all goes wrong even though they get all the benefit if things go right.

    He’s missing a huge detail here. If a company goes pear shaped the investor loses part or all of his investment.

  6. It’s interesting, isn’t it, that you leave out the bit on his blog that matters here. Which knocks down your blog rather effectively.

    “Second, remember that when you avoid something you go round it. That’s what tax avoiders do. They go round the law.”

    As I said, interesting that you left that bit out.

    Tim adds: Nice try but no cigar.

    Drunk driving avoidance is not going around the law, it’s obeying the law, to the letter.

    Murder avoidance is not going around the law, it’s obeying the law to the letter.

    Tax avoidance is not going around the law, it is obeying the law to the very letter.

  7. He also completely misses the fact that those who interact with a company will be aware of its limited liability status. In particular, its largest creditors will likely be banks who know perfectly well that they would be unlikely to have any recourse to the shareholders’ personal (uninvested) wealth, except under the provisions of the Insolvency Act or the limited exceptions under common law. The only problematic category are involuntary creditors such as tort claimants. However, this problem can usually be dealt with through compulsory insurance.

    Companies don’t owe such a debt to society. Yes, information and disclosure is necessary to prevent fraud etc., but as a commentator above pointed out, incorporation would likely have come about by private contract anyway.

    Richard has a remarkable habit of ‘having a go’ at just about any subject. I would have posted this on his site, but why waste my effort? He’d just write me off as an ‘extremist right winger who hates society’ or some such bollocks.

Leave a Reply

Your email address will not be published. Required fields are marked *