Good, glad we’ve got this settled then

ISAs are not tax avoidance

Super, OK. And we are given a precise definition:

If someone is doing precisely what the law intends and allows for and seeks to encourage then they are not tax avoiding.

When they are doing something that the law never intended to happen and get a tax advantage from it then they are tax avoiding.

So, EU law specifically insists that intra-European royalty payments are not to be taxed in the country of origin. Thus Starbucks, Amazon et al are not tax avoiding by doing so. Interest is a deductible expense, thus Boots is not tax avoiding by being capital light and debt heavy. Cadbury showed that Vodafone was obeying the lat# to he jot and tittle, it being the UK CFC laws which were the illegality. That’s not tax avoidance therefore. Facebook selling from Ireland into the UK is the very point of the Single Market.

The Senior Lecturer has just given us a definition of tax avoidance which wipes out near all his examples of tax avoidance.

14 thoughts on “Good, glad we’ve got this settled then”

  1. Spud sells books. Books have VAT privileges. This is barefaced avoidance and thoroughly reprehensible.

  2. MB, yes, particularly as most of his output is online, which would have VAT on it were he to charge.

    He only publishes in book form when he is selling his writing and so benefits from the VAT zero-rating, which makes it look even more like tax avoidance.

    At least that’s how he’d argue it if it were someone else doing it.

  3. ISAs are clearly tax avoidance, most of the time.

    They were introduced to encourage saving, so it is only doing “what the law intended” if the tax breaks encourage you to save money that you would not otherwise have saved.

    The vast majority of ISA investment (there were some stats on this) is money that people would have saved anyway, but they’ve just put into the ISA to get the tax breaks. That’s pure tax avoidance – there’s no commercial rationale for the ISA, it’s only being used for the tax break.

    I don’t have a problem with that; tax avoidance is fine.

    Murphy’s problem is that he wants to say that all tax avoidance is evil, but doesn’t want to criticise ISAs (either because he’s got them himself, or because even he realises that it would put too many people off his argument), so he’s reduced to spouting nonsense like this.

  4. “something that the law never intended to happen”

    Which is worse than pathetic. Whenever all the conditions that are required to put a particular provision into effect are satisfied, then the law quite rightly applies. If parliament made a mistake in the drafting or left certain conditions uncovered, that is not the tax payer’s problem.

  5. I still don’t know what it is when I … um… have no occurence of paying tax… when I don’t buy alcohol or tobacco.

  6. Bloke in North Dorset

    “When they are doing something that the law never intended to happen and get a tax advantage from it then they are tax avoiding.”

    I suppose it should come as no surprise that the authoritarian twat is trying to overturn the constitutional principle of English law that “everything which is not forbidden is allowed”

  7. The problem is he may be wrong but his lobbying may well result in changes to the rules since weak willed politicians succumb to feeble minded journalists inspired by his drivel. They are already coming for interest as a tax deductible expense.

    https://www.gov.uk/government/publications/corporation-tax-tax-deductibility-of-corporate-interest-expense/corporation-tax-tax-deductibility-of-corporate-interest-expense

    “The new rules will restrict the ability of large businesses to reduce their taxable profits through excessive UK interest expense. They are part of the government’s wider changes to encourage alignment of the location of taxable profits with the location of economic activity, and are consistent with the UK’s more territorial approach to corporate taxation.”

  8. Soapy today argues that Oxfam’s clothing wheeze is tax avoidance and, rather less convincingly, that David Cameron’s dad’s IHT was also tax avoidance.

  9. @ aaa
    Have you read Heinlein’s “The Moon is a Harsh Mstress” which assumed that society on the Moon was created around thre spouse exemption from IHT decades before any real-life government invented it?
    One does not need to like Henlein as a person in order to recognise his genius as a SF writer.

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