Tackling the tax avoiders – and HMRC’s 38-year backlog

The Times investigation into tax avoidance has provoked a fierce debate about the morality of the wealthy and powerful.

Revelations in The Times have provoked a fierce debate about avoiding tax Alamy

Published at 12:01AM, June 25 2012

The Times investigation into tax avoidance has provoked a fierce debate about the morality of the wealthy and powerful

Sir, It is disturbing that following your penetrating and courageous campaign against immoral tax avoidance, tax havens and the greed of the wealthy and powerful, so many of your correspondents seem in no way shocked at your findings and appear to feel that it is natural or even honourable to go to any lengths to avoid paying tax. I would have expected responses more like that of Lily Allen, the pop star, who commented that such tax avoidance, far from being the moral equivalent of benefit cheats, was surely a hundred times worse.

Some of the wealthy and powerful having accumulated their wealth in the UK flee overseas to enjoy it, but in so doing are deprived of the privilege of living in this lovely country. But others like to have it both ways – they remain in the UK enjoying the benefits of being here, but squirrel away vast chunks of their wealth in tax havens and immoral tax avoidance schemes. In both cases the tax that should benefit the poor and the needy enriches the rich and powerful even more. It is difficult to conclude which is the more repugnant.

Lord Joffe

House of Lords

Sir, Not only taxpayers lose money because HMRC takes so long to resolve tax disputes (“The 38-year tax backlog<http://www.thetimes.co.utax alamy pics

k/tto/money/tax/article3454344.ece>”, June 23). The uncertainty and costs on businesses are even more damaging.

I know of companies that cannot close their books from seven years ago because of unresolved tax disputes. This makes it impossible to buy or sell such companies, or for them to pay full dividends to shareholders, squeezing their access to capital. In one case, HMRC case staff have changed three times during their lengthy review, requiring the company and its lawyers to explain their arguments over and over again.

There is one way we can cut the number and length of tax tribunals, and reduce tax avoidance at the same time – make taxes lower and simpler through the adoption of a flat tax.

Eamonn Butler

Director, Adam Smith Institute,

London SW1P

Sir, Unless I am mistaken, the Cayman Islands did not feature once in your extensive investigation of tax avoidance schemes. And understandably so, because no British citizen can evade or improperly avoid paying UK income tax by investing in the Cayman Islands. The Cayman Islands Government is a tax-neutral jurisdiction, but it has a double tax agreement with the United Kingdom government whereby HMRC is provided with full transparency for tax purposes in relation to any account in the Cayman Islands.

It was disappointing, therefore, that your cartoonist chose to misrepresent he true position by showing Jimmy Carr seeking asylum in the “Cayman Islands Embassy”, which does not exist. We applaud your editorial for pointing out that high tax rates drive tax avoidance schemes, and for calling for lower taxes. It is a pity that you incorrectly portray a British territory, which has indirect taxes, only to perpetuate this myth that there is something immoral about low tax jurisdictions. When the United Kingdom tax rates get closer to those of the Cayman Islands, you will find that these ingenious tax avoidance schemes, lawful though they may be, will wither and disappear.

Cayman Island Response from:

The Rt Hon The Lord Blencathra

Director, the Cayman Islands Government Office in the UK

Sir, Nowhere in the recent discussions have I found a reference to the other side of the equation, namely what happens to the tax paid by the taxpayers

It is well documented that billions of taxpayers money is squandered by incompetent civil servants. That does not really encourage people to pay tax from their hard-earned money. In yesterday’s Times there was a story about defence procurement which confirms this waste.

The Prime Minister should be careful to condemn tax avoidance as morally unacceptable while many billions for which he is responsible are squandered.

C. Wim Witjens

Camberley, Surrey

Sir, Your focus has rightly been on tax avoidance but we need to build better links between taxpayers, who earn the money, and the government, which spends it.

The Chancellor’s decision in March to issue annual personal statements explaining departmental expenditure was a move in the right direction. They could be amended to allow law-abiding citizens, who pay their tax on time, to instruct government on how a small proportion (say 5 per cent ) of their money is spent. We pay for government every day of the year but only get to change it every five years.

Robert Duffield

London EC4

Sir, Jimmy Carr* should have heeded the advice of George Carman, who declared in 1989 whilst successfully defending Ken Dodd of tax evasion charges that some accountants are comedians, but comedians are never accountants.

Frank Greaney

Formby, Liverpool

*iNews Cayman – see our story today (26) “Slush funds in the Cayman Islands” with reference to Jimmy Carr.