When Sir Vince Cable, having criticised the government for not clamping down on offshore tax havens trading under the British flag, added ‘The Paradise Papers suggest that a small number of wealthy individuals have been able, entirely legally, to put their money beyond the reach of the Exchequer’, he was making what is the single most important thing about this situation. UK’s tax law allows the use of offshore tax havens. It may be galling for the rest of us who, as John Macdonald said this morning, go to work and pay our taxes and who cannot afford to pay for the skills of tax lawyers and accountants to massage our tax returns. You have to ask yourself the question…if I was rich enough would I invest in legitimate overseas funds to avoid paying tax? You might like to take the moral high-ground and but the answer is that you probably would.
The HMRC has a commendable record of getting people and companies to pay their taxes and has collected £160bn by tackling tax avoidance, evasion and non-compliance since 2010. Jeremy Corbyn has suggested the Queen, among others, should apologise for using overseas tax havens if they were used to avoid taxation in the UK. The Duchy of Lancaster that manages royal finances has already said that it was audited and legitimate. He also said anyone putting money into tax havens for the purposes of avoidance should ‘not just apologise for it, but recognise the damage it does to our society’. The difficulty is that if it is lawful for individuals to avoid paying taxes by using tax havens, why should you apologise for it. You may well be a grasping, mean-spirited, amoral individual but if you can live with that and the ‘damage’ you rain down on society, then you are acting perfectly legally…your moral compass may be off by a mile but you’re acting within the law…so that’s alright then!!!