For as long as I can remember, our media has been hunting down and naming and shaming certain figureheads in the country for their financial wrongdoing. Not so long ago it was the politicians’ expenses scandal, then bankers bonuses and now, in what seems to be a bit of a surprise, it’s Jimmy Carr.
I’m sure we can all appreciate that Jimmy Carr is just the tip of the iceberg, and that there are huge numbers of high-net worth individuals who operate aggressive tax saving schemes. However, this leads us to an interesting point as taxpayers and, in particular for me, a tax adviser: when does tax-efficiency become tax-immorality?
What Jimmy Carr and Co. have done is not illegal, but using the tax aggressive scheme has given him a poor public image, something which could well impact his earnings as a comedian.
This raises a new problem for the publicly-lit tax-savvy as there is now a required balance between saving on the tax bill and maintaining a good public image.
The British media and public have proved to have very clear cut views on this. Whilst some tax avoidance planning is acceptable, lowering your tax bill to 1% is front page news and immoral.
The controversial question which sits in the back of my mind is this: is it Jimmy Carr’s fault? If he has a legal outlet by which he can lower his tax bill, can we blame him for not taking it? Or it is the fault of our legislators who have allowed such a loophole to exist? How would we act in his position?
There certainly seems to be a bitter taste amongst the British people in relation to residency also. As an F1 fan, I can tell you that seven of the 12 teams in F1 are based in Britain. However, despite having three British-born F1 drivers, none of them are resident in the UK – all three are in Monaco. Do the British taxpayers not mind tax avoidance provided the individuals don’t benefit from tax revenue?
This leads me to another point which I find particularly interesting about UK tax and my job on the whole. Tax advice isn’t about crunching numbers, it’s not about saving ‘x’ or ‘y’, it?s about finding a solution which works, as well as providing a personal solution which suits out clients.
I see this recent development as another point for the tax advisor to focus on when advising clients, but what isn’t clear to me is how far the tax-efficient should go before they are regarded as tax-immoral. It’s a difficult balancing act and one which will continue to add the human element to what is often regarded as a black and white job.
As always I would be interested to hear your thoughts on the recent press on Jimmy Carr and other aggressive tax avoiders. Are they right to avoid their taxes or is a new wave of morality biting through our cash-strapped Treasury?