Tag Archives: #AS2012

Autumn Statement 2012: The Big Picture

Whenever someone asks me why I made the choice three years ago to take up a career in tax, I have a few key lines I often spew out. Since joining Grant Thornton my opinion hasn’t changed exactly, but what I find appealing in this role has developed.

What I enjoy most about having a career in tax now is that what I do is always relevant to the big picture. Pick up any newspaper today and it won’t take you long before you find a hot topic in the public eye where tax policy is at the heart of the story. Whether this is something I didn’t notice as a student or just didn’t appreciate, I’m not sure. What I am now sure of is that this factor of my job makes it interesting every day.

However, today was slightly more interesting than any other day as it was the unveiling of the 2012 Autumn Statement. An event which might pass many people by became the focus of my day. I travelled up to our London Euston office to work with a small team offering a live reaction to the statement and provided assistance to a journalist looking to create snippets of audio for local and national radio stations.

My day started slowly but as soon as the clock stuck 12 it was all go! I, along with fellow beans spiller Lucy, watched the statement live in a room with our PR team, a number of senior partners and, notably, our Head of Tax; Francesca Lagerberg. Watching Francesca in her element was a delight and something I’m really grateful I have been able to witness with only two years with the firm. Seeing how she interpreted the information was, admittedly, a daunting experience (I have so much to learn) but it is a fascinating insight into the mind of one of the best in the business.

After the statement finished I assisted a journalist in interviewing and recording short soundbites for radio stations. This meant witnessing yet more amazing minds at work and, again, whet my appetite for knowledge of specific tax issues.

I ended the day by having a couple of pints at a local pub with a selection of colleagues from London, a refreshing end to a long day!

As I sit on the tube ready to head home I realise I’m just about to go full circle on this blog. When I’m asked why I enjoy tax, one of my standard answers is that I love how it changes and I’m always challenging myself to learn more. Today I have yet again realised that in a career where it is literally impossible to know everything, an inquisitive mind will always be satisfied, with or without George Osbourne.

The Question of Tax Morality

When I started life as a tax advisor (only 3 years ago) I never really questioned the morality of my job. I help people structure their tax affairs efficiently and ensure that they can protect their wealth whilst providing for future generations.

However, since the recession took hold in 2009, there has been a huge shift in public opinion. The general public are disgruntled by the likes of Jimmy Carr and Starbucks and understandably so when times are so difficult for the vast majority.

This makes the job that I do even more interesting. On a daily basis there are news articles announcing the latest ‘tax avoider’ and my friends are even becoming interested (sort of) when I discuss tax at the pub!

However, on the eve of the 2012 Autumn Statement where tax avoidance is likely to dominate the headlines, this shift in public opinion is verging on a profound change in the role of a tax advisor. Nobody is accusing Jimmy Carr or Starbucks of breaking the law and they are simply structuring their affairs so they pay the least tax possible whilst keeping within the remit of the law. Instead they are being accused of, in my view, an equally heinous crime of acting immorally!

By reference, one of the most famous quotes in tax planning comes form Lord Clyde in a decision he gave in 1929:

“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores.”

The current state of play goes against this basic principle which has been followed for so long. The argument that sticking within the law is no longer enough concerns me greatly, as who defines morality and ethics? As far as I am aware there is no law, act or statute defining the morally correct ethical taxpayer. It is a long established principle that individuals and companies are well within their rights to structure their affairs efficiently. However, we have reached a stage where doing this is classed as immoral and unethical!

The most simple tax efficient structuring such as making use of pensions, ISAs and transfers between spouses, all perfectly legal, are now being called into question. Are these transactions immoral or simply doing as Lord Clyde told us to all those years ago?

I understand people’s frustrations that some companies may pay more tax than others. However, we also need to consider that these companies contribute a lot more to our economy than corporation tax. They all employ a substantial amount of people, pay their business rates, fuel duty, national insurance etc. and have helped shape our economy into what it is today.

Also, and more importantly, these companies are, from the current facts available, not breaking the law. Surely, the general public should be lobbying the government to change the law in order to curb this perceived immorality, instead of attacking law-abiding individuals and companies. The Government’s proposal is to introduce a General Anti Abuse Rule (GAAR). This will seek to tackle abusive tax arrangements and will aim to set the borderline between what is acceptable and what is not. However to resolve the issue of multinationals’ corporation tax, it is likely that the OECD model of a tax system based proportionately on revenue will need to be adopted.

However my concern remains about what defines a moral ethical taxpayer? Does it need a definition? Who can even contemplate making such a definition? And are the lines between what is legal and what is moral diverging?

I anticipate that the next few years will be instrumental in the future of tax planning. With the current public opinion, the introduction of the GAAR and a shift of focus from legality to morality, the tax planning arena will be shifted into uncharted territories where it appears we will all have to learn what is ‘right’ and what is ‘wrong’ all over again.