8 thoughts on “Should the Church evade the issue of tax avoidance?”

  1. Posted 10/07/2012 at 12:59 | Permalink

    “Evasion involves illegally not paying tax that is due. This includes not declaring £10 received for babysitting…”

    Unlikely. Most babysitters probably don’t earn enough to reach either the tax or the NI threshold, so there is no reason why they should declare it for tax purposes.

  2. Posted 10/07/2012 at 18:13 | Permalink

    Before we cast our stones against the churches with their tax loopholes,we should
    take a look at the widescale abuse of tax payment by the Takeaways,cafe,restaurant,market trader ,self employed service engineer sector
    If these were to pay their correct dues ,we could probably pay of the national Debt.
    Let us be honest,the only ones paying the correct amounts are the PAYE slaves

    Bless em

  3. Posted 10/07/2012 at 19:49 | Permalink

    This may be true; but it may not. Somebody childminding/babysitting for (say) three hours a day five days a week, 40 weeks a year would easily reach the NI threshold (at south east rates). But, point taken.

  4. Posted 11/07/2012 at 06:13 | Permalink

    Philip – You have an somewhat inflated idea of babysitting rates and how much babysitting an individual would do! Even were they to do 15 hours a week for 40 weeks per year (unlikely) they’d have to be paid around £13/hr to meet the threshold.

    Those are higher than the rates that nannies get, let alone babysitters.

    Nevertheless, your article makes some very good points.

  5. Posted 11/07/2012 at 18:34 | Permalink

    We are only morally obliged to pay just taxes to a just government. There’s a caveat to the obligation. I don’t have the exact wording in front of me. We are permitted to render unto Caesar, even is he is evil, and not suffer the stain of sin by complying with that demand. If a tax is just, we are obliged to pay it. I can’t think of a modern state that is just.

  6. Posted 12/07/2012 at 12:18 | Permalink

    Hang on – using gift aid or a pension isn’t tax avoidance.

    As you say, these are conscious government policies, designed to encourage particular behaviour – and are perfectly compliant with UK tax law. I’m assuming when Cameron & Osborne stated that aggressive tax avoidance was morally wrong, they had in mind the Treasury’s definition:

    “Tax avoidance represents a significant part of the UK tax gap. Unlike evasion, it is not in itself illegal, but it involves using the tax law to get a tax advantage that Parliament never intended. It frequently involves contrived, artificial transactions that serve little or no purpose other than to reduce tax liability. And it enables some taxpayers to gain an unfair advantage, undermining confidence in the tax system.”

    Source: Tackling Tax Avoidance: cdn.hm-treasury.gov.uk/2011budget_taxavoidance.pdf

    Conflating the morality of using perfectly legitimitate tax breaks with highly artificial off-shore avoidance schemes (a la Jimmy Carr) totally confuses this debate.

    By definition, there’s no tax avoided when a person does what parliament encourages them to do and invests in a pension, ISA, or uses gift aid. Exploiting obscure loopholes in the system – which are not avilable to those without an account – is surely morally reprehensible.

    If people (and companies) took more responsibility to pay the taxes they owed, we wouldn’t need such a complex tax code in the first place – and overall tax rates could be lowered.

  7. Posted 12/07/2012 at 13:13 | Permalink

    Chris J – as far as I can see, this is simply a definition of avoidance invented by the Treasury for the purposes of bringing in generalised anti-avoidance rules (that are retrospective). It is not the accepted definition of avoidance. The point is that there are important shades of grey (as I tried to make clear in the article). On the one hand, ISAs, somewhere in the middle using to the extreme tax avoidance schemes that were designed to help a particular industry but them being used to a much greater extent than was ever envisaged by parliament, and then schemes that seem (under any reasonable person’s interpretation) to be classifying income as loans. There is no strict delineation which is why I was trying to make the point that moral judgements about other people’s behaviour are difficult. Even the “parliament never intended” issue is difficult. Did parliament intend with separate taxation that self-employed people could set up companies and allow a non-earner to receive dividends? I suspect parliament never really considered it. On the one hand, this is a perfectly logical application of separate taxation but HMRC took a different view. But the main point is that we are not objectively morally obliged to pay simply what parliament intends if that is not what the law requires and if there are competing claims on our money which we may judge to be more important, especially if the state is not using our money justly. Regarding the tax code, i think it is the other way round. A simple tax code would lead to much less avoidance – these loopholes should not be there in the first place. I am not saying that you are completely wrong, just that these issues (in Catholic social teaching and more generally) are difficult froma moral perspective.

  8. Posted 16/02/2015 at 22:50 | Permalink

    Philip, if I may add something in relation to your response to Chris J. (12 February at 13.13):

    You say “generalised anti-avoidance rules (that are retrospective)”. If this is a reference to the new GAAR, I don’t think it is retrospective. It is there, and people have advance notice of it when they consider whether to use an avoidance scheme. (The taxpayers may not understand it, but if they are entering into schemes that might be caught, they will have advisers who will understand it.) It does mean that a scheme can fail even though there was, at the time, no specific provision that prevented the scheme from working, but there was still a non-specific provision that did so – the GAAR itself.

    The GAAR is vague: a taxpayer cannot always be sure whether a scheme will be caught. But I think that vagueness is a different issue from retrospection. And a scheme does have to be pretty aggressive to have any chance of being caught, on account of the double reasonableness test: the tax avoidance actions must be such that they “cannot reasonably be regarded as a reasonable course of action” (Finance Act 2013, section 207(2)). Moreover, the GAAR needs to be vague, or it would not work.

    There is a debate to be had as to when vague legislation should be enacted. Vagueness is bad, but it may on balance be necessary. Compare public order offences, which have to be vague so that the police officer on the spot can use his or her common sense. But the vagueness there is still bad, because someone on a demonstration to advocate some political or social cause may be arrested because a police officer arbitrarily decides that some harmless conduct amounts to a public order offence.

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