Morally Repugnant or a Moral Right

The government are trying to convince the general public that tax avoidance is the same as tax evasion. But one is outside the law (evasion), and one is inside the law (avoidance) and they should not be considered the same.

However much HMRC and the government may wish to vilify anyone who uses tax avoidance it is clear that, by definition, tax avoidance is legal and we have every right to take advantage of anything that avoids paying tax. As Lord Clyde so vividly put it 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 Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue” (Ayrshire Pullman Motor Services & Ritchie v CIR, 1929, 14 TC 754).

There are very few people, even though most recognise that taxes are needed for society’s benefit, who actually like to pay taxes. If at all possible the majority would prefer to not pay any at all. Even our politicians will use tax avoidance schemes to avoid tax – the switching of houses to avoid paying capital gains tax is a prime – and can rightly be accused of gross hypocrisy when criticising anyone else who dares to do likewise.

There are of course “tax avoidance” schemes that are on the border of avoidance and evasion. These are schemes that are created purely to not pay or reduce the amount of tax payable by creating artificial situations, which under normal circumstances would not happen. In these cases it is up to the courts to decide whether there has been avoidance or evasion and tax paid accordingly.

Whether the people who take advantage (and the risk that they will not work) of these schemes are morally repugnant, or just enforcing their rights is for people to decide individually, but when considering the question ask yourself, if you were in the same position and you were prepared to take the risk would you want to pay less tax. Do not let jealousy of someone else make you accept what the government is saying. If you can avoid paying tax legally, and retain the money you have earned for yourself, then whether you take the opportunity is your choice, and one that we are more than happy to help you with if you wish to take it.