Is saving tax really 'morally repugnant'?
Am I the only person to be concerned about the current witch-hunt in the media at the moment against anyone who has entered into a perfectly legal and properly disclosed tax planning arrangement? Ignoring the rhetoric for a moment – putting money into a bank or building society ISA is a tax planning arrangement. The only reason for picking an ISA over another account is that the return is better because there is no tax on the interest. No-one has suggested that this is wrong and should be stopped. Similarly, investing in new companies under Enterprise Investment Scheme (EIS) relief is popular solely because of the tax advantages – income tax and capital gains tax relief. Without the tax reliefs the investments would be very unlikely to be made. Again this is perfectly acceptable.
Legally there is no difference between investing in an ISA or acquiring shares under EIS from making an investment in a film scheme. The only real difference is that the quantum of tax saved is higher and the costs of entry are higher.
Realistically, therefore, on a tax planning scale whilst everyone can do ISA’s only high earners are likely to make film investments. In all honesty no-one wants to pay more tax than they absolutely have to but, realistically, you need to have a high income to make the planning worthwhile. You also have to be able to pay the tax if the planning fails and live with the uncertainty if HMRC seek to challenge the planning, which can take years to resolve.
If the government does not like the way the system works based on the existing law it needs to change the law and not create a position of trial by headlines. To be fair the law is being changed – there is a consultation document out with a view to bringing into force regulation to prohibit tax advantages on abusive tax schemes.
Just a thought, how many people have paid a tradesman in cash for a cheaper price? That is not tax avoidance, it is tax evasion – which is illegal, but somehow the press do not seem to focus on that area of tax.
No-one has any enforceable obligation to pay more tax than is required by law. Is it right that they should be pilloried in the media for earning enough to be able to arrange their affairs tax efficiently?