Strangely familiar?

Some of the following may seem strangely familiar:-
• A shambolic budget;
• rises in indirect taxes;
• rises in petrol duties;
• arguments over the top rate of income tax;
• National Health charging causing ministerial tension whilst defence spending is increased;
• seemingly pointless or even harmful tinkering with capital allowances for business;
• people driven near to “the limits of taxation”.

If, however, you think that I am talking of the last budget, think again.  All the above were features of the Daily Mail’s coverage of Hugh Gaitskell’s 1951 Budget, and the ensuing furore that lead to the resignations, in short order, of Aneurin Bevan, Harold Wilson and John Freeman (Bevan’s Parliamentary Secretary).

Now, in case you think me ill, I should stress that I don’t usually just happen to be found reading my back copies of the Daily Mail. The circumstances of my delving into that paper’s past are that some while back I arrived home from work to find a much loved picture on the floor surrounded by broken glass and shards of frame, flanked by two boys holding table tennis bats who had witnessed the picture fall suddenly and without provocation or explanation.  When, this week, I picked up said picture repaired from the framer, I was presented with assorted pages from the Daily Mail newspaper of April 1951 on which the picture had previously been mounted and which covered the budget of that year and its aftermath.

What is striking is how similar are the issues and similar the coverage (albeit the Daily Mail of the time was a broad sheet lacking the journalistic hysteria of the Daily Mail of today).  Some things were different for sure – a key measure of economic health included the length of time (up from 4 hours 20 minutes in 1939 to 8 hours in 1951, post budget) it took Mr Average to earn enough money to buy a dustbin, but the similarities far outweigh the differences. Why, for instance, only 6 years after the end of World War II, Government withdrew initial allowances on expenditure on new plant and factories at a time of intense re-generation, must have been a mystery to all.

Perhaps it is this apparently senseless tinkering that was then, and remains now, a key source for some in seeking to minimise or avoid their tax liabilities.  Possibly, rightly, people thought then and think now that at times Government’s capricious and ill thought out changes in tax policy were and are indicative of a lack of competence and that government does not spend its (our!) money responsibly.

However, the individual attempting to minimise his tax liabilities most definitely will notice a key difference between then and now.

We used to be able to rely on a man’s right to minimise his liabilities within the law following the words of Lord Clyde in the Pullman Motor Services case of 1929. In that case Lord Clyde asserted that:-
‘no man…… is under the smallest obligation…. moral or otherwise to enable the Inland Revenue to put the largest possibly shovel into his store……’

Lord Clyde went on to say that the taxpayer was:-
‘entitled to prevent so far as he honestly can, the depletion of his means by the Revenue’.

We seem suddenly to have moved away from this notion only to find ourselves in a fervid environment headed by the tax illiterate, Margaret Hodge and the Public Accounts Committee, bemoaning the fact that journalists seem better able to determine what is “the right amount of tax” for people to pay.  With the media’s assistance the debate has moved into a moral theatre which seeks to blur the difference between avoidance (legal) and evasion (illegal) by, amongst other things, and dare I say deliberately, using the terms avoidance and evasion seemingly interchangeably.  But theatre is indeed what it is.

Even HMRC’s officials have blenched at the Public Account’s Committee’s emotionally biased attitude towards tax collection.  As HMRC has itself pointed out, there has been too little focus on the need to address, in a sensible debate about avoidance, the inadequacies of tax law by promoting changes in that law.

Our view remains that legal planning is totally acceptable and we remain committed to assisting our clients to structure their affairs in as tax efficient a manner as possible within the law.

Some day, the press pack will move on and we will be left with the law as modified by the new general anti-abuse rule and whatever else may be around the corner.  Let’s hope it is fit for purpose.

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