Avoiding tax is legal – so what's the big fuss?

ONE of Guernsey’s greatest self-proclaimed ‘unofficial ambassadors’ has told the financial services industry that he ‘doesn’t get’ the big fuss over tax avoidance issues dogging the islands in the national media.

Digby, Lord JOnes

ONE of Guernsey’s greatest self-proclaimed ‘unofficial ambassadors’ has told the financial services industry that he ‘doesn’t get’ the big fuss over tax avoidance issues dogging the islands in the national media.

On the eve of a high-profile Panorama investigation into the islands’ role in tax evasion, Digby, Lord Jones, told the Guernsey Financial Services Commission’s industry presentations that the moral dimension, often referred to by politicians in recent months, should not come into the equation.

‘If people are playing the game, what’s wrong with that? If you don’t like it, change the rules,’ he said.

At the height of the furore over the tax affairs of comedian Jimmy Carr, who used an avoidance vehicle in Jersey, Lord Jones, pictured, was asked to comment on Sky Television. An argument ensued.

‘My argument was, if you can have your income, tax free, completely legally, with a letter from the Inland Revenue saying that’s fine, of course you would do it,’ he said.

‘If you don’t like it, change the rules, but, until you do that, don’t go on about it.'

Comments for: "Avoiding tax is legal – so what's the big fuss?"

Scarpia

I wonder how ol' Diggers expects us to get the rules changed if we don't 'go on about it'.

Normal taxpayers,unlike the wealthy and certain business groups, are unable to use expensive lobbying organisations to influence the decisions of politicians.

Bloggs

I agree totally with him.

Unfortunately though, its not his opinion which counts!

Arnald

Apartheid was legal.

"Going on" about things that are clearly indefensible is all people can do to change opinion enough to get the rules changed.

But then Digby's not the brightest.

Gilthead

Arnald - ISA's are a tax avoidance scheme that are legal.

Are they like apartheid?

Arnald

Non-sequitur, I'm afraid.

Those uses of incentive are clearly laid out and mandated.

The use of artificial structures to fit around the tax laws, so using those laws not as they were intended, is very different.

But then I guess you knew that and are ploughing this boring furrow that has been turned over and explained over many, many years.

Using 'legal' as an excuse for abuse is nonsense.

Gilthead

Arnald - well you know that very many "avoidance" schemes ARE clearly laid out and mandated by HMRC.

We'll never agree so merry Christmas to you!

Tax avoider

Arnald

Do you not claim your personal tax allowance? Do you voluntarily hand over the £1,800 ish that it saves you? Do you claim tax relief on mortgage interest?

Arnald

Do you know what you are talking about or are you deliberately trying to make yourself look stupid?

Dani

Tax avoidance is legally minimising your tax bill and everyone is entitled to do so. Using personal allowances is just one way of doing it. There is nothing stupid about what they have said at all.

Sam

Dani

Your appearing as stupit as "Tax avoider"

GM

I'm totally with Dani on this one.

Arnald is merely a stooge of Richard Murphy, right down to using the analogy of apartheid which is always Murphy's stock response.

Dani

Sam: I think the word you are after is stupid.

The thing is though I'm being honest - not stupid. Using personal allowances is tax avoidance. Using available reliefs is tax avoidance. They are legal ways to minimise your tax bill.

If people want to start discussing tax avoidance methods they believe to unfair/immoral I want to see specific methods discussed in a balanced, open and informative way so all the facts are there for people to independently make up their own minds method by method. Please share in this manner - it would be interesting to hear what you had to say. I'd definitely appreciate it more. :-)

What I do see more frequently however is people politically hijacking the term (for their own ends - to sell papers for example and run with solely the negative connotations) with little understanding of the whole topic (it is varied and complex) and I don't believe ignoring a basic point of what it is in its entirety is a great precursor to the type of intellectual conversation that will be productive for the people it should be held for. Most of the time the public only get half the story and I think telling half truths to get a desired outcome is manipulative.

I have no issue with the discussion itself but let's get the foundations right for when/as it takes place.

bothered

Well said Digby. If its legal than why shouldn't people manage their affairs to take advantage of lowering their tax bills. Whilst we know this only benefits the wealthy and businesses what we must remember is that all of these so called "tax dodgers" are benefitting our little island by way of creating a finance industry that employs so many and in turn creates taxes which are paid to the states of guernsey and which benefit the island as a whole.

If the UK doesn't like what it has created than it needs to look at itself and change the rules all together. oh wait this probably wouldn't happen as its not in the best interests of the politicians and law makers who no doubt all have certain of their financial affairs through the offshore world in order to save themselves some tax!

Beanjar

British politicians are unlikely to do much besides whinge, they have too much to lose. England is stuffed to the rafters with rich foreigners blowing piles of cash, often ill gotten gains. Look who owns half the best properties in London, best hotels, best shops, best cars. In fact everything from superyachts to football teams. As usual, HMRC want their cake and eat it. Try telling them their taxes are immoral and they will laugh in your face - taxes are either legally enforceable or they're not. As well the MP's know, plenty of them being lawyers.

Conundrum

Be careful what you wish for, as it is the rich investing in business that keeps the economy afloat.

Bring in tax breaks for those who choose to invest in renewable energy, and job creation schemes such as Remploy and suchlike.

Reward those who seek to improve the fabric of society..

PLP

He's right to a point, simply keeping the law is sufficient for some folk - however saying it to a gathering of finance industry professionals is like preaching to the converted. Other sections of society look through a different lens, they see certain moral and ethical obligations above and beyond legal compliance - those folk are unlikely to be swayed by his words.

Either way it's all a bit of a non-story to be honest.

Rustylink

Given that many consider taxation itself to be legalised 'theft' Governments protesting it is immoral to use legal manoevres to minimise taxation is hardly edifying.

The moral point is the clearer when one takes into account the use that governments too often put much of the funds they 'confiscate' from taxpayers.

When governments and politicians spend wisely and stop trying to buy voter support by unsustainable benefits, pensions, pretige projects. and lax financial controls, they might gain some of the respect required to introduce moral justifications for 'voluntary' taxation.

Until such time as govenments can claim all their expenditures are morally justified, let us stick to the traditional respect for, and just application of, established law. If the law is inadequate then change it!

Beanjar

This is rather like the government bleating when they bale out the banks with public money only to have them take it as a bonuses. Or the MPs themselves fiddling their expenses en mass. Prisons would be full if people got jailed for greed. We have already established that you cannot expect moral behaviour from people. Without controls people do not do the right thing, thats what we have laws for. I won't pay more tax than I have to, nor will you, morality doesn't come into it. If they make it possible to arrange your affairs in such a way that you legally pay less tax, you would be a fool not to take advantage. Change the laws, make the tax system fairer and more transparent then jail those who cheat, no more cozy deals to just pay some tax later.

Terry Langlois

After the Jimmy Carr story broke, Ed Miliband said pretty much the same thing.

He said that politicians should not discuss whether something is moral or not, they should decide whether they want to make it illegal or not.

But it's not really a great defence. People do not criticise tax avoidance on the basis that it is illegal, they criticise it on the basis that they think that it should not be happening.

As with everything, there are shades of grey - the Jimmy Carr scheme was pretty outragious and difficult to defend. Other forms of avoidance are more defensible.

And a large part of our industry does not depend on tax avoidance at all, but people tend to overlook that.

Don

Taxes pay for our hospitals,our schools,our police,an fact all the public services.There should be no loophoes in"getting out of paying"everyone should pay their fair share according to their means,and most of the normal mortals do.However,if you are rich,can afford the best lawyers,park your cash overseas under dubious methods,then you are able to escape your "fair share"And all the fiddles going on in the finance world tells it all!

Beanjar

It still comes back to legality. It could be made law that any person or company that trades in the UK must employ only UK taxpaying staff and suppliers. The onus could be put on the individual or company to prove that any payments made abroad are wholly legitimate and necessary. That might put an end to 5 minute board meetings in Luxembourg or coffee bought from Switzerland. It could be sorted but the UK government worries that other countries would reciprocate any clampdown. In September the Guardian revealed that 68 MPs and peers are directors of firms linked to offshore jurisdictions.

Dani

GM

Thank you for the support.

This may be of interest to you: RM has actually been saying that tax avoidance is not legal... He stated so on his "tax research" blog which then is tweeted to his 15,000 followers..

Dave Jones

Dani

Murphy is basically a communist, who doesn’t believe in banking confidentiality or peoples right to invest their money in a low tax jurisdiction.

He is also a hypocrite, while writing endless drivel about the morality of tax avoidance which is legal, sells this drivel through his books on Amazon, which has been in the spotlight lately for legally avoiding UK taxes but you will notice Murphy has made little comment about Amazon.

Just

You do yourself and your cause no favours by calling a person who is clearly not a communist a communist. It is plain lazy, and shows no real depth of understanding of political doctrine. Applying your own idle criteria to yourself would throw you to the other end of the spectrum and make you a fascist, which I'm sure you would not appreciate being called. So please show others some respect. Disagreeing with your views does not automatically make someone a 'commie'.

Incidentally, Mr Murphy has been proved right on several matters appertaining to the Isle of Man and the Channel Islands, and the jury is out on some of his other predictions, but there are increasing signs that he might be right about our respective economies if we do not diversify and rely less on the finance industry.

Terry Langlois

just because he peppers his comments with a few statements of the bleeding obvious, or "predictions" of things that are clearly already in motion (such as "LVCR is going to be attacked by the UK" or "the island needs to diversify to reduce its exposure to the finance industry") does not mean that he is right when the core of his argument is founded on inaccuaracies and misunderstandings. GM's post below is an excellent summary.

as soon as you really press him to prove the factual part of his argument, he takes his toys away and stops playing.

Dave Jones

Just

I describe Richard Murphy as I see him, judging him by what he says and does. He is a man who believes that low tax jurisdictions have no place in his high tax world and every citizen should have their personal financial details open to scrutiny by the State. A man who believes that people should pay taxes they are not legally liable to pay and that his Marxist view of the world requires people to give up large parts of their income on moral grounds to the State because he says so.

Incidentally, I don’t have a cause, I happen to be a member of a government that has helped keep this island prosperous for many years and as long as the people want me,I will defend our right to determin our own tax thresholds. I have a duty to those I represent, to protect their way of life and to ensure we have employment opportunities and a decent future for their children and Grand children.

Our finance industry is carrying out perfectly legal and legitimate commerce in the islands and people like Murphy who constantly attack us, dislike the fact that we have our own autonomy and are outside the clutches of the EU and the other Communist’s that make up the Commission.

jj-letho

The description of Richard Murphy as a communist is not far off the mark. He doesn't believe in any sort of freedom of speech (try criticising his trade union paymasters with a post on his blog-instant deletion!) and he wants to remove freedom of movement (look at his passport ideas). He makes completely untrue statements and tries to legitimize them by constantly repeating them, until others repeat them. He is a dangerous liar (at times) with a band of blind followers.

But we need to be careful on what we believe is acceptable. Just because something is legal does not make it acceptable. Contrast the Jimmy Carr scheme with using your legitimate allowances (as Dani suggests). A very big difference!

GM

Dani

I know all about RM. Unfortunately I get barred by him whenever I contest his ridiculous views by stating the facts. He will block anybody who stands up to him and who will prove him wrong in frint of his devoted and brainwashed flock.

He's a man who claims that, constitutionally, the Crown Dependencies are nothing more than UK county councils with no autonomy whatsoever. His view is that key events of 1066 and 1204 which define our constitution are irrelevant and should be ignored. He claims that we must do whatever the UK government says, and that our involvement in lawful tax avoidance is a sign of bad governance which justifies the UK coming in and imposing direct rule.

He thinks that our finance industry is rife with thousands of tax evaders and is incapable of recognising that Guernsey and Jersey are run very differently. His hatred of Jersey is significantly greater than his hatred of Jersey. I suspect that he genuinely fears for his personal safety over there after many of his comments.

Remarkably, his views get a disproportionate airing by the equally ignorant BBC, the Times and the Guardian amongst others, and sadly our own Guernsey Press has been only too willing to give him exposure. He is totally ignorant about UK corporate tax yet calls himself a tax expert. The only people who he fools are the oblivious sheep who follow him.

I would love to see him torn apart by Roger Perrot and Dave Jones about our constitutional relationship. That really would be worth watching when he doesn't have the ability to simply stop publishing the posts like he does on his blog!

Tax Avoider

RM is an idiot, most of his arguments are ridiculous, and as you say he now believes that he is personally able to decide what's legal and what isn't, not worrying about what the actual law is.

And Arnald is simply the idiot's apprentice, totally blinded by what his master says, which he then repeats verbatim.

Dave Jones

GM

I know exactly what you mean, I have argued him to standstill and he just says he will not post anymore of my posts because I am making it up.

He has absolutely no understanding of our constitutional position and keeps insisting that we are somehow part of the UK which we most certainly are not. He is a man riven with envy at our successful economy while the country he lives in is sinking in billions of pounds worth of debt and the wealth creators and entrepreneur's leave because they are taxed beyond fairness in part because of lobbying by people like Murphy and his ilk.

We don't mind because we will take them and allow them to flourish in Guernsey, creating jobs and contributing to our economy.

So I suppose we should thank him really.

Spartacus

You are never going to get along with Murphy if you do not understand his message.

The way I see it jurisdictions who seek to attract the wealthy by enabling them to accumulate vast wealth are now deemed to be sabotaging the aims of more ethical nations who are seeking greater degrees of equity for the benefit of the world generally.

Guernsey has capitalised on its links to the UK for a long time and with great success however tolerance and mutual benefit of this arrangement seems to be evaporating.

Terry Langlois

"ethical nations who are seeking greater degrees of equity for the benefit of the world generally" - and which ones would these be??? Every nation seeks to look after its own. The UK is very good at attracting wealthy non-doms to the UK, who then pay no or minimal tax on their worldwide income. So is the UK being unethical in relation to the countries from which those non-doms earn their worldwide income?

In any event, the key driver of our industry is not about taking wealth from elsewhere, it is a about being part of the international wealth generation machine that is capitalism. Now, you may dispute whether it does actually generate wealth, or that it does not do it fairly enough, but those are issues with capitalism as a whole, not onshore vs offshore.

Remember, there have been a number of studies that show that we are a net contributor to the UK - we help to make the UK financial industry competitive and help thousands of UK located fund managers and other finance professionals employed and earning billions - which is taxed in the UK. If we were stealing wealth from the City, why is it that the City is so pleased to deal with us? Because they know that the Channel Islands is a part of the success of the City, which is itself a major contributor to the UK economy.

Spartacus

Terry

Valid points well made as usual. I just think that trying to argue with people like Murphy who holds a radical moral stance is perhaps futile. Why even try to challenge his views?

PLP

That was pretty much the point I made above Sparty, but I don't blame people for challenging him if they think he's wrong. Murphy gets a lot of media attention and if only one voice is heard, eventually that will be the one that's believed.

Terry Langlois

Thanks Spartacus. I make a point of not challenging his views but challenging his misstatement of facts. I adopt the same approach with Arnold. He is entitled to his views but all views of whatever persuasion must be based on verifiable facts or at least not claim false ones. Have a good Christmas.

Arnald

Simplistic nonsense, Terry.

Just because we are a booking centre for London activity doesn't mean anything as a 'contribution'. Those 'studies', such as Foot (who is mired in City tradition), only proved that there is flux between the 'onshore' and 'offshore' positions of various financial operators.

Most of the original funds came from the UK. The UK does not benefit from funds that come from elsewhere.

Those earning billions pay hardly any tax in the UK, you dolt! they use the same structures that Guernsey provides to avoid it. FFS.

Really, do people walk around in their life believing this nonsense.

Get a grip, Terry, and spell my name right.

Terry Langlois

oh dear Arnald, you clearly do not understand the funds industry at all.

You think that we are a "booking centre". Oh dear, oh dear, you are getting very confused. You've obviously read a few too many Murphy articles and you're cutting and pasting comments that have no relation to the subject matter.

I won't bother explaining it, as you won't (and don't want to) understand.

Arnald

Funds as in money, not funds as in Funds.

You are the one who is mistaking tackling abuse of other jurisdictions tax laws with legitimate investments. Why bring it up at all?

Merely to hide the fact that there is wholescal abuse, something you have always denied.

Terry Langlois

I mentioned the funds industry as an aside to show that we are not all about tax avoidance, and you disputed what I was saying (while making several incorrect statements yourself - such as the assertion that the UK does not benefit from overseas funds invested into Guernsey funds - which is totally and patently wrong). So no, I am not mistaking anything.

And so what is the wholesale abuse? - evidence please.

Panorama obviously failed to find any evidence of wholesale abuse recently (while finding plenty at home in the UK). I've never denied that it happens, as people break the law wherever. I have always denied that we rely on abuse or encourage it. You, however, like to throw mud around with no evidence, knowing that for some people who do not know better some of that mud will stick.

Gilthead

Spartacus - those "ethical" nations are who exactly?

GM

Spartacus

Debating with Murphy is even more frustrating than debating with you. Both of you spout utter garbage - his through maliciousness towards the Crown Dependencies and his extreme socialist views, and yours through sheer ignorance when you try to argue on topics which are way beyond you

The main difference is that he simply blackballs any posters who start winning an argument with him, whereas you don't have that luxury and just end up further exposing your ignorance and digging an even deeper hole. Come to think of it, his tactic has more appeal.

Spartacus

Merry christmas GM, I hope you are not on the naughty list ;-)

Sparty

GM

Spartacus

Likewise a Merry Christmas to you.

And when you are playing Trivial Pursuit over the holiday period, please just accept the answers on the card. :)

Arnald

There is far more maliciousness from Murphy towards the UK and the USA, if you could be bothered to take your blinkers off.

The cause is for fairness towards the developing world, an angle he has chosen to take is to tackle the 'home' problem first.

The tax justice movement is global, not a figment of someone's imagination.

I'm afraid you stand out as a perpetrator of the indefensible.

No kudos, you.

GM

Arnald

No - I just defend the freedom to operate within the law.

His untrue and unproven attacks on the CI would be defamatory if made against individuals. It's true that he hates us less than he hates Jersey, but there are solid historic reasons for that.

I have no problem with his mission. My problem is when he attacks our constitution and pretends that it doesn't exist, or when he assumes that we are doing things which we just aren't, with his stock attack tactic of "prove me wrong".

Arnald

We don't have a constitution GM, nor does the UK.

We are a Crown Dependency. Our autonomy is granted, not actual.

GM

Arnald

We don't have a written consolidated constitution but we have unequivocal rights which have been granted by Royal Charter over many centuries. Murphy ignores these though as they aren't written down formally enough for his liking. He has no time for customary law.

I have no interest in whether or not the UK has its own constitution. But does Murphy contest whether the UK is a valid jurisdiction as a result? Of course not.

Our link is to the British Crown, not to the UK government. Unfortunately the UK government has had to be frequently reminded of that very important difference, not least the last Labour government of Blair, Brown and their cronies (Murphy's heroes) who were no respecters at all of our rights.

Dave Jones

Spartacus

First of all, I could care less about whether I and others “get along with Murphy”

Secondly, we are not deliberately attracting the wealthy to our shores; they are attracted to us because we are a low tax jurisdiction with attractively low personal taxes. We do advertise that fact I will grant you but we also advertise other qualities the island has to offer such as a beautiful natural environment, good public services and a very low crime rate.

They have already accumulated their wealth before they came here and they are not trying to sabotage anything by moving somewhere else, they may of course be leaving because they disagree with many of the unethical ways their taxes are being spent in their own country such as on wars in far off lands for instance and a benefit culture that is allowing the uncontrolled migration of millions of economic migrants to flock to their shores.

Or they may not want their taxes swallowed up paying off billions in debt or their children and grandchildren facing years of the same, while the public services they also contribute to are struggling to cope every day.

The UK is no longer the country many of them recognise from their birth, it is a country that has become unsafe for many wealthy residents and their families, so there are many reasons why people want to leave the UK and other parts of the world besides tax reasons.

The tolerance and mutual benefit you describe is evaporating because the UK is being governed from elsewhere and is no longer in charge of its own destiny.

We certainly have no wish to benefit from much of what they have signed up to through several treaties with the European Union and their attempt to interfere in our affairs periodically are unwelcome and have for some time put a strain on the relationship.

Some within the UK government would like to tear up the 900 year relationship between us, forgetting of course that our relationship is with the Crown not their Parliament; we have our own Parliament which several of them fail to notice.

Spartacus

Dave Jones

Thanks I always find it interesting to read your views and I wish more politicians would post on TIG.

Merry Christmas

Dani

Dave Jones/GM

He has also not posted some of my comments and they have not been inflammatory in any way.

I dislike how despite a judge stating no VAT abuse occurred here (that what we did was exploit fiscal advantage) he still says what happened here was VAT abuse which is factually incorrect and damaging to our reputation.

Dave Jones - When you have a spare moment (I understand the bad timing!) would you be able to let me know how much it is we voluntarily pay to the UK for defense; how the payment came about; to what extent is it diplomatic and what exactly we do/don't get for it. Can savings be made in this area?

Tax Avoider - He makes up his own definitions on a whim as well, stating long established ones are incorrect. Then builds arguments based on these made up definitions. To an extent he is propagating a circular fallacy. I guess personally deciding what is legal or not is just an extension of this.

Arnald

This message board also doesn't publish some posts by people.

It must be a communist!

GM

Arnald

I think that's probably just your posts :)

Seriously, Murphy would gain a lot more respect and credibility if he didn't behave like the playground bully who is being stood up to for the best time. His style on that blog is ride loudly childish if one even dares to challenge a mistruth of his.

You seem to get a free reign to post on the Tim Worstall blog, even though 99% of posters give you a tough time.

Dave Jones

Dani

Our defence contribution is the maintainence of the Alderney breakwater

It used to be maintained by the MOD and the agreement was we would take over the costs of this breakwater.

We make no cash contribution at all. In Jersey they have formed and equipped a territorial company of men and women as their part of the deal.

I think it is recognised as it was in the last world war that we would be very difficult to defend from a land invasion of from a parachute invasion from the air. The MOD may be able to defend us for while from the sea and if they had control of the air space but we already know they are hugely over stretched and my guess would be that we would given help to evacuate the women and children and the islands then left to their own devices.

If the UK comes under attack, then I suspect we will be the least of their worries.

Dani

Dave Jones

Thank you for explaining.

:-)

A.J.

Communism collapsed, leaving all the Russian people on poverty.Capitalism replaced this void and now some of the'Russian Billionaires' are living, and paying tax in the UK. I wonder why they didn't stay in the country of their birth?

Arnald

Show me an oligarch paying any meaningful tax in the UK.

They buy all their stuff from elsewhere. They avoid all taxes on capital. Their income cannot be taxed as it is not UK derived.

Get some information.

Honestly, you lot are saying the same things as ten, twenty, thirty years ago.

Move on and accept the new normality. Tax 'competition' is, and always was, a fabrication designed to prosper the very few, at the expense of the many.

It is not a raison d'etre. You are misguided.

GM

Arnald

Your info is out of date. After 9 years in the UK they have to pay £30k a year, rising to £50k after 12 years, to enjoy non-Dom status.

You are right - the world is changing. However, the ultra wealthy will be fine because they can afford to move country of residence and always will. Those of a lower net worth will find it much harder.

Arnald

That's not a tax GM. It's a nominal 'membership fee'.

If you knew more about what the tax justice aims were you would know that there is no problem with mobile wealth per se, only a desire to see it classified and it's movement traceable by the relevant authorities.

Private individuals can have their privacy. Corporate structures should have recognisable owners/beneficiaries. And be taxed where it is economically active.

GM

Arnald

I'm well aware of what "tax justice" aims for. I simply disagree with those aims.

I also disagree that corporates should have "recognised owners/beneficiaries". That's all part of an individual's rights to privacy which he should not abuse. What I do agree with though is the efforts to ensure that they remain tax-compliant. There is no place for tax evasion and there have been so many opportunities in recent times for historic evaders to come clean that I have no time for those who have not done so.

Don

Times are changing - and one can see on here its getting up certain peoples noses!

Chelski

Arnald

Has Abramovich not been responsible for enormous amounts of tax revenue paid to the UK government?

GM

Chelski

Not through taxing the profits of Chelsea FC though! Seriously, he has created considerable employment tax revenues through his personal entourage but specifically through the entire payroll of Chelsea FC from top to bottom, causing wage inflation in football like never before. That of course has spread throughout the top 30 or so clubs in England, and a big part of that is attributable to Abramovich since 2003. So yes, indirectly he has boosted the UK's tax revenues enormously through his investment in football.