Osborne likes to tell us he’s keen on cracking down on tax avoidance. Ha, ha. He’s allowed multinationals with a finance subsidiary in a tax haven (and 98% of the FTSE-100 have one) to pay corporation tax at just 5.5% instead of the current 23% – meaning you needn’t worry about tax avoidance because I’m serving it up to you on a plate. He’s brought in another tax scam whereby any company that introduces a patent has its corporation tax on the all the company’s activities more than halved to just 10%, even if the patent involved only a tiny fraction of those activities. And he’s very proud to be bringing forward a so-called General Anti-Abuse Rule (GAAR), though the shine’s been rather knocked off that by the revelation that it’s only aimed at the most artificial, contrived and aggressive behaviour – meaning that all other forms of tax avoidance are OK and legit. But what has now really blown this charade is the discovery (verified by a secret recording) that one of the members of the HMRC panel chosen by Osborne to advise him on tackling tax avoidance spoke at a conference advising people on how to get away with tax avoidance.
This man, a certain David Heaton, a partner at Baker Tilly, speaking at a conference designed to promote tax avoidance (entitled ‘101 ideas for personal tax planning’), was recorded as lauding one particular scheme with the delicate recommendation that “it keeps the money out of the chancellor’s grubby mitts”. Not much doubt about which side he’s on. But his remark is more revealing still. Heaton is no minor cog in the tax avoidance machine. He was last year’s chairman of the tax faculty of the Institute of Chartered Accountants. He would only be appointed to this position if his views accorded with the approach of the whole City legal and accountancy fraternity in support of tax avoidance. Osborne would have known all this when he appointed him. Heaton’s offence was not that he held these views, but that he was discovered publicly expounding them.
The whole idea that the government’s seriously cracking down hard on tax avoidance is pure PR pretence. Obviously they’ll put a stop to schemes that are blatantly artificial, contrived and indefensible, but by limiting their disapproval to the minority of very worst schemes, all the rest are by implication legitimate. The GAAR was therefore deliberately devised to give PR protection to the government while at the same time opening up a loophole so large that even the City lawyers were delighted – they could still make a highly lucrative living from dreaming up fancy tax avoidance devices, only now they could avoid the ignominy because Osborne had made it all legitimate. To make sure of this, Osborne had chosen Graham Aaronson as the City grandee to draw up the GAAR, a gent who had always made his money by defending tax avoidance against the HMRC.