Should we be a bit more like Isle of Man? Not everything is as black and white as it seems

“Who is scapegoat of the month then?” asked the BattleAxe as the summary of news headlines appeared on the Chief Elf’s screen. 

“Not that old chestnut again surely – those who chose to preserve their wealth by investing it in low tax regimes?”   Knowing the signs, the Chief Elf settled in for the denouement.

“Anyone would think doing that was illegal!” The BattleAxe warmed to her theme, “OK, so some people do cross the line from avoidance, and evasion really does need to be cracked down on.  But most is as legal as putting cash in ISAs or making pension contributions, both of which reduce your tax bill of course.

“Surely Apple or Google should be able to invest spare cash wherever it will grow fastest so they can research new gizmos, or return it to shareholders in the form of dividends or share buy-backs, or even donate it to charity?

“Talking of pensions, everyone’s pension schemes invest in those nasty big companies that are avoiding tax: because they generate good returns.  So, maybe the trustees will have to tell their members that their retirement income is dropping markedly because those immoral companies have had to pay more tax and so paid lower dividends – and their share prices have dropped too!

“When HMRC had a spat with the then Duke of Westminster a judge stated that: 

‘Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax. This so-called doctrine of "the substance" seems to me to be nothing more than an attempt to make a man pay notwithstanding that he has so ordered his affairs that the amount of tax sought from him is not legally claimable.’

“So, maybe it’s the tax havens that are at fault and should be made to charge more tax. But what about the folks who live there and are reliant on those financial services salaries?  I mean, what has that paradise in the Irish sea, otherwise known as the Isle of Man got other than investments, a smallish airport, the TT and copious amounts of rain? 

“There is also a lot of evidence that lower tax rates increase collections because then, trying to avoid tax using fancy schemes costs more than you save. 

“A radical thought, with the UK escaping the EU’s rules, why don’t we urge the Government, under regional devolution, to let Yorkshire become even more of a tax haven than we already are?  You heard me right – we’re already seen by some overseas regimes as a tax haven because of our rules on R&D, low corporation tax and social security rates.  

“Now then, just check that we haven’t got any potentially illegal inward investment from Lancashire….”

This article originally appeared in Huddersfield Examiner on 16th November 2017