Yesterday was a rather interesting day. I spent half of it dealing with the usual tenant moving malarkey, and the other half working on web stuff with my Twitter stream open discussing the tax situation around Jimmy Carr. His private tax situation has been splashed all over the news for the last couple of days which culminated in a public apology.
At one point, an aging journalist called me a psychopath because I didn’t agree with his moralising about tax payments. In case you have had your head under a blanket for the last few days, Jimmy Carr was publicly ‘outed’ for using an offshore tax system called K2 which was legally declared to the HMRC, and allows him to pay less income tax. This effectively saved him around £1.6 million in tax. A similar system saved Vodaphone billions off of their UK tax bill, but you cont hear them being made scapegoats of.
Moral Or Not?
It seems the debate split the folks on Twitter in half. On the one hand you have those who like to climb up on a moral high horse about how we should always pay all taxes due. On the other you have those who say that the system is unfair and full of badly written rules which penalise everyone from rich to poor so why shouldn’t they be able to use legal ways to lessen the burden? After all we don’t write the rules…..;-p
OK, my own opinion, which I’m sure I will get plenty of flack for, is that tax has nothing to do with morals. We have been taught to think, since the days of The King’s Writ, that individuals should be “taxed according to status and means.” To my mind this is utter madness and can only ever lead to people trying to avoid paying extra just because they happen to inherit money or work hard to build a business.
Whichever side of the tax fence you sit on, the fact remains that we have a very unfair tax system in the UK which promotes hypocrisy. Some folks are let off the hook, and some are publicly lambasted for using fully legal systems that are often passed by the HMRC!
So What About A Flat Tax Rate Then?
After over a decade of Labour Party rule, the government handbook of tax regulations roughly doubled in volume. ( In fact, that government was hell bent on adding more rules for everything.) A flat rate tax has been adopted by around 40 countries around the world. Over in Russia, after it was introduced, the government saw income tax revenues more than double in real terms. Flat tax rates have been shown to wipe out most of the loopholes created by the excessive rules, regulations and red tape of the past. And this progressive tax system we have goes back hundreds of years.
Having one rate could stop the flow of “tax expatriates,” – or wealthy foreigners who move to, or buy property in Britain to avoid the higher taxes in their own countries. A Flat Tax Rate could massively boost investment from overseas, encourage businesses to invest and help people back to work.
The plain fact is, tax in the UK needs reform. Fair tax systems promote business, which creates jobs and ultimately helps everyone-including the government,who will spend less money and time chasing alleged tax dodgers.
If you are looking for a proper tax mitigation system that won’t ever be challenged by the HMRC, then you need to visit our Tax & Pensions page.