Tax - a legal not a moral issue - Business Works
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Tax - a legal not a moral issue

Nigel Green, CEO, deVere Group The Public Accounts Committee (PAC), in a report published last week, said it was 'very concerned' how the so-called Big Four - Deloitte, Ernst and Young, KPMG and PricewaterhouseCoopers - are able to advise their clients on how to exploit loopholes in the tax laws.

It is the latest hectoring and political posturing from MPs on legal tax avoidance which to my mind, is misguided, disingenuous and should stop.

The ongoing political rhetoric on the matter reveals how some members of parliament are seemingly taking part in a witch-hunt of companies and individuals who are complying with laws that they, as politicians, could reform if they wished.

To suggest that it is in some way wrong to advise a client on how they can legally reduce their tax burden is astonishing. Implying that there is an element of 'getting away with' something which is within the law is bizarre. It is akin to claiming that drivers in the UK are 'getting away' with driving on the left hand side of the road.

Knowing that mitigating tax is indeed perfectly legal, late last year, the same group of MPs accused the likes of Starbucks, Google and Amazon of acting immorally over their tax affairs. They are not acting immorally, they’re acting legally.

tax should never be a moral issue

Tax should never be a 'moral' issue – it is a legal impost, set out by the state. Firms and individuals should pay what is required to by law – and not a penny more as it is tax, not a charitable donation - and if they then fail to do this, they should be prosecuted.

However, following the pressure and blistering attacks by this group of MPs, in December the coffee giant decided to voluntarily hand over more tax than it is legally obligated to, which, in my opinion, sets a dangerous precedent.

flies in the face of the message 'Britain is open for business'

A tax system based on 'voluntary' payments, flies in the face of the oft-cited message that 'Britain is open for business', as international investors could, not unreasonably, assume that their business could be next in line to be publicly hauled over the coals on the whim of a group of politicians - even though they are trading in accordance with the law set out by the state.

Perhaps MPs would be better to target their 'concerns' towards other countries, such as Holland and Ireland, which attract businesses and high net worth individuals by offering lower tax rates?

Perhaps those 'tax activists' who are angered by firms abiding by current tax laws should protest outside the Houses of Parliament instead of inside Starbucks?

And perhaps the politicians who are beating the drum for tax reform should, before publicly lambasting job and wealth creating multinationals, first look to the coalition government which has introduced a patent box, which gives tax relief on intellectual property in the same way the 'innovation box' does in the Netherlands?

Indeed, it might very well be the case that the laws need to be overhauled to bring them more in-step with 21st century business models, but until that point the so-called 'naming and shaming' policy apparently adopted by the Public Accounts Committee must be dropped.

Nigel Green is the founder and Chief Executive of the deVere Group, the world’s largest independent financial advisory firm. Established in 2002, the company currently has in excess of $9 billion of funds under administration and management and more than 70,000 clients in over 100 countries.

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