Monday, February 11, 2008

Is it one rule for MPs and another rule for the rest of us?

The papers are currently rife with stories of how MPs are arranging their affairs to enable them to draw the maximum allowances to supplement their salaries.

MPs place properties in trust, employ family members and do whatever they can to justify claims worth thousands of pounds each year. And the media damn them for bending the rules.

The recent party funding rows are much the same.

There is rarely any suggestion that anyone has broken the law. No. They have simply looked to secure the maximum reward for their efforts within the strict wording of the rules.

Those involved have adopted a literal and precise approach to interpreting the rules. Not a purposive approach.

When it comes to tax planning however the courts are increasingly adopting a purposive approach to interpretation of the law. What was Parliament's intention when the law was introduced or amended? More and more often HMRC are winning cases where the tax avoidance motive was more of a catalyst for the transaction in question than was the business motive.

Is there one rule for MPs and a different rule for everyone else? It's ok for MPs and political parties to adopt a literal approach to the rules and laws concerning allowances and funding. But everyone else is expected to comply with the intent behind tax laws rather then the specific wording thereof.

I have long been concerned by the way that people accused of criminal activities can escape on technicalities but that taxpayers are held to a higher standard. HMRC and the Government talk about 'unacceptable tax avoidance' which is invariably within the letter of the law but arguably undermines or runs contrary to the purpose of the legislation.

This seems to me to be evidence of the most audacious double standards.

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1 comment:

  1. I referenced this post today in a new item titled: Flipping properties - avoiding CGT when you have more than one main residence.