Lord Ashcroft: To Ask Her Majesty's Government whether they expect citizens to organise their tax affairs in order to maximise tax payable.[HL2125]On this blog I have taken an objective stance when sharing my views on the issue of legal but artificial tax avoidance schemes. I'm no fan and I'm skeptical of many of the claims made about the prospect of success of such schemes. But I equally understand the rationale for Lord Ashcroft's question (leaving aside his personal position etc). It comes down to the extent to which citizens can take action to reduce their tax bills as long as when doing so they remain within the law.
The Commercial Secretary to the Treasury (Lord Sassoon): The Government expect citizens to pay tax that is due by law. The Government will take action against tax avoidance schemes that claim to produce results completely at odds with the intentions of Parliament. That is why the Government support the Code of Conduct on Taxation for banks and is asking them to adopt it by the end of November 2010.
I don't imagine Lord Ashcroft expected a fully reasoned reply to his question. At it's simplest the answer has to be 'no'. Of course there is no legal or moral obligation to organise one's affairs in order to maximise the tax payable. And that then begs the question as to how far can one go to reduce the tax payable as long as one remains within the law?
I've explored previously the difference between tax evasion, legal but "morally questionable" tax avoidance and uncontentious tax planning. And I asked just last month: Doesn't everyone try to avoid or evade taxes? The problem is that different people will draw the line between what is acceptable or unacceptable in different places.
I know that many advisers struggle with this. The challenge is whether they can honestly and objectively advise their clients as to the risks and downsides as well as the prospective benefits of tax avoidance activities.