Friday, April 29, 2011

Are super-injunctions 'just like tax avoidance'?

I was taken by the analogy drawn by Chris Blackhurst in The London Evening Standard:
"People secure super-injunctions because they can. It's just like tax avoidance. Wealthy folk minimise their tax bills because they're able to, because the law allows them to, because their adviser would be negligent if they did not show them how.

Most of us cannot avail ourselves of that service and the schemes the rich use. And that annoys us - but it doesn't mean we wouldn't do it. Human nature decrees that we look after our own - and anyone who claims otherwise is delusional".
I made a similar point to the one highlighted above (by me) on this blog last year: Doesn't everyone try to avoid or evade taxes? Some of the critics of the rich who pay for tax schemes think nothing of fiddling their taxes (or expenses - which amounts to the same thing as it creates additional income that should have been taxed).

The big difference is that the promoters of most tax avoidance schemes generally try to stick WITHIN the letter of the law. Those who fiddle their taxes, eg: by failing to declare all of their taxable income or claiming deductions for non-business expenses are clearly breaking the law and evading their taxes. The complaint therefore is really that some people can afford to PAY for advice to get around the law - as with those philanderers who secure super-injunctions to cover up their infidelities.

The article in the Standard rightly concludes:
"If they're honest, lawyers should tell their clients not to bother - that transparency really is a better policy. As they see constant hints dropped in their direction and live under constant pressure of exposure, those holders of existing super-injunctions might concur."
And, as regular readers of this blog will know, I think accountants and tax advisers should be careful with their advice re tax avoidance schemes. All too often clients get caught up in something more complex, 'dodgy' and time consuming than they had anticipated. See this earlier post: "Have a look at this scheme and tell me what you think". It includes a routine quote from a client who has been given chapter and verse on the risks and downsides of a tax scheme: "Now I understand it properly, why would I want to go into a scheme like that?"

On balance, I think I disagree with the analogy drawn by Chris Blackhurst. What about you?

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