They were warned......
Below are excerpts from Hansard dated April 2004 at the 2nd reading of the 2004 Finance Bill
(HC Deb 20 April 2004 vol 420 cc186-267 186
§ [Relevant document: The Sixth Report from the Treasury Committee, Session 2003–04, on the 2004 Budget, HC 479.] )
The person initially quoted is Conservative Mark Prisk MP (Hertford and Stortford). PS The Chancellor that Prisk refers to is, none other than, Gordon Brown.
“……Conservative Members fully accept that seeking to evade legitimate tax liability is illegal and should be dealt with accordingly, but there is a world of difference between illegal tax evasion and tax avoidance or planning. Indeed, I understand that that was once the Labour party's view. Preparing for the debate, I came across a fascinating document, Labour's policy paper "Tackling Tax Abuses, Tackling Unemployment"—a snappy title. It was written when the Chancellor was still the shadow Chancellor. Under the heading, "How avoidance can be countered", it states: ‘The taxpayer is entitled to take advantage of the law to minimise his or her tax bill.’ It goes on ‘as a matter of principle’ —not a phrase that we hear often from Labour Ministers nowadays— ‘we believe that the citizen is entitled to know where he or she stands before the tax law.’ It concludes: ‘It is the complexity of the present system that has encouraged the growth of a flourishing avoidance industry.’”
At the same session Mr Howard Flight (Arundel and South Downs) (Con) is quoted as saying
“I am surprised that the Inland Revenue has not previously attacked artificial tax avoidance schemes, which have been widely marketed, well before they have become widely used, and I understand the Government's objectives in the Bill. However, I ask the Chief Secretary to make a commitment that the Government will now publish the prescribed Treasury regulations, mentioned in clause 290, which will define "notifiable arrangements". Without that, we cannot know whether, as the Treasury Committee warned, the arrangements will create undue compliance burdens for taxpayers and their advisers, or undue administrative burdens for the tax authorities. As the national head of Ernst and Young commented, his concerns are that UK businesses should not be put at a competitive disadvantage. I am sure that the Government share that objective.
I also warn the Government of the dangers of confusing tax evasion and tax avoidance. In those European Union economies where that happens, the outcome has been to make tax evasion socially acceptable. Ultimately, there also needs to be a degree of consent on the part of those asked to pay the taxes levied on them. As the senior partner of Grant Thornton pointed out, many of the Government's problems in their attempts to tackle tax avoidance are of their own making. Moreover, to avoid the new rules imposing excessive and uneconomic burdens on business, they also need to draw a clear line between "offensive" tax avoidance schemes and normal corporate tax planning; otherwise, provisions could have the effect of requiring any transaction on employment or a financial instrument that could have been accomplished in a less tax-efficient manner to be reported. That would impose wasteful time and cost burdens both on business and on the Inland Revenue.”
Also Michael Jacks (then Conservative MP for Fylde) & now head of the new Office of Tax Simplification announced today) is quoted as saying
“…While the Government are seeking to deal with general tax avoidance, they ought on the other hand to encourage the retention of moneys in small business. However, with IR35, section 660A, and now other elements of the Finance Bill, they seem to be hammering hard on these small engine room businesses for the British economy. Why does that group seem to have been singled out for particular treatment, when a more considered review might have been the best way forward? Such people are the entrepreneurs of the future and the engine rooms of the service economy, yet they seem to be getting a bad deal in the Finance Bill…..”
The then Paymaster General (Dawn Primarolo) said
“The debate in Committee—on which I hope the right hon. Gentleman will serve—will enable all hon. Members to draw a clear distinction between legitimate tax planning, avoidance and evasion and allow us to discuss how we should respond to these challenges in fairness, treating all taxpayers on an equal basis.
Both the right hon. Member for Fylde and the hon. Member for Arundel and South Downs asked about legal privilege and whether it was our intention to override it—it is not—and about the regulations that will provide for the disclosure. The regulations will be made available before we get to that part of the Standing Committee. There will be consultation on them, because it is our intention to try to make sure that this works, for exactly the reasons that everybody in this House would expect.”
What is my point?
1. Gordon Brown (then Chancellor) was/is a hypocrite when it comes to tax avoidance/planning
2. Howard Flight warns about the consequences IR dragging their feet regarding tax avoidance schemes before they become widespread
3. Howard Flight voices our same concerns about the (deliberate?) mixing up illegal tax evasion with legitimate tax avoidance / planning
4. Establishing Michael Jack's (in the news today) credibility regarding his knowledge of IR35 & surrounding issues
5. Dawn Primarolo's hollow words about giving the opportunity to discuss & agree tax planning "....allow us to discuss how we should respond to these challenges in fairness..." Hah! Plus her weasely words about legimitate expectation.
Below are excerpts from Hansard dated April 2004 at the 2nd reading of the 2004 Finance Bill
(HC Deb 20 April 2004 vol 420 cc186-267 186
§ [Relevant document: The Sixth Report from the Treasury Committee, Session 2003–04, on the 2004 Budget, HC 479.] )
The person initially quoted is Conservative Mark Prisk MP (Hertford and Stortford). PS The Chancellor that Prisk refers to is, none other than, Gordon Brown.
“……Conservative Members fully accept that seeking to evade legitimate tax liability is illegal and should be dealt with accordingly, but there is a world of difference between illegal tax evasion and tax avoidance or planning. Indeed, I understand that that was once the Labour party's view. Preparing for the debate, I came across a fascinating document, Labour's policy paper "Tackling Tax Abuses, Tackling Unemployment"—a snappy title. It was written when the Chancellor was still the shadow Chancellor. Under the heading, "How avoidance can be countered", it states: ‘The taxpayer is entitled to take advantage of the law to minimise his or her tax bill.’ It goes on ‘as a matter of principle’ —not a phrase that we hear often from Labour Ministers nowadays— ‘we believe that the citizen is entitled to know where he or she stands before the tax law.’ It concludes: ‘It is the complexity of the present system that has encouraged the growth of a flourishing avoidance industry.’”
At the same session Mr Howard Flight (Arundel and South Downs) (Con) is quoted as saying
“I am surprised that the Inland Revenue has not previously attacked artificial tax avoidance schemes, which have been widely marketed, well before they have become widely used, and I understand the Government's objectives in the Bill. However, I ask the Chief Secretary to make a commitment that the Government will now publish the prescribed Treasury regulations, mentioned in clause 290, which will define "notifiable arrangements". Without that, we cannot know whether, as the Treasury Committee warned, the arrangements will create undue compliance burdens for taxpayers and their advisers, or undue administrative burdens for the tax authorities. As the national head of Ernst and Young commented, his concerns are that UK businesses should not be put at a competitive disadvantage. I am sure that the Government share that objective.
I also warn the Government of the dangers of confusing tax evasion and tax avoidance. In those European Union economies where that happens, the outcome has been to make tax evasion socially acceptable. Ultimately, there also needs to be a degree of consent on the part of those asked to pay the taxes levied on them. As the senior partner of Grant Thornton pointed out, many of the Government's problems in their attempts to tackle tax avoidance are of their own making. Moreover, to avoid the new rules imposing excessive and uneconomic burdens on business, they also need to draw a clear line between "offensive" tax avoidance schemes and normal corporate tax planning; otherwise, provisions could have the effect of requiring any transaction on employment or a financial instrument that could have been accomplished in a less tax-efficient manner to be reported. That would impose wasteful time and cost burdens both on business and on the Inland Revenue.”
Also Michael Jacks (then Conservative MP for Fylde) & now head of the new Office of Tax Simplification announced today) is quoted as saying
“…While the Government are seeking to deal with general tax avoidance, they ought on the other hand to encourage the retention of moneys in small business. However, with IR35, section 660A, and now other elements of the Finance Bill, they seem to be hammering hard on these small engine room businesses for the British economy. Why does that group seem to have been singled out for particular treatment, when a more considered review might have been the best way forward? Such people are the entrepreneurs of the future and the engine rooms of the service economy, yet they seem to be getting a bad deal in the Finance Bill…..”
The then Paymaster General (Dawn Primarolo) said
“The debate in Committee—on which I hope the right hon. Gentleman will serve—will enable all hon. Members to draw a clear distinction between legitimate tax planning, avoidance and evasion and allow us to discuss how we should respond to these challenges in fairness, treating all taxpayers on an equal basis.
Both the right hon. Member for Fylde and the hon. Member for Arundel and South Downs asked about legal privilege and whether it was our intention to override it—it is not—and about the regulations that will provide for the disclosure. The regulations will be made available before we get to that part of the Standing Committee. There will be consultation on them, because it is our intention to try to make sure that this works, for exactly the reasons that everybody in this House would expect.”
What is my point?
1. Gordon Brown (then Chancellor) was/is a hypocrite when it comes to tax avoidance/planning
2. Howard Flight warns about the consequences IR dragging their feet regarding tax avoidance schemes before they become widespread
3. Howard Flight voices our same concerns about the (deliberate?) mixing up illegal tax evasion with legitimate tax avoidance / planning
4. Establishing Michael Jack's (in the news today) credibility regarding his knowledge of IR35 & surrounding issues
5. Dawn Primarolo's hollow words about giving the opportunity to discuss & agree tax planning "....allow us to discuss how we should respond to these challenges in fairness..." Hah! Plus her weasely words about legimitate expectation.
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