JOURNAL 25

END OF THE FOOTBALL SEASON

Wow! What a season for West Ham. Newly promoted to the Premiership last season via the play-offs having finished sixth in the Championship, they were widely tipped as candidates to bounce straight back to the Championship. Instead they fulfilled both of my dreams, namely to finish in the top half of the table (ninth out of 20) and for Tottenham to be one point ahead of Arsenal when they played at Upton Park on the last day of the season so that we could knock them off of fourth place. The latter victory was made sweeter by the fact that Tottenham were such bad losers. Their pleas to the FA to order the game to be replayed because they chose to field some players who were not fully fit was not surprisingly rebuffed by the FA which pointed out that it has been their choice and that they had a squad of 30 players so could have played a fully fit team had they chosen. They could also have pointed out, but didn’t, that during the season Spurs won only 1 out of 5 away legs of their London derbies and that when West Ham played at White Hart Lane Tottenham could only manage a 1-1 draw in spite of having home advantage. Accordingly their implication that a fully fit Spurs would have beat us at Upton Park in front of Alan Pardew’s claret/blue army on the last day of the season, when the team always show something special, falls firmly into the category of wishful thinking.

A Cup Final place and entry into next year’s UEFA Cup were beyond my wildest dreams, but the team achieved both of these too. Of course losing the Cup Final on penalties was a great disappointment, but like most football fans I think that a penalty shoot out is an unfair way to decide a game as it depends very much on luck rather than skill. The key think was that the team played brilliantly to achieve a 3-3 draw and the game is already being talked about as one of the best finals in the last 50 years. Certainly on the trip back from Cardiff most of the supporters on my train seemed more buoyed up by the game than crushed by the result.

If only the Cubbies could do half as well as the Irons. They have started the season badly and after 36 games are second from bottom of the table having won only 15. Fortunately there’s another 126 games to go before the baseball season finishes this October, so there’s still time for improvement.

Last week I gave evidence to the Finance Bill Subcommittee of the Economic Affairs Committee of the House of Lords. I was asked to do so on behalf of the Institute of Indirect Taxation, so expected to talk only about MTIC fraud. I was billed to give evidence at the same time as Chas Roy-Chowdhury of the ACCA and expected that I could listen whilst he fielded the Committees questions on trusts and the other direct tax issues selected by the Committee. However someone must have recognised that I am experience in direct as well as indirect tax, as when I got there the chairman suggested that I might like to help them by giving the Committee the benefit of my personal views on the direct tax issues too.

The House of Lords is not of course entitled to comment on tax raising legislation. Accordingly the Committee seeks to confine itself to considering those areas of the Finance Bill that relate to the administration of the tax system rather than taxation as such. Its report – and my evidence – will in due course be published on the Parliament website.

Robert W Maas

JOURNAL 24

WHO ARE THE TAX AVOIDERS?

What is a tax avoider? I was struck by the following statement by the Paymaster General, Dawn Primarolo, during the Finance Bill debate on 2 May.

“I hope that the Hon Gentleman would agree that it is unfair that some people exploit the trust rules in order to avoid inheritance tax…The Government are not labelling respectable people as tax avoiders. We are saying that a system has emerged in which two types of trust – accumulation and maintenance trusts, and interest in possession trusts – can, in certain circumstances, be configured to provide an unfair tax advantage at the expense of other taxpayers. That is what we are seeking to put right.”

This seems a novel distinction. It is one that I have never seen the Minister make before. Now we know! Disreputable people avoid tax! Respectable people do not do so; they merely configure their affairs to provide an unfair tax advantage at the expense of other taxpayers.

The Minister has on many occasions condemned tax avoidance but has never uttered a word against configuring to provide an unfair tax advantage. It seems to follow that such configuration is not immoral; it is a reasonable thing for respectable people to do – although respectable people cannot complain if the government change the law to put the tax system right so as to prevent such configuration.

One difficulty with this is that the Minister did not indicate who she believes are (and are not) respectable people. My dictionary indicates that it is someone of good repute or of fair social standing, honest and decent, or above the average in merit. This suggests that anyone is capable of being a respectable person – even the very rich, although I am sceptical whether the Minister really envisages rich people who configure their affairs to provide an unfair tax advantage as being “respectable”. I suspect she had in mind only members of the working class and the middle class, although that may be an unfair inference. Perhaps she really does applaud configuration to reduce tax by all members of society, in the same way as wicked tax avoiders can presumably come from every situation of society.

Another difficulty is that the Minister does not explain the difference between tax avoidance and configuring to obtain a tax advantage. All that I can think of is that tax avoiders comply with the legislation enacted by parliament in circumstances in which parliament did not intend that legislation to apply, whereas tax configurers comply with the legislation in circumstances envisaged by parliament when it enacted the legislation but in doing do highlight the unfairness of what parliament chose to enact.

Wouldn’t it be better all round if parliament were actually to think through what it legislates, debate it, refine the first draft, and ensure that the legislation that is put on the statute book actually achieves what is intended? My recollection is that that is what happened in the 1960s and 1970s when I started in tax. However when I suggest it to politicians they laugh at me and explain that nowadays parliament needs/wants to enact such vast quantities of legislation that it is wholly impracticable for it to give the wording anything more than a cursory glance.

This creates a major problem. Parliament apparently wants people to ignore what the legislation says and act in accordance with what the taxpayer should have known it would have intended the legislation to say it thought about it in the context of the taxpayer’s particular circumstances. The courts on the other hand equally strive to give effect to the intention of parliament but they discern this, not by guessing what it might have enacted had it thought more about what it was trying to do, but rather by seeking to discern parliament’s intention by the wording of the legislation. We accordingly seem to have arrived at the odd situation where taxpayers are expected to realise that the wording of the legislation does not necessarily reflect parliament’s intention but knowing that, in the event of a dispute, the courts will adopt the opposite approach of assuming that the wording does indeed reflect parliament’s intention. It’s a funny old world!


Robert W Maas