WE'RE ALL TAX AVOIDERS NOW!

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WE’RE ALL TAX AVOIDERS NOW!

I wonder exactly how ridiculous the witch-hunt against supposed tax avoidance currently being pursued by the national press is going to get.

Take the following main front-page headline from last week’s Sunday Telegraph; “Cameron in line to avoid inheritance tax of £80k”.

How is he going to avoid this tax?  Apparently, by doing nothing!  Or perhaps by looking after his Mum.

The basis of this “avoidance” is explained later as being that if his 82-year old mother lives another two years, her £200,000 gift to him five years ago will drop out of charge to inheritance tax.

I find the labelling of this as tax avoidance by Mr Cameron extraordinary.  He has done absolutely nothing other than accept a gift by his mother.  If gifts are suddenly now tax avoidance, it is surely Mum who is avoiding the tax, not David.  She made the gift.  It is her estate that would have been larger, and thus attracted more inheritance tax, had she not made the gift.

It is even more puzzling how giving money to someone can be regarded as tax avoidance at all.  A natural consequence of no longer owning something is that it ceases to form part of your assets so ceases to attract tax on your death.  Of course Inheritance Tax would be fairly pointless if a person could give all of his assets away on his death bed and thus avoid the tax.  Clearly the system needs to guard against this.  It does so by pretending that the deceased person still owns anything that he gave away less than seven years earlier.  It is a massive leap from that to conclude that making a gift and not dying within the next seven years constitutes a dastardly scheme to avoid the inheritance tax.

What planet do Telegraph journalists or sub-editors live on where gifting money is tax avoidance?  And where does this avoidance stop?  If a person is offered a job paying £50,000 a year or one paying £44,000 and he chooses the latter, is he “avoiding” income tax on the £6,000 extra he could have earned?  Indeed, am I avoiding tax by not selling everything I own at the end of each year and starting again?  After all by hanging on to my assets, I don’t pay the capital gains tax that I could have crystallised by selling.  Surely if it is immoral for Mr Cameron’s Mum to give money to her son to help him and his family during her lifetime, rather than leave them to struggle (in relative terms, of course) and hang on to her money so that it can be taxed when she dies, it ought logically to be equally immoral for me not to crystallise my capital gains so that I can pay tax on them.

And is it only a gift from mother to son that is wicked tax avoidance or is a gift to charity tax avoidance too?

And what sort of families do Telegraph journalists live in?  All of my friends who have children would gladly give them money if the parent has the funds available and believes that the child is in need.  That is the natural thing to do.  If you have ever given money to one of your children, I hope (on behalf of the Sunday Telegraph) that you now feel utterly ashamed – you nasty tax avoider!  If you don’t feel ashamed, spare a thought for Telegraph journalists, who are presumably torn between being branded as tax avoiders by their own employer or helping their kids.

A final thought.  If giving your money away is tax avoidance, how about spending it?  If I decide to buy a new sofa rather than keep using the battered one I have had for the past thirty years, the cost of that new sofa will reduce the assets I have when I die.  In the Telegraph world, do we all have a moral responsibility to spend the bare minimum to meet our needs so as to conserve as much as possible for the taxman when we die?

Personally, I prefer to continue to live in the real world and do what I want with the money that I have worked hard to accumulate.  If the Sunday Telegraph, or indeed anyone else, wants to regard me as a tax avoider for doing so, I don’t really care.  I suspect you don’t either!

ROBERT MAAS