Osborne told tax avoidance rhetoric is toxic

George Osborne has been called to use his Autumn Statement on Thursday to end the government’s unhelpful rhetoric about tax avoidance.

In a letter to the chancellor, the Institute of Directors said attempts by ministers to describe authentic tax planning as tax abuse were “toxic” to the coalition’s business-friendly agenda.

Merely utilising tax reliefs intended by legislation does not make a company a tax avoider, the IoD said, even if the outcome is that their liability to HM Revenue & Customs is reduced.

On the contrary, a chancellor “defending the rights of taxpayers” to factor in tax reliefs into their commercial decisions would serve to ‘reinforce the business-friendly agenda.’

Mr Osborne was also told: “There is considerable disquiet that both certain sectors of the media and politicians attempt to describe authentic tax planning strategies as tax abuse.

“HM Treasury, HMRC and BIS [should] work together… to ensure that tax compliance, tax planning, tax avoidance and tax abuse are not discussed as if they were a single concept.”

The institute added that it supports the existing General Anti-Abuse rule, but believes that the overall avoidance rhetoric is toxic to the “business-friendly framework,” which the state has built.

The call by the business lobbyist was sounded just before a new study found worries about tax avoidance have shot to the top of public concerns about business behaviour.

In fact, the Institute of Business Ethics yesterday showed that, for the first time in six years, tax avoidance rather than remuneration is the main issue that people want firms to tackle.

Yet earlier this year, legal firm Pinsent Mason said a fall in the number of serious cases of people not paying any tax was evidence that widespread speculation about evasion was “over the top.”

 

28th November 2013

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