Magna Carta links

Magna Carta links
At the Library of Congress in Washington

Wednesday, 4 March 2009

Tax Avoidance

The dust is settling a little after the Guardian's crusade against the evil tax avoiders. There are to me two points which need to be made.

In the UK, Public companies owe a duty to their shareholders. In exercising this duty it is generally considered reasonable that they should minimise costs and maximise revenue. If taxation, which is a cost, is not to be minimised then they would be failing in their duty. So the answer is not to wring hands, but to open a debate over the duties of directors of public companies. If, however, taxation is a distribution of profits in the same way as dividend then the tax needs to be maximised. But what then about employee remuneration; is it a cost or a distribution? What about local taxes? This subject needs proper debate.

The second point is banal, tax avoidance is as old as the hills. I spent most of my career advising clients on how legally to minimise their tax bill. But the question is the same; is tax a cost or a distribution?

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