Chris Blackhurst: 'Aggressive' tax avoidance? It's time for politicians to stop offering soundbites and send out hefty bills

Midweek View: Aggressive is a weasel word, designed to offer a get-out rather than an easily prescribed target

According to David Cameron, "aggressive" tax avoidance is "morally wrong". His Chancellor agrees. George Osborne describes "aggressive" tax avoidance as "morally repugnant".

They were speaking in 2012 after Jimmy Carr, the comedian, was exposed for having channelled £3.3m a year into a tax avoidance scheme. This week, the Government was repeating the same mantra, this time in relation to the financial affairs of another entertainer, Gary Barlow, the singer.

All of which is good, soundbite stuff, designed to make ministers appear as though they're winning the battle against tax avoiders. Except that the figures tell a different story. According to the Treasury, more than £4bn a year is lost through artificial tax avoidance schemes. Other estimates put the total loss much higher, at £30bn.

It's a slippery slope, declaring war on tax avoiders. When Gordon Brown was in opposition as shadow Chancellor he liked to promise that if Labour ascended to power it would launch a massive crackdown on those who went out of their way to minimise their tax bills. Labour duly entered government and what happened? Precisely very little.

The theory shouted from the conference platform is difficult to translate into reality. I can picture the scene, of the smooth, Whitehall mandarin, agreeing that more should be done, but then questioning, "Yes, minister but how do you propose to do that, exactly?"

I'd go further and say the phrase "aggressive" tax avoidance has all the hallmarks of a sketch from the Yes Minister show. Aggressive is a classic, weasel word, designed to offer a get-out rather than an easily prescribed target. It's genius, a description entirely open-ended and, therefore, in this context, quite meaningless. It sounds good, though. It also implies "non-aggressive" tax avoidance is morally okay.

The clue that this was some ruse dreamt up in the recesses of the mind of an official or spin doctor is that nobody actually knows what it means. Or rather, they think they know what it means but they can't find the words to define it – not in such a way that a smart lawyer would be unable to demolish.

To help taxpayers, HMRC publishes some non-exhaustive pointers for guidance:

* It seems too good to be true and cannot have been intended when Parliament made the relevant tax law.

* The tax benefits or returns are out of proportion to any real economic activity, expense or investment risk.

* The scheme involves arrangements which seem very complex, given what you want to do.

* The scheme involves artificial or contrived arrangements.

* The scheme involves money going around in a circle, back to where it started.

* The scheme promoter either provides funding to make the scheme work or arranges for it to be made available by another party.

* Offshore companies or trusts are involved for no sound commercial reason.

* A tax haven or banking secrecy country is involved.

* The scheme contains exit arrangements designed to side-step tax consequences.

* There are secrecy or confidentiality agreements.

* Upfront fees are payable or the arrangement is on a "no-win, no-fee" basis.

* The scheme has been allocated a scheme reference number by HMRC under the Disclosure of Tax Avoidance Schemes regime.

So, here's my exam question. Based on the above, do any of the following count as "aggressive" tax avoidance:

* A 15 per cent holding in a British-based, luxury wallpaper business held in an offshore trust (the holding is believed to belong to George Osborne's family and the business is Osborne & Little).

* A home on the Scottish island of Jura, a favourite spot with holidaymakers, is registered to a company in the Bahamas (it's Viscount Astor's house and he is David Cameron's father-in-law).

* Someone is British, lives here, works here, owns businesses here, yet they're able to claim non-domicile status for tax purposes (they're too many to mention individually).

* A British retailer puts his companies in the name of his wife who lives in Monaco (no marks for this one but he was appointed a Government adviser on reducing public spending).

I will add another one, because I know you like quizzes. Is an American corporation parking $70bn (£42bn) offshore and then using the money to buy a British rival and take advantage of Britain's lower tax rate engaging in "aggressive" tax avoidance? While this last one does not relate to keeping cash out of the clutches of HMRC, it does highlight a particular mindset, albeit an American one and the company behind this way of thinking, Pfizer, was lauded by the Prime Minister ("a cheerleader" for Pfizer is how Labour described him) for its move on AstraZeneca.

Since when has tax avoidance been split into "aggressive" and "non-aggressive"? What is "non-aggressive" tax avoidance when it's at home? Like many non-members of the super-rich I have no choice where payment of tax is concerned. It's taken off at source, direct from my income, as Schedule E. If I do anything to try to reduce that charge is that "aggressive" or "non-aggressive"? Answers please.

The fact is I can see no difference between the two – tax avoidance is tax avoidance, aggressive or not – but for the purposes of politicians wanting to appear as though they mean action, saying they're pursuing one and not the other, it makes them seem decisive and in control.

Here's another nugget, gleaned from Companies House. A trawl of all companies registered there reveals the following totals, of British company directors who reside in offshore tax havens:

* Switzerland 9,317

* Luxembourg 1,026

* British Virgin Islands 1,025

* Monaco 732

* Bermuda 436

* Bahamas 328

* Cayman Islands 224

8 Liechtenstein 185

* Barbados 141

* Netherlands Antilles 13

* Channel Islands 2,184

Add that lot up and you find there are at least 15,611 British company directors based in overseas tax shelters. If I was HMRC searching for tax avoiders I'd put all 15,611 of them under the microscope until they squeal and offer to make a settlement – at which point the revenue should drive a hard bargain, harder than it's been doing of late. After all, what can be more "aggressive" in terms of tax avoidance than going and locating yourself in a tax haven?

The Swiss number is interesting. It's actually risen, from about 7,000 two years ago to more than 9,000. So much for the Government's declared putsch against tax havens, and those who use them.

What the current crop of ministers have found, as others found before them, is that making ringing statements about purging tax avoiders is far easier in theory than in practice.

Where they're making a grave mistake is in choosing to narrow the definition of who they're chasing. That's a gift to the sort of sharp-minded lawyers and accountants who make a very lucrative living in the tax avoidance area, or as they prefer to call it, "tax minimisation". We've enough loopholes as it is in our tax system, without creating another one.

Far more effective would be to apply the broad brush – to go on the front foot and send out bills requiring people to pay more, based on all their earnings, domestic and overseas – and challenging them to explain why they shouldn't. Splitting hairs between "aggressive" and "non-aggressive" tax avoidance will get HMRC and the Government nowhere.

What is required is more aggressive pursuit of all tax avoidance, plain and simple.

News
news

Emergency call 'started off dumb, but got pretty serious'

Sport
Erik Lamela celebrates his goal
football

Argentinian scored 'rabona' wonder goal for Tottenham in Europa League – see it here

News
The cartoon produced by Bruce MacKinnon for the Halifax Chronicle-Herald on Thursday, showing the bronze soldiers of the war memorial in Ottawa welcoming Corporal Cirillo into their midst
news
News
peopleFox presenter gives her less than favourable view of women in politics
PROMOTED VIDEO
Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into disastrous conflicts
News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
Property
One bedroom terraced house for sale, Richmond Avenue, Islington, London N1. On with Winkworths for £275,000.
property
Voices
Nigel Farage has backed DJ Mike Read's new Ukip song
voicesNigel Farage: Where is the Left’s outrage over the sexual abuse of girls in the North of England?
News
i100
Arts and Entertainment
Taylor Swift performs at the 2014 iHeart Radio Music Festival
musicReview: 1989's songs attempt to encapsulate dramatic emotional change in a few striking lines
News
Mario Balotelli has been accused of 'threateningly' telling a woman to stop photographing his Ferrari
peoplePolice investigate claim Balotelli acted 'threateningly' towards a woman photographing his Ferrari
Arts and Entertainment
Paul Anderson plays Arthur Shelby in Peaky Blinders series two
tvReview: Arthur Shelby Jr seems to be losing his mind as his younger brother lets him run riot in London
News
ebooksAn unforgettable anthology of contemporary reportage
Voices
Don’t try this at home: DIY has now fallen out of favour
voicesNick Harding, who never did know his awl from his elbow, is glad to see the back of it
Arts and Entertainment
Miranda Hart has called time on her award-winning BBC sitcom, Miranda
tv
Sport
Phil Jones (left) attempts to stop the progress of West Bromwich Albion’s James Morrison on Monday
Chelsea test can be the making of Jones and Rojo, writes Paul Scholes
Arts and Entertainment
Saw point: Bradley Cooper and Jennifer Lawrence in ‘Serena’
filmReview: Serena is a strangely dour and downbeat affair
Life and Style
The Zinger Double Down King, which is a bun-less burger released in Korea
food + drinkKFC unveils breadless meat beast
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

COO / Chief Operating Officer

Competitive (DOE): Guru Careers: A COO / Chief Operating Officer is needed to ...

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker