The Government has fulminated about offshore schemes where big companies are able to avoid paying tax in the UK. David Cameron has criticised ‘clever accountants’ who set up these offshore schemes for their clients to avoid paying UK tax.
Margaret Hodge of the Public Accounts Committee has attacked the big Accountancy companies for setting up these schemes at a Public Enquiry.
However, one wonders who should be in front of this Public Enquiry, the big Accountancy companies or the Government. After all, it is the Government who are in charge of the law. The big Accountancy companies just follow the laws that the Government set up.
Perhaps the Committee should investigate members of the Thatcher Government. The Committee could ask them why one of the first pieces of legislation they put through in 1979 after being elected was to allow people to send money offshore without it being taxed. Why was that so urgent?
There’s a lot of talk also about trying to shame companies like Starbucks into paying more tax than they legally have to.
Perhaps they should put David Cameron in front of the Committee to ask him if he would hand over to HMRC a big chunk of his own inheritance which came from the offshore schemes set up by his father Ian, who was one of the early practitioners of such schemes.
Perhaps they can bring Chancellor George Osborne before the Committee. They could ask him if he would promise to that he and his family will pay not just the tax that they have to but the amount of tax that they would have had to do if their £4.5m family trust has been set up in the UK rather than set up offshore.
So, the problem for the Government is that these offshore schemes are mainly used by their supporters and backers. There’s not a huge amount of Labour backers with offshore trusts.
These offshore schemes are used by people like David Cameron’s father-in-law Lord Astor and the Conservative Party’s main sponsor and fundraiser Lord Ashcroft. However, it was Margaret Thatcher’s Conservative Government who brought in the laws allowing people to send money offshore untaxed.
What they don’t appear to like is multinational companies getting a slice of what was set up just for the upper and business classes in Britain to avoid paying UK Tax. The upper and business classes in Britain have been taking advantage of this for more than 40 years. However, they are now outraged that companies like Starbucks, IBM, Google and Microsoft are using them.
What really annoys them is that freelancers, many of them in IT, are using offshore schemes to avoid UK tax. IT Contractors mainly come from the middle and working classes. They didn’t set these laws up for them. So, will Cameron and Osborne change the laws which have helped their supporters and sponsors for many, many years – or is this just a knee jerk reaction to a media frenzy.
We shall see. For the moment these offshore schemes remain perfectly legal.