Are these Early Day Motions a sign of the times?
Originally sent: July 19, 2004If you are involved in one way or another in tax planning - and I guess most of us are, even if only indirectly by advising on pensions or the tax effect of insurance bonds etc ? you cannot have failed to notice recent changes in the attitude of the government to this whole subject. Where a year or so ago Inland Revenue was concentrating on highly abusive schemes and reacted with mild irritation to the promotion of mainstream tax avoidance mechanisms, they are now being encouraged by the government to use their considerable might to crush anything that moves and has the slightest resemblance to a tax avoidance scheme.
We are all aware of the draft regulations which, from 1st August, will force tax planners to register their schemes with Inland Revenue and I will be reporting on the significance of these regulations in a later bulletin.
Another sign of the times is two very recent Early Day Motions, both tabled by Labour MP Austin Mitchell.
For those of you not entirely familiar with the Parliamentary process, an Early Day Motion is a House of Commons motion which the proposer fully expects not to be debated in the House. So why on earth propose the motion in the first place? Well, it is simply an MP?s way of publicly drawing attention to an issue. The more Members who vote for the motion, the greater the indication of support and the more likely something will eventually be done about whatever bee the proposer has in his or her bonnet.
On 17th May, Austin Mitchell introduced the following two motions in the House:
?That this House urges the Government to investigate the activities of banks and major accountancy and law firms in devising, marketing, promoting, implementing and concealing aggressive tax avoidance schemes which have no commercial substance and whose sole purpose is to avoid UK taxes on income and profits, thus enabling their wealthy and corporate clients to avoid taxes and national insurance contributions by transfer pricing, artificial loans, inflated management charges, special purpose vehicles, joint ventures, ficticious [sic] assets, offshore schemes and secretive trusts, all designed to deprive the UK Treasury of billions of pounds of tax revenues which in turn forces the Government to curtail social investment and shift the tax burden onto ordinary individuals, as evidenced by the increase in the 1989-90 income tax total from ?48.8 billion to ?115.2 billion in 2003-04, while the corporation tax over the same period increased from ?21.5 billion to ?28.1 billion, making corporation tax barely 2.5 per cent of the GDP in 2003.?
?That this House urges the Government to investigate the activities of Alliance and Leicester, Allied Domecq, Amersham, Barclays, BOC Group, Compass Group, Dixons, GlaxoSmithKline, Hanson, Kelda Group, Lloyds TSB, Northern and Shell, Portland Enterprises, NewsCorp, Prudential, Rolls Royce, Sage Group, Severn Trent, Shell, Virgin Atlantic, Virgin Trains and WPP, all of whom consistently pay considerably less than the 30 per cent rate of corporation tax, thus depriving the UK Treasury of billions of pounds of tax revenues; and further suggests that each company be required to publish a full explanation of why it pays tax at less than the standard rate of corporation tax, as well as listing the tax avoidance schemes used to this end and the sources they acquired the schemes from.?
The first motion attracted 30 votes of support and the second 40. Not momentous, but hardly insignificant either.
Of course, one could take the view that Early Day Motions are used by all and sundry to publicise their latest crackpot ideas which will never attract any measure of support in the House. Witness a Motion by Tony Banks on 21st May:
?That this House ? believes that humans represent the most obscene, perverted, cruel, uncivilised and lethal species ever to inhabit the planet and looks forward to the day when the inevitable asteroid slams into the earth and wipes them out thus giving nature the opportunity to start again.?
I do not think for one moment Tony expected the House to debate this motion and it certainly represents rather a curious view of the people who elected him to office. As might be expected, this Motion only attracted one other signature. I, for one, do not believe that even if the Motion unexpectedly reaches the floor of the House it will in any way increase the likelihood of an imminent asteroid catastrophe.
So perhaps we could hope Austin?s Motions are of a similar mould. Unfortunately they are not. Certainly the first of his Motions was a rather unfortunate home goal for his party. Austin complains that the growth in Corporation Tax has not kept pace with the growth in Income Tax. Hardly surprising, when his own figures demonstrate the growth in Income tax is over two and a half times the rate of inflation over the same period! But that aside, they ARE a sign of an attitude endemic in the Government, the backbenches, Inland Revenue, Customs & Excise, and the courts. And if you are ignoring or even unaware of this change in attitude there is probably trouble in store.
Adviser Breakthrough Training Solutions Ltd. takes no responsibility for loss occasioned by any person acting or refraining from action, or in consequence of any other person acting or refraining from action, as a result of the material in this article.
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