The Times letters page, often a good source of interesting comment about tax, today leads with a discussion about whether corporation tax rates should be lowered.

There seems to be a consensus building around a lower CT rate, and Lord Jacobs, the Lib Dem peer, a chartered accountant and a former taxation adviser to the Liberal party, as it then was, says exactly that. If special reliefs were eliminated and normal accounting profits taxed, the rate could be reduced to 23%, he says.

Kevin Phillips, a tax partner at Baker Tilly, makes the point that while UK CT rates have remained static, the world outside has become more competitive.

Interestingly, though, the most compelling argument comes from the opposing side of the debate, from Graham Gudgin, an economist and former adviser to the Northern Ireland First Minister.

Gudgin says that Ireland's CT rate has been low for 30 years, and that the uplift in the Irish economy is unrelated. Ireland essentially makes the most of profits that would otherwise be taxed in the UK or the US. Ireland is no big problem for the US, he says, but if the UK were to follow suit, the US would be sure to act in response given its size.

He adds also that Ireland's GDP is overstated as a result, since much of the profits from such activity do not belong to Irish citizens.

Food for thought for the Tories, pondering a cut in the tax on company profits, and Gordon Brown, who might now be seeing the move as a useful opportunistic attempt to steal the Tories' clothes.

June 19, 2006 | Permalink | Comments (0)

Richard & Judy's case against the taxman (which I think we can now prefix with the word 'celebrated') was covered by almost everyone at the weekend.

There's one question perhaps that hasn't entirely been covered, but will be of special relevance to tax professionals.

It's this: is tax law to be interpreted in a strict and literal manner, or in a purposive manner? Is it the letter of the law that should concern people, or the intention?

The answer, of course, is both, but HM Revenue & Customs is playing a very dangerous game in taking this particular case. Splitting hairs about whether or not Madeley and Finnigan are 'theatrical artists' or not leads one to think the letter of the law, rather than its obvious purpose, might be the key thing.

HMRC wouldn't want tax advisers to think that when pushing avoidance schemes, though, would it?

June 12, 2006 | Permalink | Comments (0)

There's so much going on at the moment I don't have time to blog it all! So here are some highlights.

The debate on multi-nationals pondering a move abroad away from what is perceived to be an unattractive UK tax regime seems to be gathering steam. It isn't as easy as it seems, though, as Anneli Collins of KPMG explains in this week's Accountancy Age. There's also an interesting, and highly sceptical, view, put by Dennis Howlett at his Accman Pro blog. If I was in the Treasury, I would be more worried about a steady trickle of decisions to situate new business offshore than a showy HQ move.

The Richard & Judy case, which Accountancy Age revealed two weeks ago now, looks like being one of the most absurd cases of recent times. The Sunday Times went to town over the case at the weekend, revealing that television stars and other famous celebrities are set to be targetted for hundreds of millions of pounds as part of the attack. The government seems to be arguing that television stars should not get a tax deduction for their agents whereas singers and others can, an absurd point of view. What happens if you're Des O'Connor?

I'm afraid I missed the flat tax debate at ACCA on Tuesday. Richard Murphy, the tax campaigner, led the debate and wrote a report. You can get to the report, entitled 'A Flat Tax for the UK: The implications of simplification', through ACCA's website. Richard cuts a characteristic swathe through arguments for lowering and flattening taxes. There's plenty of interest to read in it, and even if you don't agree with his conclusions, one thing you won't be able to do is think that a flat tax system would be simple.

There were some disreputable suggestions put about by incorrigible gossips before the debate that Murphy and his opposite number in the debate, Richard Teather, would tear strips off each other throughout. Though Murphy has assured me it was all good-natured, I'd be keen to hear from anyone who can offer an independent adjudication on the big match bout...

June 8, 2006 | Permalink | Comments (0)

Jealous Guy's question, featured in Taxation recently, about whether or not politician's wives' hairdos were taxable as a benefit in kind has been answered.

And the answer is...well, it's not exactly clear. 'Jim' suggests ordinary clothing and such like are not deductible, only protective clothing necessary for work.

Cosmetic treatments might be allowable, unless they are over the top (surely not the case here?).

'Hodgy' suggests that politicians such as Tony Blair and Cherie are not actually employed by the parties, and thus benefits are not offered by reason of employment, and cannot be taxable.

There's also one other point Jim mentions. 'readers may recall egg throwing incidents and the brawl involving the deputy prime minister. Reimbursements of expenses claimed for the dry cleaning costs in such instances may be regarded as exempt....the cleaning of stains and for wear and tear from his day-to-day office activities are quite a different matter.'

Now was that really necessary?

June 5, 2006 | Permalink | Comments (0)

I have made a mistake. Both in the magazine, and below, we say that Peter Shilton won his tax battle with the Inland Revenue. Alas not. I'm told he lost in the Lords, so before anyone goes out and pays their employees huge fees when they leave the company, you might want to double check the rules first.

And before anyone else says it, yes, TS did have a go at someone for making a similar mistake on the back page this week.

I should also clarify. Suggestions for notable celebrity tax cases detailed below came from John Whiting of PwC. The mistakes all come from me.

June 2, 2006 | Permalink | Comments (0)