Rebecca Reading: Tax without the nonsense
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Rebecca Reading Partner
Baker Tilly
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So, it does really matter where the money goes! I returned last week from a short break in St Lucia – it was 28 degrees and sunny every day – to be greeted by sub-zero temperatures and tax making the headlines yet again. Of course, I timed my trip to ensure I was back just in time for the Pre-Budget Report last Wednesday, but found I had missed the headline on the previous Monday: “New government clampdown on tax dodgers” , which was accompanied by a more formal HMRC publication, “Closing Down on Tax Evasion”. I did not anticipate missing so much – I was only away for a week – but even whilst I was sitting sipping a local beer only a stone’s throw from the Caribbean sea, I soon discovered that the UK is not the only place where tax is a topic of general conversation. St Lucia introduced VAT for the first time on 1 October 2012, and the Lucian people I spoke to seemed to think that an extra 15% tax had been added to just about everything. I did not check whether there were lower or zero rates available, but what certainly felt true to the locals was that there had been sudden, unfair price increases across the board. They were interested to know what I thought about what their government had done. Perhaps surprisingly, what immediately came into my mind was a degree of sympathy for the St Lucian authorities. To be blunt, it is obvious to any foreign visitor that the government needs money – filling the crater-sized pot holes in the roads would be one good thing they could do with the extra cash! Also, as a small island, there really are not too many options as far as generating GDP is concerned, so they have to do the best they can with what they have. One bright, young Lucian civil servant made an interesting comment that really resonated with me, bearing in mind the tax debate currently running here in the UK and now that I have seen George Osborne’s speech, the Pre-Budget Report. Her view was that if the government really did do something worthwhile with the extra revenues then perhaps that would not be so bad. Even so, she thought it would have been better to introduce VAT more gradually, at a lower rate first to lessen the blow, and then rising to the full 15% at some later date. Something that stands out for me in Pre-Budget Report and “Tax-Dodgers Clampdown” document, is the pledge of £77m funding for HMRC to expand their anti-avoidance and evasion activity, specifically focusing on offshore evasion and avoidance by wealthy individuals and by multinationals. The document goes to great lengths to reassure the public in general that by far the vast majority of tax payers pay the right amount of tax at the right time, and only a minority are deliberate evaders. I was pleased that as far as commenting on who the evaders might be, the report is sensible and balanced, not focusing simply on very large multinational companies, who have been in the firing line in recent weeks. I have been dealing with HMRC for my entire career in tax, and I am glad of their extra funding, as this could potentially improve the way the tax system is managed and monitored. As a taxpayer I agree with my Lucian friend: when the government spends the tax receipts on something worthwhile perhaps that really is not so bad. Rebecca Reading Rebecca specialises in corporate and international tax. She spent six years leading the in-house tax team in a global manufacturing group, and has a practical and commercial approach to tax. More articles in
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