Stand up for tax lawyers

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Believers in the rule of law should celebrate its use to dodge tax.

Whenever we have a national panic about terrorism, lawyers are prominent principled objectors to any attacks by the authorities on the rule of law. Politicians and pundits who say the ‘obviously guilty’ should not receive due process, or who condemn defence lawyers for exploiting flaws in a prosecution case, are rightly given short shrift by the civil liberties brigade.

Alas our human rights defenders seem to be less alert in the current national panic, over the exploitation of perfectly legal mechanisms to reduce liability for tax.

You may say a national outcry on this issue is long overdue. Perhaps, but not when it equates tax avoidance with evasion, a confusion which has been made repeatedly over the past few weeks, including by parliamentarians who should know better and media groups with their own tax-dodging skeletons. This in turn leads to incidents such as witch-hunting the solicitor general, Robert Buckland QC (who at least had the consolation of being described by The Sunday Times as a ‘top Tory’ – for possibly the first and last time in his career).

And, as we’ve seen so often with terrorism panics, it is at times like these that thoroughly bad laws are made. The Law Society’s hard-working tax law committee is doing its best to water down two potentially dangerous measures, the first of which would allow HM Revenue & Customs to recover debts directly from bank accounts, the second to impose a ‘Google tax’ on multinationals that route profits to more friendly jurisdictions.

On the direct recovery of debt provisions of the Draft Finance Bill, the committee points out that the provisions ‘enable HMRC to stop taxpayers accessing their money prior to any judicial confirmation that HMRC’s actions are warranted’.

On the diverted profits tax, it says the hastily drafted legislation is likely to hit businesses with perfectly legitimate reasons to transfer money across borders, and hence damage investment in the UK.

the general election campaign is likely to feature an arms race of thoroughly illiberal measures

These are serious objections and deserve the same backing from the legal profession as do more overtly ‘human rights’ campaigns.

Supporting these efforts should not imply any endorsement for aggressive tax avoiders, any more than support for the right of a terrorist suspect to a fair trial endorses the terrorist’s cause.

And anyway, we have ways of tackling the problem other than by ill-thought-out enforcement legislation. The main one is transparency: individuals and businesses who are in a position to exercise discretion about where they pay taxes should be forced to publish the fact and accept public consequences, including consumer boycotts and their opinions being excluded from national debate.

The second obvious step is to make avoidance less profitable and appealing by simplifying the tax code. However that’s probably too much to ask in a general election campaign which is more likely to feature an arms race of thoroughly illiberal measures.