KEY POINTS
- Tax avoidance in the public eye.
- Dealing with criticism.
- Complexity of the tax law.
- Customise responses.
We are all tax professionals here, right? We get it. We understand. There is a continuum that goes from tax planning via tax avoidance to tax evasion, and we are always on the right side of it.
There is something very soothing about being in a civilised discussion with people who speak the same language.
I am sure we all appreciated the identification of Margaret Hodge as a “tax prat” [1] for her chairmanship of the public accounts committee, particularly the session where they tried to pull a Paxman on the Big Four.
Even the people in HMRC were annoyed: that comment about the size of their brains is going to rankle for a few years.
Margaret Hodge is not the only one. I am sure we have all had that uncomfortable feeling of trying to talk to someone who doesn’t speak our language.
Perhaps you have come up against one of those people who thinks that country-by-country reporting is a good idea? What about someone who wants company tax computations or personal tax returns to be published?
There are people who do not know that “there is no equity in tax” and think that there ought to be some kind of principle of fairness involved in taxation – imagine that!
So if you come across someone like that, someone who is, in fact, a “tax prat”, you will need this handy guide.
Countering your opponents
Tired of discussions of tax in the newspapers and on television? Worn out from unwarranted criticism of your chosen profession? Frustrated with having to respond to each new argument carefully and conscientiously?
We can help! If you come across an argumentative civilian, a tax prat if you will, all you need to do is to follow the structured steps set out below.
1. Control what your audience sees
Do not allow people who think there is something wrong with tax avoidance to set the terms of the debate.
Say the “drama unfolded live on Parliament TV” and generated a Twitter storm from “those tax professionals who were watching”.
Do not (especially not in your online edition) link to the text of what was said [2], or embed the video stream, or Storify the tweets [3].
Many of your readers will not even realise they have not heard what was said. If you make sure you never quote anything in context, they never will. If anyone asks you for a link, obfuscate.
Remember, you are the editor of a tax magazine: it is not your responsibility to educate anyone about how tax “really” works.
If people lose their heads and start to Google on their own, don’t worry, not all is lost – go to step two.
2. Attack the person, not the argument
If you can make it clear your opponent is on a “personal crusade”, “idiosyncratic and ill informed”, engaged in a “vendetta” and, this is always a good one with a female opponent, “aggressive”, you don’t need to bother addressing any of the concerns.
Those two steps will get you through almost any argument with a tax prat but there will come a time when you need to engage in an actual discussion about tax avoidance itself. If that happens, take a deep breath, smile, and go on to step three.
3. Argue against straw men
Remember: responding to what your opponent says should always be a last resort. Never underestimate the power of simply arguing against what you would like her to have said.
Suppose she says something like:
“I think you are a bunch of really clever people. You are clever, well remunerated and very experienced, I have no doubt of that. What depresses me is that you could contribute so much to society and the public good and you all choose to focus on an area that reduces the resources available for us to build schools, hospitals and transport infrastructure…”
In that event, focus carefully on the tone of the discussion instead. Say something about how the committee “forget that they are neither in a criminal court nor at prime minister’s questions, and … adopt a point-scoring and aggressive tone which generates heat without ever casting light”.
After all, it’s entirely accurate (they are politicians, after all) and why should a bunch of politicians get away with treating the tax profession like Jeremy Paxman treats them?
But even if you have to face direct criticism, there are ways. The next step?
4. Deflect attention away from the specific criticism
Remember, people outside the tax profession often think we are a bunch of parasites. So here is a list of helpful phrases to start deflecting attention away from specific discussions of tax avoidance. They can be used in almost any context.
- The tax law is very complex in the UK and internationally.
- The Finance Bill that was just passed is 50 pages longer than any other Finance Bill.
- Countries are competing for tax revenue more than they ever have done.
- We are giving the best that we can to businesses that are competing internationally.
- It is not an offence at all to have a difference of interpretation about what the law means.
- It is a supply chain management issue.
5. Tax avoidance, if we have to use that term, is better than the alternative
Sometimes, with the best will in the world, you will find yourself up against an opponent who is so persistent that you find yourself in the middle of an actual conversation about tax avoidance.
Well, worse things happen at sea, and in most cases you can get by with a few handy responses. Try one of these:
- I think, with respect, you are underestimating the skills and quality of HMRC.
- If you collected VAT from a customer and did not hand it on, it would be a criminal offence.
- Evasion is illegal and tax avoidance is not.
- Delaware is not a tax haven.
- It is a supply chain management issue.
6. Prove your opponent has mistaken some other quality for tax avoidance
In a worst-case scenario, you may need to respond to specific points in your opponent’s argument. In these cases, familiarity with the piece of tax law in question will help you customise your response to best effect.
Warning: not all of the responses below will be applicable to all situations. Make sure that you only use responses appropriate for the current argument.
- The Netherlands has some privileged tax regimes, but essentially it is offering facilities to businesses to base employment, jobs and development there.
- US multinationals directly employ some 5% of the Irish workforce and indirectly probably another 15%. Without that contribution, Ireland would probably be in even more trouble than it is.
- Insurance companies operate out of the Isle of Man and Guernsey because the UK’s regulatory regime is too onerous.
- Country-by-country reporting would have huge costs, enormous complexity and, in some cases, commercial confidentiality, but I am in favour of greater transparency.
- The problem with that proposal is that it is data, not information.
- Delaware is not a tax haven.
- It is a supply chain management issue.
- Our main purpose is to help our clients calculate and pay their tax.
Here to help
So there you have it. There is no need to feel downhearted by all the negative press about tax avoidance. It’s just that tax outsiders simply don’t understand.
Wendy Bradley is a PhD student researching the relationship between tax simplification and better regulation. She is a former member of HMRC’s Better Regulation team and writes a tax blog. She can be contacted by email.
Happy to carry on the discussion, in comments here or on Taxation’s site, or on twitter (@wendybradley). If you’re interested, I was also contacted by Tax Journal and there are quotes from me in the second half of this article, here. That’s BOTH taxation magazines crossed off the bucket list, in the same week!
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