A Taxing Reality For Deputy PM Nick Clegg

In a desperate bid to try to deflect the criticism from grassroots members of his party that he has ‘sold out’ by forming a coalition government with the Tories, Deputy Prime Minister, Nick Clegg, is expected to announce a huge crackdown on the perfectly legal practice of tax avoidance.

Whilst it may be on the borderline of moral acceptability, it is not generally regarded as being illegal by financial professionals, business experts or indeed the Inland Revenue. It is purely exploiting the maximum advantage from a system that is both cumbersome and complicated.

Mr Clegg, however, says that legal tax avoidance and illegal evasion are as bad as falsely claiming benefits adding: ‘Both come down to stealing money from your neighbours’

Of course, he is right about illegal evasion (it is after all clearly breaking the law) but legal tax avoidance is maximising the opportunities available within the present tax guidelines (the law) to minimise the liability for payment of tax. It is purely good business practice and can be challenged by the Revenue at any time through close scrutiny of a company's or individual’s accounts, each financial year.

The only way to end tax avoidance schemes, is for Parliament to close the available loopholes by re-drafting the present legislation.

That scenario is not very likely, given that Mr Clegg’s senior coalition partner, the Conservative Party, has historically always had a very cosy relationship with those who have made their fortunes by being astute at playing ‘the system’. Without those tax avoided donations from financial backers, it is unlikely any political party would be able to exist in today’s world.

Until the law is changed, Mr Clegg can promise as many tax investigations as he can possibly find. The end result will inevitably be more work for the tax avoidance professionals, who will themselves utilise their specialist knowledge, to minimise their liability on the tax due on their fees.

And so the world goes around!!