Snake Hall II (or) Tax Avoidance and the Sex Lives of the Potato Men

Ok, so you all seemed to like the Snake Hall post and several of you wondered out loud whether there was something similar going on in the UK (I issue here the obligatory *innocent face*).  I am not qualified to comment, but a very interesting tax barrister Jolyon Maugham (follow him on twitter folks) has written this blog post which suggests that the role of some at the tax bar (and, although he does not seem to say this, he may mean also solicitors’ firms) may bear scrutiny as not as independent or professional as others.  He points to some of the same issues that the Confidence Games book points to, and he neatly identifies the importance of the role of advisor as gatekeeper in such circumstances – he refers to it as policing.

He cautions too about being too simplistic about labelling tax avoidance good or bad: it can be either, or it can be ambiguous.  See here and here.  As he notes, and this is clear too from the Confidence Games book, the devil is in the detail, along with lots of numbers and the sex lives of the potato men.  One might be tempted to say here as someone called Dave apparently does in aforementioned film, “I think you’re focusing too much on the crazy aspect, and not enough on the paving side of it.”* but Jolyon moves on from the little pictures to the bigger one with something important to say.

The kinds of problems he canvasses are similar too, but less egregious than the US examples: high fees, relationships of *ahem* mutual advantage.  The US examples are strengthened by a great deal of evidence about how and why schemes were developed and the way in which they were executed which rendered ambiguous tax arrangements clearly abusive. These were prompted by prosecutions and investigative journalists looking hard at the professionals.  I’ve not seen similar evidence here, but that may just be my failing.

He indicates too – particularly interestingly – that there are ‘powerful structural forces’ at work.  He is not generally talking of the kinds of specific collusion that make Rostain and Regan’s book so interesting, though there may well be a bit of that lurking in the background, but he does provide an important indication that regulators may need to pay greater attention to the incentives which help structure ethical decision making in tax and elsewhere.  Both Maugham, Rostain and Regan would agree, I think, that bad tax avoidance is not all about a few bad apples. There are ways in which the barrels may be, or are, bad. He puts it like this:

So there are ‘powerful forces’ – to put the matter politely – operating in favour of saying ‘yes’. There are also powerful internal and external controls on saying ‘yes’: not least, your reputation and the inclination of insurers to indemnify you against the consequences of giving poor advice. I think most barristers at the tax bar get the balance right. But several do not.

This aspect of the tax industry has, rightly, exercised Margaret Hodge (although you should not rely on as accurate the particular individuals she has named as offenders under cover of parliamentary privilege). But, more importantly, the account given above should spark further ideas as to how one might tackle tax avoidance. In a quiet, but effective, and pro-growth sort of way. I’ll come on to those another day.

I am looking forward to it.


* I should point out that I just googled the quote.  I have not seen the film.  I don’t like the Inbetweeners either.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s