9 July 2012

Too Little Carr Tax

Following the theme of my previous blog about culture and morality in the financial world, comedian Jimmy Carr's tax affairs have raised some important questions in that area.

For many, it has simply been too easy to condemn his approach of reducing his tax bill. The problem is that he has done nothing illegal. To condemn his approach means that we end up with three levels of legality - illegal, legal but bad, legal and good. The trouble is that the law only has two levels - legal or illegal.

Any further refinement is always going to be subject to the variable whim of public opinion. What about using your ISA allowance to reduce the tax you pay - is that OK? What about making additional pension contributions to obtain tax relief - is that OK? What about shifting the ownership of assets between spouses to reduce tax - is that OK? ... and so on.

Ultimately it should only be the law which judges what is acceptable. Otherwise we all end up open to prosecution at some point in the future - financial advisers particularly! - when the wind of opinion changes direction.

Public opinion should result in a change to the law, not in judgements handed down by the tabloid court!

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