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Rules for some and Rules for others?

It’s never advisable to have rules for some and rules for others regardless of the context in which those rules are applied, but it is particularly ill advised when differences arise relating to Taxation. As evidence proves, there are those who choose to abide by the rules, whatever they may be and those who ignore them and in the context of taxation this usually means evasion which is illegal and means, rightly so, that the full force of the law is brought to bear on anyone who engages in such evasion.

In recent times though, the tax rules as published in legislation, have not been to the taste of those who would say, in these difficult times for the country, that abiding by the rules is not the only measure by which responsible behaviour is determined and our government have therefore decided that a new test, the morality of a particular course of action, now has to be considered as well. This test of morality has no legal standing; it is instead something which has been introduced and championed by MPs, in particular the Prime Minister and the Chancellor, to bully and coerce taxpayers into paying what they think is necessary so that they are making a sufficient and morally correct contribution to the national tax pot whatever that may be!

This blog has previously commented that morality is best left out of taxation and it is indeed the concept of morality that has caused friction of late between the government and its commentators with recent cases emerging where clearly the lack of morality exercised by those who are espousing its application for the rest of us, have shown indeed that ‘it is Rules for some and Rules for others’.

This became crystal clear in the recent case of Culture Secretary Maria Miller, where it was reported that she had allowed her parents to live in a property, on which she had claimed circa £90,000 in second home allowances between 2005 and 2009. It appears that Mrs Miller had been claiming expenses for this second home in south London while her parents were living there, whilst her “main home” was located in her Basingstoke constituency.

The Commissioner has previously ruled that second homes must be used “exclusively” by MPs in fulfilling their parliamentary duties, and that housing a politician’s parents was “specifically prohibited” by the rules. Despite this, Mrs Miller has said in a recent interview that her expenses were “entirely in order” and “consistent with the rules”. How can this be so?

It is this last comment, “consistent with the rules”, that we want to focus on. Why should we focus on this? Well simply in this context being consistent with the rules is no longer enough, it surely must be also morally correct as well or at least if the mantra of the current government of which Mrs Miller is a serving representative, it to be upheld! It is therefore rather surprising that Mrs Miller would not have applied the test of morality when she was making her expense claims.

Tax Avoidance, with which C3 Tax is involved, is defined as the minimization of a person’s tax liability by using lawful methods. Therefore, legally developed and implemented, it is “consistent with the rules”. Yet, George Osbourne continues to describe the undertaking of such practices as morally repugnant which, in light of the Maria Miller case, albeit still under inquiry, seems to be rather rich which, incidentally, both of them are! What could be more morally repugnant than an elected MP breaking the rules and then preaching that she did not and that her claims were within the rules? Both cannot be correct and unlike tax avoidance, incorrect expenses claims are illegal!

Another striking example of how MP’s have lost touch with reality in particular and taxpayers in general is demonstrated in the report published this week. Following an anonymous poll of around 100 MP’s, it was reported that they feel on average their salaries should be increased by 32%! Yes, you did read that correctly - 32%! This coming in the same week as the benefits cap was agreed it demonstrates both a breathless disregard for their constituents who are suffering from cuts and caps and rampant self-interest whilst their benefits are protected. Whilst it is highly unlikely that MP’s would receive such a pay increase in the current economic climate with rigorous austerity measures in place, it does show they most definitely are out of tune with the rest of us.

Despite glaring evidence to the contrary, the Government continue to state that “we’re all in this together” which falls a little flat given the cases sited here. So the next time you or your clients take time to consider whether it is right to do something or not, we suggest that you do nothing more than consider whether the course of action is legal and leave considerations of morality and righteousness out of the decision, which is after all, what our MP’s seem to be doing.