Well, we are all entitled to manage our affairs to avoid paying tax. Is this morally right? Does it fit with the concept of “the Big Society”?
Taxation is by its very nature penal. It goes against the concept of the freedom of the individual to do what he/she pleases with his/her assets. It is the State taking money (usually) from the individual because that individual is a member of the State. This is nothing new. It has taken place since the dawn of civilisation.
But the problem arises when someone is not paying their fair share. And this is the issue. What is that fair share?
You come to us and tell us that you are selling a piece of land for development and you are making a handsome gain which will be liable to Capital Gains Tax. Now, should we tell you that if you transfer the land in to the joint names of you and your spouse or civil partner first there will be no Stamp Duty Land Tax and secondly when you sell and make that gain your spouse or civil partner will also be able (if it has not already been used up) to claim his/her CGT annual exemption, presently £10,600.00.
By a little bit of “engineering” you may have saved around £3.000.00.
The question is by this “scheme,” for want of a better word, is it fair to the Big Society that you have managed your affairs to avoid £3,000.00 tax? Or is it a matter of degree and, if so, where do you draw the line? I expect that very few people would agree where that line is. MPs are adept at using the Reliefs available when they buy a second home in London and save thousands by doing so. But that is perfectly legitimate, so should they be criticised for this “scheme”?
I suppose we all have to stop using the word “scheme” when looking at ways to mitigate the tax burden. It has become a dirty word. “Tax Planning” is not so offensive! I don’t know the answer. Do you?