Expect ‘tax avoidance’ to be Budget’s buzz phrase
David Bennett, tax partner at Moore and Smalley, offers his thoughts ahead of Budget 2015I would love to tell you how this budget is going to be a meaningful one for businesses, but I’m afraid I’m going to have to disappoint you.
I predict that the content of the budget will be quite thin, and his speech will be more about setting the tone for the pending General Election.Not in the sense of Mr Osborne trying to sweeten the electorate (as many think he will), but more the fact that it provides a timely platform for the chancellor to talk about staying on course to reduce the national debt.
I think the political aspect of this budget will be the focus on tax avoidance. This has been a hot issue for a number of years now in the wake of numerous scandals involving celebrities, bankers, footballers and other wealthy individuals.It’s a debate that’s only intensified as the election nears, with politicians of all shades throwing the tax avoidance mud at each other. Labour in particular has really turned up the heat on the Conservatives following revelations that some of its wealthy donors are tax avoiders, but the party has enough of its own embarrassments to contend with.
As a tax specialist, I feel obliged to say here that there’s a clear distinction to be made between legitimate tax planning and tax avoidance, something that both major parties seem to ignore. My fear is that HMRC is starting to lose sight of that distinction, but that’s another story.Whichever way you look at it, this is now a key election battleground and so you can expect a significant portion of Mr Osborne’s budget speech to be devoted to the issue.
To be fair to the coalition government, they have already done a huge amount of work over this parliament to close down the most aggressive tax schemes. But if they want to stop Labour getting the upper hand on this issue they will feel obliged to do more. Let us hope that this does not impact on well-founded tax planning.Therefore, I’m anticipating some quite bolshie and aggressive language from the Tory camp about tax avoidance. In terms of what the chancellor is practically able to do, I think we may well see him announce plans to allocate more resources to tackle tax avoidance with the creation of a new taskforce within HMRC to increase the number of prosecutions.
There will be a lot of noise in the House of Commons at lunchtime on March 18, a lot of silly shouting and needless banter, but when you filter all of this out, I’m pretty confident this will be a rather dry and safe budget.This will be Mr Osborne’s sixth budget and he’s had more than his fair share of backlashes (see pasty tax and granny tax) to risk doing anything drastic with the electorate about to head to the polls in May.
Of course, it could get interesting if there’s a change of government. Then you can expect some fundamental fiscal changes come June and July.