To repeat our insistence, tax avoidance is not a thing that exists
This is, of course, amusing.
A snail farm in an office building linked to a company that describes itself as the “Canceller of the Exchequer” is an attempted tax avoidance ploy, a council has said.
Snai1 Primary Products 2023 Ltd has been keeping about 15 covered crates containing snails on the lower ground floor of 9 Dale Street, in Liverpool city centre, for the past year, according to the BBC.
We’d all probably file that under nice try, never mind. But it’s this which is the important part:
City Council confirmed that Snai1 Primary Products has not made an application for the exemption of business rates and no official probe is underway.
A spokesman for the council said: “The misuse of the agricultural exemption with the use of ‘snail farms’ in commercial premises is a business rates avoidance tactic that has been attempted in Liverpool.
“To date, no agricultural exemption has been awarded on commercial premises and the council’s business rates team continues to monitor the situation closely and will not hesitate to take further action and challenge such tactics to protect public funds and maintain a fair and efficient tax system for all ratepayers.”
Tax avoidance isn’t, actually, a thing. It is, even at its worst, an attempt but still not a thing.
There is tax compliance, otherwise known as obeying tax law. There is tax evasion, otherwise known as not obeying tax law. That second is a criminal offence, obviously. Tax avoidance, however, is not a thing, not a state of being. It’s an attempt, a process perhaps. Where tax law is less than clear it is possible for there to be differing explanations of it, results from those explanations. But such cases do get examined and we end up with a determination that the attempt resolves down to tax compliance or tax evasion.
Think of the oft quoted Vodafone and £6 billion in Luxembourg and all that. Contrary to everything you’ve read in the likes of Private Eye this revolved around whether the Controlled Foreign Companies (CFC) rules applied to subsidiaries within the European Union or not. If the whole escapade had been done through Bermuda then all agreed tax would be due. If Luxembourg, well - and the end result was that it wasn’t. Sure, the issue bounced up and down the courts for a bit but the Cadbury case made the final result clear and obvious. Not until those profits were moved back into the UK would they be taxable in the UK and when they were they were. Or the Boots complaints - no, interest on debt is a deductible expense for a company. Or so may other of the varied whinges we’ve heard over the years.
It’s possible for there to ba an attempt at tax avoidance, possible for there to be accusations of such. But all do finally collapse down to “This is legal” and therefore tax compliance or it’s not and so tax is due. Tax avoidance simply isn’t a thing it’s, at worst, a process.
Tax avoidance, unlike tax evasion, is not a criminal offence.
Of course not. Avoidance is like an accusation of any other form of criminality. Something to be investigated, evidence to be gathered, but in any system which includes the rule of law is something that does - can, might - sometimes collapse down to “This is fully in order. Sir”.
Tim Worstall