Don’t let tax avoidance screw up your life

Peter cruddas

Founder of CMC Markets and former Tory Treasurer Peter Cruddas was on the radio this morning. Though I will get a kicking for saying this, I really enjoyed hearing him speak.

What he had to say was simple

  • He was expecting to pay £100m in tax this year (including £5m stamp duty on his new London House
  • He screwed up being a tax exile because he “wasn’t very good at it”
  • He thinks trying to avoid paying tax is counter-productive as it stops him focussing on making even more money.

We heard that organisations like the Duke of Edinburgh’s awards and the Boy Scouts (which kept him honest growing up with a disadvantaged background) are other beneficiaries of Cruddas’ wealth generation.

Put simply, I thought Cruddas was a straight guy who set me up to work really hard today.

Wasting time not paying tax

I was also pleased to see some sabre rattling yesterday from HMRC in the direction of financial advisers whose principal business is in creating complicated tax schemes for wealthy people that (according to HMRC) “generally do not work”.

Under the plans set out in an HMRC consultation document, enablers of tax avoidance could have to pay a fine of up to 100 per cent of the tax the scheme’s user underpaid.

The Treasury listed “accountants, tax planners and advisers” in its announcement regarding who might be hit with the tougher penalties.

Currently tax avoiders face significant financial costs when HMRC defeats them in court. However, those who advised on, or facilitated, the avoidance bear little risk, officials stated.

The Government said it is acting to make sure that tax avoidance is “rooted out at source and this action will target all those in the supply chain of tax avoidance arrangements”.

The Financial Secretary to the Treasury, Jane Ellison said:

“People who peddle tax avoidance schemes deny the country of vital tax revenue and this government is determined to make sure they pay.

“The vast majority of their schemes don’t work and can land their users in court facing large tax bills and other costs.

“These tough new sanctions will make would-be enablers think twice and in turn reduce the number of schemes on the market.”

This is music to my ears. Not only are the tax advisers wasting their own time, they are wasting other people’s time. Just as Cruddas was saying.

Tax tail wagging the dog of contentment!

My personal affairs are rather less exciting and I won’t be paying £100m tax this year. But I expect to be taxed on a proportion of my pension savings at 55% because I have no intention of tucking my money under a bed and seeing it earn no interest, generate no growth.

People who’ve saved all their lives can expect a decent pension and I’m lucky enough to have a decent amount in my pot. Enough to breach the Lifetime Allowance at some point.

If I was to follow some tax advice i have been given, I should minimise my tax-bill by not risking getting long-term growth on my investment. The thought – at age 54 and 3/4 of sticking money in cash to avoid paying tax is what Cruddas would call a distraction.

I am also extremely unhappy when I contemplate organising my life around not paying what I should, I feel the same way about maintenance payments to my family and sharing orders to former spouses.

But as soon as I look at these payments as proof positive that I have done a decent thing, I’m back as the dog of dignity (aligned with  the pig of happiness – see below).

dog of dignity

Infact – If I wasn’t giving a decent whack of my pension to the former Mrs Tapper, I would undoubtedly be paying more 55% tax , so I am inadvertently becoming the wonderful husband I never was!


Life is too short

I am no fan of high taxes, especially when they hit me, but I am less a fan of not paying my dues. Like Cruddas, I am proud to state I will pay a lot of tax in my life. Like Cruddas I get a lot from society. Unlike Cruddas , I am not sitting on a fat cheque from the sale of my business when it IPOs. But I can dream and if anyone wants to value Pension PlayPen at sums north of £100m my email address is….!

Contentment comes from peace of mind and you don’t get that worrying about tax. Tax (and death) cannot be cheated. Even if you evade taxes, you will live in fear and live in guilt. If you make your living helping others evade taxes you are living off the proceeds of crime. Even if you think you are using a legal loophole, you are demeaning yourself in the eyes of others and making a mess of your life.

Life is too short to make a mess of it by worrying about tax. Pay your taxes- have fun and remember how lucky you are to have the money that you’re taxed on


Pig of happiness

Not Cedric



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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7 Responses to Don’t let tax avoidance screw up your life

  1. Gerry Flynn says:

    I am sure that the very small percentage of people that this would affect will be quaking in their boots, as will the purveyors of such services, however, the rest of the taxpaying population of the (disunited) UK will just have to continue to “suck it up” and continue to diligently pay their tax every week/month. What advantages the ordinary person gets to avoid paying tax through legitimate means, ie salary sacrifice, is potentially going to get the chop if HMRC gets its way. I would like to see the figures in comparison of how much extra tax HMRC thinks its going to get.

  2. DaveC says:

    I think we need to be careful that a clear line in the sand doesn’t become a random point on the beach to which no one can say anything about which side they are on for certain.

    One of the biggest tax avoidance schemes employers and employees benefit from is Salary Sacrifice.

    This apparent re-branding of ‘tax avoidance’ into something ‘bad’ is quite confusing.

    It’s either illegal, or undesirable, and so falls under tax evasion.

    Or it’s acceptable, and remains as tax avoidance, which can be used for a myriad of reasonable and acceptable reasons.

    If this chap thinks he can make more money in net terms by spending more time making it than worrying about the tax burden upon his income, then he needs to invest in a good accountant!

    £100m tax this year, suggests ~ £200m income in a year. Or about £1m per working day.

    If he spends even one day considering his tax affairs, that should cover a team of very well renumerated accountants.

    Unless I’m missing something it sounds like he’s making a pointless argument about tax avoidance.

  3. DaveC says:

    Remuneration, doh!

  4. henry tapper says:

    DaveC, Peter Cruddas was making the good point that the time he spent in Monaco trying to avoid tax was wasted, he was better off paying the tax and spending the time he didn’t spend avoiding tax, earning the money to pay the tax bill with.

  5. Kevin Neil says:

    I believe that your line of thinking is 20th Century, and the world has changed. It is now the 21st Century, and the old two-dimensional tax landscape is three-dimensional.
    Tax evasion and what constitutes it has not changed, and rightly so.
    Tax avoidance, which lumped everything that wasn’t evasion into the box marked “acceptable”, has been updated and redefined.
    In its place, we now have tax planning. This occupies the box that all avoidance once occupied. This is the use of clearly laid down reliefs and allowances, typically using one’s own money, and typically requiring investment in real assets. This now encompasses ISAs, Pensions, VCT, EIS, BPRA.
    Tax avoidance is now being redefined as the use of artificial schemes that pick and mix different parts of the tax legislation to produce a tax advantage that the legislation was never intended to provide. Typically it will involve the use of loans so that the taxpayer often risks little of their own money, and often involves little or no investment in actual assets.
    I am happy – both personally and professionally – that this is the new normal.

  6. henry tapper says:

    Well , whatever floats your boat!

  7. Mike Lacey says:

    HMRC should sort their act out and stop complaining when clever people use legislation to the advantage of their clients. Stop loopholes by drafting the legislation correctly on day one.

    In a former firm I recommended some of my clients invest in Business Premises Renovation Allowance schemes. All totally legit and above board. The idea is to give wealthy people the opportunity to save tax while the schemes provide scope to renovate rundown areas. The precursor of BPRA was the Enterprise Zone which was hugely successful in regenerating eg. Docklands.

    HMRC (AIUI) have now issued Advance Payment Notices requiring some investors to repay the tax relief they’ve had – regardless of the fact that it went straight into the BPRA and is now quite literally tied up in bricks and mortar. These people are at their wits’ end and at risk of bankruptcy.
    It seems as if HMRC decided to change the rules retrospectively and stamp all over what was perfectly legitimate tax planning. This is really poor; effectively, retrospective amendments to legislation.

    Problem is HMRC have deeper pockets than anyone and seem to be using the threat of APNs to stifle future legitimate tax planning.

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