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).
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
Not Cedric