All bases covered

On reading the Sundays, it is hard to think of another point in time when a government, of any stripe, has managed so successfully to lose the confidence of not just one sector of society, but of all sectors, in its management of fiscal policy.

The more alarming tax news is Shire Pharmaceutical moving its head office to Ireland (barely 4 weeks ago, Yahoo announced a move to Geneva, and it is rumoured that at least two other big names are ready to announce that their bags are also now packed). It is reported that the management of Shire stopped by the Treasury to give them the news in person, as a courtesy !

With Shire being the 50^th largest company quoted on the UK stock exchange, not only does the move serve to highlight the fragility of the UK as a leading economic centre but it also reflects that, when it comes to tax policy, we have a government which can be relied upon only in so far as we know it will be incompetent and arrogant in equal measure.

The UK has been losing its attractiveness to multinationals as a choice of location. Having the world's worst international airport, the world's most expensive housing and a near grid-locked traffic system in our capital, are all bad enough, but are nothing compared to the effect of the government's inability to establish an international corporate tax policy which is both coherent and offers certainty.

Despite the brown trousers alert which was the mixer-company debacle in 2000, the government seems intent on believing that the UK is simply just so important in a global context that the multinationals will remain in the UK regardless. This complacency has manifested itself in a two year consultation over taxing controlled foreign companies, for which no end is in sight, and where it appears to have occurred to no one in government that the recent capital gains fiasco, domicile fiasco, income shifting fiasco, capital allowances fiasco and, now, the shafting poor people fiasco, all help to create an increasing sense of unease over what unexpected, irrational and desperate law change will next be introduced.

It is, therefore, no small wonder that, having now seen the government have a pop at everyone but the multinationals, Shire have decided that the multinationals will be next (or should that be last ?). Why hang around, and wait for the inevitable, when you can get out; Ireland has a policy of not taxing CFCs and, no matter what the UK eventually decides upon for taxing foreign subsidiaries, we can be sure that it will not better the proposition Ireland offers in this respect.

Further, when Shire could, instead of Ireland, have chosen a handful of other, more than welcoming, jurisdictions which would levy no corporate tax whatsoever, the fact that Shire has moved its HO not to a pure tax haven but to a country in which it will be paying some tax, albeit at only 12½ %, does imply that the decision of Shire was not based solely on minimising its tax exposures. This choice of a low tax, rather than no tax, alternative to the UK, reflects what has so quickly become the sad reality; with a government which is now unpredictable and unstable in its law making, those companies and, indeed, individuals, who are fortunate enough to be internationally mobile, will look at moving to more stable regimes.

At the present time, Shire has said it will leave its operational facility, with its 300 jobs, in the UK. Something tells us the Irish government, and its agencies, will be making make more of an effort to lose the UK those jobs, than the UK government will make in trying to keep them.

At the other end of the spectrum, we have the other big tax story of the week, with the abolition of the 10% income tax rate for those who are not just less advantaged and less mobile, but are, rather, completely disadvantaged and totally immobile.

It is probably fair to say that, although announced in March 2007, the change, which took effect this month, has not previously figured highly in the world of tax advisers. With this government enacting more laws in advance than any other government in history, it is increasingly difficult to keep up with prospective legislation; and all the more so when, albeit not on this occasion but usually, it is brought into force by the snide and, arguably, undemocratic technique of laying secondary legislation before parliament.

It is also most probably reasonable to say that the uproar which has only now occurred does not reflect well on the professions. There are some honourable exceptions, most notably those at the LITRG, who have long since been on the case, but the rest of us also had the fine detail sitting in front of us for the past year and have paid it scant attention.

Whilst we may spend our days earning a good living in dealing with the vastly more advantaged in society, it is impossible to find anyone who is not sympathetic to the plight of the much less well off who find themselves with an increased tax bill at any time, let alone in the current economic climate which is already causing the same sector of society to suffer disproportionally through increased housing and heating bills etc.

No one likes to see the weak and defenceless picked on, but yet this is exactly what the government has done. The unsavoury nature of this "kick a cripple" tax hike is compounded by the insult of government ministers pointing to the tax credit system as the supposed saviour, when not only are some 2 million people on low incomes not entitled to tax credits, but it recognised by many (including government ministers) that a significant proportion of the 5 million people who are entitled, fail in either claiming, or receiving, their entitlement because the tax credit system is so complex and poorly managed. Throw in the fact that funding for the Citizens Advice Bureaux is also being cut from this month, thereby depriving many possible tax credit claimants of a primary source of vital assistance, and it is all a sorry mess which must reflect badly on us all.

Contrary to common public perception, accountants and lawyers are not total self-serving shits (well, not all of the time), and neither are the more advantaged in society who are our clients. If there ever was a time for us to acknowledge our relative good fortune by coming to the defence of the most vulnerable in our society, now must be that time.

Not wanting to appear overly altruistic, we can, into the bargain, also benefit ourselves by using this disgrace as a means of bringing to the fore the incompetence of the government to formulate tax policy generally.