Thomson Reuters Legal Debate: Post Brexit: Tax haven status will make Britain great again!

To mark the anniversary of the referendum on leaving the EU, Thomson Reuters planned another Legal Debate. The motion for this debate in the successful series was Post Brexit: Tax haven status will make Britain great again!

The debate promised controversial views and lively argument from accomplished speakers. For many, tax havens conjure headlines of scandal, money laundering and corruption, but could this be a viable path for the UK to take following a hard Brexit? In the time between arranging the debate and the date it was held, the political landscape had changed significantly and the intervening general election reduced the mandate for a hard Brexit.

Could the UK become Singapore-on-Thames, luring European business with zero tariffs, radical deregulation and lower taxes? What would be the response from Brussels and the rest of Europe: would they be happy to see the UK develop in a different direction from the Continent? Would they respond in kind with deregulation and tax cuts? Or would they take a protectionist stance and apply sanctions punishing the UK for poaching investment from the EU?

In an adeptly chaired debate by our own Axel Threlfall, the pair for the motion were David Goldberg QC from Gray’s Inn Tax chambers and former MP Douglas Carswell. Against the motion were Dr Joanna Perkins, CEO of the Financial Markets Law Committee and Chris Huhne, journalist and former MP. Before the arguments were made, the votes cast were 46 % for the motion 38% against and the rest undecided.

David Goldberg QC, the pre- eminent tax silk, took the opportunity in opening the debate to define the terms of the debate. The motion posed two questions for consideration in his view:

  • What does a tax haven mean?
  • What makes a nation great?

He described a great nation as one that is bold, confident, vigorous and economically strong.

He went on to describe a tax system no longer compliant with the rule of law, a system unbalanced by penalties and criminal sanction. He referred with horror to the not yet implemented offence of failing to prevent the facilitation of tax evasion, an offence that he felt could see professionals criminalised for giving tax advice. For more see  Note for the board on failure to prevent facilitation of tax evasion. 

David Goldberg QC described our system of direct taxation as a nasty and mean code, the most hideous in Western democracies, that saps the vitals from our democracy leaving a dispirited, oppressed  and weak society.

The thrust of his argument, which was compelling and consummately delivered, was that Brexit provides an opportunity for change, a change to a simplified and pared down code of direct taxation.

Those against the motion did not disagree that of course we need a simplified code of taxation , something like the German Code for direct taxation but we didn’t need Brexit to bring about the change and as for a tax haven? Non merci.

By far the most poetic presentation proposing fifteen alliterative arguments was from Dr Joanna Perkins who persuasively proposed that problems of practicality, productivity, pay, prestige and probity proved the preposterousness of the proposition. Her clear message was that post Brexit free trade partners don’t want to deal with deregulated countries and that tax havens attract dirty money.

While we do need free movement of people to support our skills and labour gaps, we don’t need free movement of the proceeds of crime, guns or drugs.

Douglas Carswell in support of the motion veered off-topic concentrating on the blizzard of regulation created by EU standardisation. He appealed to a sense of post-Brexit optimism, encouraging the audience to think more Boris Johnson than Nigel Farage. He also rejected the notion that Britain needed to be better, in fact we have never had it so good! And he provided examples of why we don’t need a British Trump to make Britain great again.

From Chris Huhne, an economist, we had absolute agreement that we need a simpler tax code but we don’t need an exercise in self-harm (hard Brexit) to achieve that. He identified Brexit as a displacement activity. Instead of concentrating on improving skills and productivity (and, he suggested educating the ruling elite so that they understand you can’t have your cake and eat it) we were wasting time on Brexit.

He explained that the UK is not in fact highly taxed. OECD figures show that we are 25 in the list of levels of taxation in developed countries, and 21 in the list in respect of public spending. We cannot have Scandinavian style public services with US style taxes.

He suggested that withdrawal of cross border cooperation on tax and money laundering offences would reduce our ability to fight terrorism. It is by having a transparent system and co-operating with our neighbours that we can identify and combat the transfer of the proceeds of crime.

He emphasised that UK greatness depended on good global citizenship, not on trashing our neighbours.

In the end what became evident through questions proposed by a lively and engaged audience was that tax haven, whilst an emotive term, required definition. To take the definition used by Dr Joanna Perkins from the OECD, that a tax haven has low taxes, minimal regulation and banking secrecy would be a concept not welcomed by the panel as banking secrecy protects terrorists and money launderers.

At the final count, in spite of the mellifluous advocacy from David Goldberg the vote had swung and was 31 % agree,68% disagree and 5% undecided demonstrating the power of the arguments and providing an interesting and entertaining evening of legal, economic and political debate.

Morag Rea

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