Tax Evasion or Benefit Fraud: Which is the more sinful?

In these difficult times – which in the short term are likely to get more difficult – there is much huffing and puffing in what we could call the “Westminster village” about George Osborne’s recent budget.
Particular items being argued about are the cap on charitable giving and the reduction in the top rate of tax from 50% to 45%. Then there is the huffing and puffing about cracking down on Tax Avoidance.
We have such as the Dearly Beloved Mr Nicholas Clegg suggesting that a person who WITHIN THE LAW organises their financial affairs in such as way as to reduce their liability to tax is being somehow immoral.
Rather than rely on Mr Clegg as a moral authority the British Gazette prefers to defer to one who considerably outranks the Deputy Prime Minister: Jesus of Nazareth and would refer Mr Clegg to Matthew, Chapter 22 Verse 21:
“They say unto him, Caesar’s. Then saith he unto them, Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s.”
Jesus got himself into some hot water with the Pharisees following this statement for there was at that time a campaign to resist paying or to at least protest at the levying of taxes by the Roman Empire that at the time was in occupation of Israel. The Pharisees of course were very much backing this early example of what two millennia later would be referred to as “civil disobedience.”
Today’s article however is not a religious sermon so we will confine ourselves to rebut the Deputy Prime Ministerial statement by reminding him that those things that are Caesar’s are laid down in statute and therefore if the statutes are complied with and the tax liability is reduced that is perfectly OK.
Of course the issue of Tax Avoidance (LEGAL) brings us on to the issue of Tax Evasion (ILLEGAL). When we consider the issue of Tax Evasion we should also consider the question of Benefit Fraud.
Those on the left of British politics generally like to vent their collective spleens against those who seek to dodge paying tax. To these folk the question of whether such tax dodging is legal tax avoidance or illegal tax evasion is a mere detail. Their attitude is best summed up as: “Tax the rich until the pips squeak” – a remark generally attributed to Denis Healey who actually said that he would “…..squeeze property speculators until the pips squeak….”
The preoccupation of those on the right of British politics is that of the Benefit Fraudsters.
At this point, the British Gazette would ask its readers to read the following two fictional examples. One is of a family of tax evaders – the Grabs. The other is of a benefit fraudster – Mr Idle. Judge for yourselves and come to your own conclusions about which is worse – or are they equally as bad?
Mr Idle and the Grab family lived in George Osborne’s constituency of Tatton in Cheshire. The Grabs lived just over a mile and a quarter outside the very well to do village of Alderley Edge – the settlement of multi-millionaires in Cheshire where at the annual Bonfire Night the guy is not that of Guy Fawkes but of Jeremy Clarkson! The Grab’s house was a six bedroom brick built detached house with approximately 8500 sq ft of space with accommodation over three floors including a basement. It was situated on the Knutsford Road and was built in 1890 for Mr Albert Grab (1860 – 1948). The current owner was Mr Albert Grab, who inherited the property from his father Mr Albert Grab who in turn inherited the property from his father Mr Albert Grab who in turn inherited the property from the first Mr Albert Grab. Mr Albert Grab had three sons, Albert Grab, Bernard Grab and Charles Grab. The Grabs were multi-talented. They turned their hand to building work such as drives, patios, double glazing, conservatories and loft conversions. They installed new kitchens and new bathrooms. They also undertook general painting and decorating as well as general plumbing and electrical work.
The Grabs paid little tax. They preferred to be paid cash by their customers. In these circumstances VAT was not charged and receipts were not issued. The Grabs were hard workers. When completing their tax returns each Grab declared a taxable income of around £25,000. It was double this.
The Grabs did not like credit cards or debit cards. They paid for things in good old fashioned cash.
The Grabs attitude towards paying income tax, road fuel duty and VAT was mirrored in their attitude towards Inheritance Tax and its predecessors, Capital Transfer Tax and Estate Duty. The Grabs were unanimous in their opinion that such taxes upon death were “a bleeding liberty!” and they were not going to pay it!
Whilst the lawful AVOIDANCE of Estate Duty (ED), Capital Transfer Tax (CTT) and Inheritance Tax (IHT) can be a complex and expensive process using the services of accountants, lawyers and independent financial advisers, the unlawful EVASION of these taxes had always been very simple and straightforward!!!!!!!!!!
It is said that the road to hell is paved with good intentions. Well for the Grabs the road to HM Prison Strangeways was paved with greed.
The first owner of Bella Vista (the name of the Grab’s house) Mr Albert Grab died in 1948 at a time when Estate Duty was very high – even for a moderately wealthy man such as Mr Grab. Mr Albert Grab Senior and Mr Albert Grab Junior both realised that the inland revenue had based the collection of Estate Duty on the perceived need to obtain a Grant of Probate or Letters of Administration by the executors or administrators of a deceased’s estate. The solution to both Albert Grabs appeared to be extremely simple – arrange their affairs in such a way as to avoid the need to obtain a grant of probate or letters of administration! This involved some simple and straightforward procedures. By happenstance both men had the same name. Mr Albert Grab Senior simply wrote an undated but signed letter closing his bank accounts and signed a book of blank cheques. When Mr Albert Grabb Senior died it was simply a matter of Mr Albert Grab Junior typing a suitable date on the letter and posting it to the bank. Mr Albert Grab Junior banked with a different bank. The bank duly closed the account and sent a cashier’s cheque to Mr Grabb’s address.
As for the house itself, this was an unregistered property – with the Land Registry. It stayed unregistered. The owner’s name stayed the same so far as the local council was concerned for rates, community charge and council tax.
Mr Albert Grab Senior died intestate and Mr Albert Grab Junior did not apply for letters of administration. Mr Albert Grab Junior did however request that the undertaker hold the funeral service at Anfield Crematorium and scatter his ashes there as it was near the racecourse. This however was done not because Mr Albert Senior had any interest in the turf but was done to prevent the death of Mr Albert Grab Senior from coming to the attention of the local council!
The deception was repeated thirty years later in 1978 when Mr Albert Grab’s son, then Mr Albert Grab Senior, died. It was repeated again thirty years later in 2008 when Mr Albert Grab’s son, then Mr Albert Grab Senior, died.
The Grab family’s multi-generational fraud upon Her Majesty’s Inspectors of Taxes came to an end however of Friday 13th May 2011 when Mr Albert Grab Senior won a half share in that night’s £105,892,179 Euromillions rollover jackpot; £52,946,089 and 50 pence.
What brought the win to the attention of the nation’s press was that both winning tickets were purchased from the same store the same afternoon. The Co-Operative store on Altrincham Road outside Wilmslow opposite the Boddington & Dragon pub!
Mr Grab had purchased a single lucky dip ticket that afternoon as he topped up with petrol. Earlier that day his co-winner a Mr Elvis Idle had played his regular set of a dozen lines of numbers at the same store. He did this every Tuesday and Friday at a cost of £48 per week. He also played the Lotto twice a week with a dozen lines making his weekly contribution to the coffers of Camelot £72 week!
Mr Elvis Idle was unemployed. He had called in at the Co-op on his morning run. Mr Idle regularly ran six miles each day for he was a firm believer in regular exercise. His run took him the three miles from his housing association flat on the Colshaw Farm Estate, Wilmslow to the Co-op store opposite the Boddington & Dragon pub. Mr Idle would purchase a refreshing drink before returning home. Mr Idle was a creature of habit and was well known to the Co-op store employees.
Mr Idle was naturally delighted when he won. He told his friends and went public. Mr Grab decided to go public as well. Mr Idle was rumbled first as his regular jogging was at variance with his long term invalidity benefit for Mr Idle’s GP was under the mistaken impression that Mr Idle could hardly walk let alone jog 6 miles each day!
It was also inevitable that checks would be made on Mr Albert Grab who appeared to be remarkably well preserved for one who was but a mere 151 years young!
Due to the serious and persistent nature of the offences the Grabs (Mr Grab and his sons) and Mr Idle were tried at Stockport Crown Court. The trial judge in both cases was Mr Justice Bennett, who in his homily to both sets of reprobates lamented that these offences were of a most persistent and sustained nature which in the case of the Grab family had taken place over many generations. All those in the dock were convicted and Mr Justice Bennett sentenced them to terms of imprisonment of 24 months in the case of Idle and between 3 and 4 years in the case of the Grabs.
As a result all the men started off contemplating what they would do with their winnings from within the austere confines of HM Prison Strangeways!
As Mr Healey said: “The difference between tax avoidance and tax evasion is the thickness of a prison wall!”