The man who crafted the modern Employee Benefit Trust (EBT), the scheme through which Rangers gave loans to some of its employees, has called on HM Revenue and Customs to “apologise to the people of Scotland.
EBTs involve paying money into off-shore trusts. In the case of Rangers, almost £50m was given to employees in the form of long-term loans.
Paul Baxendale-Walker, a tax expert who advised the Murray Group, insisted in an interview with STV’s Scotland Tonight programme that EBTs were legal and said that it was HMRC which should be answering questions.
Mr Baxendale-Walker said: "We know that HMRC were wrong in their legal assessment of the tax effects of these trusts. We know that because they've lost each of the three big cases that they've brought. Why HMRC keeps banging its head against that particular brick wall isn't a question I can answer.
"In a case like this where a very important Scottish institution, with its reputation, all of its economic significance, and, beyond that, all of its national significance for Scotland is being challenged on the basis where, when HMRC get to court they throw the towel in, there's needs to be an accounting for that.
“That should just be whoever is the most senior responsible figure at the Inland Revenue first of all apologising to the people of Scotland and, secondly, taking the appropriate executive action, which is leaving his resignation letter on the desk.”
Mr Baxendale-Walker added that EBTs were not a new idea and can be traced back to "the heyday of Victorian industrialism" and the cooperative and trade union movement.
He continued: "An EBT is simply an arragement where a corporate employer can put monies into a reserve fund - a bit like a pension scheme - with the idea that the monies come out in a slightly less structured way than a pension. You put money in a pension scheme, you're going to get it out when you're 60 or 65. Put it in an Employee Benefit Trust, it can come out before your retirement, it can come out after your retirement, it can come out after your death to members of your family."
Asked about the morality of tax avoidance, Mr Baxendale-Walker argued that it was government’s misspending of taxpayers’ money that was the true moral infraction.
He told Scotland Tonight: "My own personal view is that tax is a cancer on society. Part of the reason we're in such a mess is because the government raided Great Britain Plc of a lot of tax revenue and misspent it. Now, if they hadn't had access to that tax revenue in the first place we wouldn't be in the throes of a double-dip recession.
“Our government is too big, particularly compared to those in successful developing countries. They have seen our mistakes and they've said 'We are not going to have big government'. So the moral case, if there is one, supports cutting off that supply of fiscal heroin to an addict. All we're doing is enabling the government to carry on misspending our money.”
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