Tax losses – are they justified?

The implication of Lord Waldegrave and Andrew Mitchell in a tax scheme based on film finance has attracted much publicity. I am anxious not, like the press, to say tax avoidance as I know people who have participated in it and the tax demands are being contested.

Recently I have been involved as an  Executor of an estate of a hard working professional man who played it by the book and did not seek any ways of lightening the tax burden. This meant that his biggest beneficiary was the taxman or – to put it another way – he worked hard, paid his taxes and now after his death he, via his beneficiaries, pays another load of taxes. His Executors had no other option than to sell the main asset, a property, to pay the tax which becomes almost immediately payable and far earlier than the asset was realisable.

I know of no other country where the taxes in deaths are so onerous.

It really is quite iniquitous. Lord Waldegrave argues that, as far as he was concerned, he was investing in a film in a bona fide scheme. Whilst I acknowledge he could hardly say he wanted a tax break, these are not unknown to encourage the film industry and, when I looked at the scheme, I was satisfied by the assurances that its executives gave as to its tax eligibility. Over my business career I have often used tax losses and were I one of these investors I would would contest these demands robustly.