On today's tax naughty step

He's not especially active on twitter, Geoffrey Cox QC, but with pleasing irony his latest tweet champions the new Theatre Tax Credit.

[embed]https://twitter.com/Geoffrey_Cox/status/509265148088172544[/embed]

Clicking on the link reveals that:

The new scheme provides support for theatres across the country, bringing productions to new audiences as well as promoting economic growth and widening opportunities for people to participate in the arts.

And what's not to like about that?

I ask because Gordon Brown, in his 1997 Budget speech, championed a very similar sort of scheme - only for films rather than theatre. He said this:

Britain is increasingly leading the world in those industries which most obviously depend on the skills and talents of their workers - communications, design, architecture, fashion, music and film. Our national endowment fund for science technology and the arts will offer talented young artists and scientists, the finance to turn British ideas into successful business ventures. But despite the British film industry's outstanding record of creative and critical success, too many British films that could be made in Britain are being made abroad, or not at all. The talents of British film makers can and should, wherever possible, be employed to the benefit of the British economy.

That announcement was the spur for the creation of Ingenious Media (founded in 1998); which put together Phoenix Film Partners LLP; in which one Geoffrey Cox QC, MP invested. According to today's Mirror.

But let me return to my question.

Measures - including tax measures - that help us reap the cultural and economic benefits of a vibrant arts sector, these sound like good things. But what of those who are encouraged by the availability of tax reliefs to provide the capital for the arts sector to flourish? Those who would not invest without the tax incentive the relief provides: good or bad?

The answer is, of course, that it all depends. The story of how the 1997 film tax reliefs spawned a huge range of arrangements - some absolutely what Gordon Brown had intended, some quite clearly not, and a large number in between - I have told elsewhere on this blog. But what cannot sensibly be argued - I almost said 'cannot be argued' but it is being argued and every day - is that the mere fact that someone has been induced by a tax relief to provide funding for the arts renders them amenable of criticism.

So, what of Geoffrey Cox QC MP?

What we learned from today's Mirror piece is this: that he has invested in Phoenix; that Phoenix is being enquired into by HMRC; and that Accelerated Payment Notices may be issued to Phoenix members.

Investment in the arts was what the reliefs sought to achieve and every single arrangement accessing the reliefs will have been the subject of HMRC enquiry. Accelerated Payment Notices, I have talked about here. Colloquially they signal that arrangements might be abusive but they certainly don't decide that they are.

Now. I don't know what arrangements Phoenix entered into. I don't know where on the spectrum between entirely pro-purposive and clearly abusive they fall. And nor, it would seem, does the Mirror. Tax avoidance is clearly a social ill and I have written widely in support of measures to tackle it. But by going too big too early we're in clear danger of rushing to ill-judgement.

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