What makes Bradley Wiggins and Jimmy Carr different?

Compare and contrast:

I had a small investment in Twofold, following guidance from my professional advisers. I had, however, claimed no tax relief of any amount in regard to this investment. Given the concerns raised, I have now instructed my advisers to withdraw me from the scheme with immediate effect.

That’s Bradley Wiggins in an interview over the weekend.

Let me be clear: Starbucks has always paid taxes in the UK despite recent suggestions to the contrary. In every country where we do business, Starbucks adheres to both the letter and spirit of the law regarding our business practices, and the UK is no exception.

That’s a statement from Starbucks’ CEO following the Reuters allegations.

Here’s another two:

I met with a financial advisor and he said to me ‘Do you want to pay less tax? It’s totally legal’. I said ‘Yes’.” I now realise I’ve made a terrible error of judgement. Although I’ve been advised the K2 Tax scheme is entirely legal, and has been fully disclosed to HMRC (Her Majesty’s Revenue and Customs). I’m no longer involved in it and will in future conduct my financial affairs much more responsibly. Apologies to everyone.

This is Jimmy Carr‘s volte face after he made the front page of the Times.

Google complies fully with the tax requirements in all the countries in which we operate. In the UK and elsewhere we make a very substantial contribution to local and national taxation. In addition, we provide employment for hundreds of people in the UK and many more across Europe.

That, finally, was Google’s response to the allegations against it back in 2009.

I think it’s interesting that individuals, when accused of tax avoidance, tend to respond by apologising and withdrawing from the schemes in question. I can’t think of a single company that has reacted in the same way – it seems essential to deny instead.

There are lots of reasons why this may be the case, but here are a couple. The individuals cited above tend to have been participating in structured, marketed tax avoidance schemes, which have one purpose that it’s quite hard to deny. With companies, in contrast, allegations are more likely to relate to tax planning within the company itself, which leaves room to dispute the facts or debate how aggressive a practice is. While part of the reason for companies’ denials is that it’s the natural public relations strategy, as I’ve noted before I also think that sometimes it reflects a genuine disagreement between the tax profession and campaigners (and actually the public at large) about what is acceptable.

Secondly, I guess it’s quite a lot harder for an individual with a public profile to handle the ‘tax avoider’ label, both personally and professionally: in Carr’s case being the continued butt of jokes could have threatened his career, while Wiggins’ whole sport has been tainted by the Lance Armstrong affair. Companies, by contrast, already invest large amounts in both positive and defensive public relations difficulties and, while staff morale can be affected by campaigns, the criticism is generally directed at an abstract entity, not a particular individual. It will be interesting to see whether the corporate representatives at next week’s Public Accounts Committee session take the criticism personally.

Advertisements