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The UK imitates Red China’s ‘Social Credit’ with the ‘Honours’ system

Red China has, like the mature totalitarian society that it is, a system of ‘Social Credit‘, as Wikipedia puts it neatly:

The system is a form of mass surveillance which uses big data analysis technology.

The excellent YT channel, China Uncensored, has a video on this system.

Of course, the UK has nothing like this yet, everything with the State is a little bit feeble and almost useless, for now. But a little chink in the armour of our free society has appeared. The UK ‘Honours System’, we now know, depends on you not being in the ‘bad books’ of Her Majesty’s Revenue and Customs (which combines the Inland Revenue – personal and corporate taxation, with Customs and Excise). Note that it is not that you have to commit a criminal offence or even a civil transgression with your taxes, it is enough that you be under suspicion of avoiding paying tax lawfully.

HM Revenue and Customs’ reported policy of advising against giving honours to tax-avoiding celebrities has been backed by Sir Vince Cable.
Celebrities who use lawful but controversial schemes are being “blacklisted” to protect the reputation of the honours list, says the Times.
A Freedom of Information request showed a traffic light system was used to identify an individual’s suitability.
The Liberal Democrat leader said HMRC’s tough stance was perfectly reasonable.
“The principle is right, I think the public is fed up with abusive tax avoidance by individuals and companies,” Sir Vince told the BBC.
He said: “It seems perfectly reasonable to me that the Inland Revenue should be taking a tough line on tax avoidance.”
Sir Vince, a former business secretary, added that some celebrities may “wonder why they’ve been caught up in it” as they may be unaware they have been involved in “aggressive tax avoidance” because accountants handle their affairs.

And how does this work?

HMRC analyses nominees for honours to check the risk of them being exposed over their tax affairs.
The FOI response revealed that people are categorised as green if they are low risk, amber for medium risk and red for high risk.

My first objection to this is that ‘Honours’ don’t exist, except as bits of ribbon, metal and enamel etc. There is the ludicrous fantasy that the Sovereign can spot ‘worthy’ individuals and somehow bestow ‘honours’ on them. What happens is, of course, that some people write someone’s name on a list, hand over a bit of painted metal and a ribbon and that person becomes honoured. If there is a scientific test that can tell me how someone changes when they receive an ‘honour’, and that this is not a voluntaristic fantasy, I’d be happy to hear about it.

My second objection to this is that is the law of England (and indeed the UK) that no one is obliged to pay more tax than that properly due. Unless I am very much mistaken, this is the law of the land still (edit See Mary C’s helpful comment); the case of The Commissioners of Inland Revenue v The Duke of Westminster established, in 1935, under George V, the following from Lord Tomlin’s speech in the majority:

Apart, however, from the question of contract with which I have dealt, it is said that in revenue cases there is a doctrine that the Court may ignore the legal position and regard what is called ā€œthe substance of the matter,ā€ and that here the substance of the matter is that the annuitant was serving the Duke for something equal to his former salary or wages, and that therefore, while he is so serving, the annuity must be treated as salary or wages. This supposed doctrine (upon which the Commissioners apparently acted) seems to rest for its support upon a misunderstanding of language used in some earlier cases. The sooner this misunderstanding is dispelled, and the supposed doctrine given its quietus, the better it will be for all concerned, for the doctrine seems to involve substituting ā€œthe incertain and crooked cord of discretionā€ for ā€œthe golden and streight metwand of the law.ā€ 4 Inst 41 Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax. This so-called doctrine of ā€œthe substanceā€ seems to me to be nothing more than an attempt to make a man pay notwithstanding that he has so ordered his affairs that the amount of tax sought from him is not legally claimable.

So even if you pay all taxes properly due under the law, you (or your accountant) might have been too clever by half, and you might have kept some of your own money, how is that wrong? I’m sorry, but I thought that King John no longer reigned. After all, if people pay more tax than they are due as a condition of getting an honour, isn’t that paying for them? Wasn’t Maundy Gregory put in jail for that?

My third objection to this is that an individual’s tax affairs are private, here is the declaration that Revenue Officers and Inspectors are required to make on taking up their positions:

Part III
Inspectors, Collectors and other Officers

” I, A.B., do solemnly declare that I will not disclose any information received by me in the execution of the duties which may from time to time be assigned to me by the Board of Inland Revenue except for the purposes of my duties, or to the Board of Inland Revenue or in accordance with their instructions, or for the purposes of any prosecution for an offence relating to inland revenue, or in such other cases as may be required by law.”

I fail to see how giving a nudge or a wink about someone’s affairs can be reconciled with this requirement, especially when it’s about them having followed the law all and having been smarter than the politicians and tax bureaucrats.

It has long been the case that the rule of law has died in this country, and some of our politicians have even boasted about it.

Isn’t it time to stick a fork in the ludicrous Honours system, and stop pretending? Most are not even decided on by the Queen, but by bureaucrats, at your expense. Even better, stick a fork in our tax system and acknowledge that paying as little tax as possible the honourable thing to do.

16 comments to The UK imitates Red China’s ‘Social Credit’ with the ‘Honours’ system

  • I take it as an ‘honour’ to avoid paying a single penny more to the state than I have so. They can take their knighthoods for being a compliant statist & stick them where the sun doesn’t shine šŸ˜”

  • Mary Contrary

    Unless I am very much mistaken, this is the law of the land still;

    Would that it were so. I am sorry to have to tell you, it is no longer the law of the land. In 2016 the Finance Act enacted an unutterably pernicious doctrine called “the General Anti-avoidance rule”.

    The HMRC guidance on the GAAR doctrine cites the very same quote you posted above, and goes on to say

    B2.3 Where the operation of the GAAR is concerned, Parliament has decisively rejected
    this approach, and has imposed an overriding statutory limit on the extent to which
    taxpayers can go in trying to reduce their tax bill.

    This was George Osborne’s last “fuck you” to the country, IIRC.

  • Peter Melia

    Perhaps that ass Cable is confusing ā€œavoidanceā€, which is quite legal, and which every one of us who pays taxes does in trying to avoid paying too much, with ā€œevasionā€ which is quite illegal and is concerned with attempting to avoid the payment of legitimately incurred taxes. Cable should put a bight upon his rhetoric!

  • Penseiveat

    If this ‘guidance’ remains, can we please make it retrospective? That way, a goodly portion of both houses will, deservedly IMHO, see their peerages, knighthoods and other decorations taken away from them.

  • Sam Duncan

    ā€œAfter all, if people pay more tax than they are due as a condition of getting an honour, isnā€™t that paying for them?ā€

    Hard to see how it can be construed as anything else.

    ā€œThe principle is right, I think the public is fed up with abusive tax avoidance by individuals and companies,ā€

    ā€œAbusiveā€ tax avoidance? What the bloody hellfire is that supposed to mean? Abusive to whom? Sanctimonious old gits like Cable on six-figure tax-funded salaries and index-linked pensions? I’ll tell you what I’m ā€œfed up withā€, Vince: people like you and the BBC telling everyone that paying your overinflated wages is some kind of moral duty.

  • Julie near Chicago

    Perry, thus:

    “…stick them where the sun doesn’t don’t shine.”

    There, fixed it for ya. šŸ˜†

  • staghounds

    “Abusive” and “Controversial” = “Things I don’t like.”

    “Problematic” has the same definition.

  • Runcie Balspune

    They went about this the wrong way, perhaps if it was put as “you can legally avoid tax as much as you like, but if you pay a bit more than you are able to then we’ll give you a bit of bling”.

  • Zerren Yeoville

    Really? “Pay more tax than the law requires and we might consider you for an ‘honour’ like those that were dished out to such paragons of integrity as Peter Mandelson.”

    Alternatively take advantage of every legal route you can find to keep your own money in your own pockets, and you can still get a title courtesy of the Principality of Sealand which, from its barnacle-crusted Maunsell fort off the coast of Essex, will sort you out with their bargain offer of ‘Become a Lord, Lady, Baron or Baroness for Ā£29.99’

    Which, frankly, is every bit as ‘legitimate’ a title as anything offered in the name of the ‘Family Formerly Known As Saxe-Coburg-Gotha’ who are only in their privileged position because their ancestors were a bunch of illegal immigrants who forced their way in to the country uninvited and have been sponging off the locals ever since. (What was the Domesday Book if not a looters manual, after all?).

  • Johnny

    “Red China has, like the mature totalitarian society that it is, a system of ā€˜Social Creditā€˜

    But a little chink in the armour of our free society has appeared.”

    I have a feeling Google China AI may have just awarded you 10 Social Debits toward your Social Justice Score.

  • Paul Marks

    The establishment (including some “libertarians”) dismiss “China Uncensored” because some of the people who helped found it practiced a form of meditation that the dictatorship in China calls a cult and savagely persecutes – for some reason being the persecuted (not the persecutors) is a crime in the eyes of the establishment.

    Michael Wood (the “historian” who, in his BBC “History of England” series, pretended that the “Victorians” invented taxation for the poor in 1834 – actually the Poor Rate goes back to the Tudors and Victoria was not on the throne in 1834 anyway, the “Poor Law AMENDMENT Act” of that year did not invent the Poor Rate, its objective was to REDUCE it) did a series on China recently – it was mess of wild distortions, no doubt the British government will give him an gong (a knighthood perhaps?).

    Remember the Roman Empire fell because of man made “climate change” (Michael Wood walking past burned out motor cars in the first episode of his History of England – as if the Romans had the internal combustion engine), “Imperial expansion” (actually the Empire had been on the defensive for centuries before it fell), and “greedy bankers” (the Romans did not have fractional reserve banking – “greedy” or otherwise).

    If this sort of thing does not disgust you – then you will be fine with the British government copying the People’s Republic of China social control “honours system” with the internet companies working hand-in-hand with the Progressive State to control all behaviour.

    “It does not matter to me” – it will matter when you find (for example) that a credit card company will not give you a card, and a bank will not give you an account (and on and on) because of your political or social opinions.

    “We should not invite this person for an interview for this job in the engineering company – because he is opposed to Gay Marriage”.

    Do not laugh – it will come, and Mrs May would approve (just as the lady went to South Africa to show her Progressive solidarity with land confiscations, as long as they are “lawful” of course).

    The Progressive Republic of China system of recording all opinions and social interaction (or as much of it as possible) and rewarding or punishing people accordingly is about a lot more than “who gets a gong” – and the British government (which is P.C. to the core) would, privately, firmly approve of the Chinese system – as would most Western governments.

    The PRC is the model that most Western governments are working towards (it is what they are taught to like by the education system) – and Big Business approves, as (unlike under Mao) there are lots of private companies in China. As long as they work hand-in-hand with the state then all is well for them – I am sure that Google, Facebook, Microsoft and (on and on) really like the Chinese system.

    Why bother with laws when a “social credit” system can destroy the life of anyone who expresses opinions the elite do not approve of, or engages in conduct (such as “tax avoidance” – i.e. only paying as much tax as one is legally required to pay) the elite do not approve of. Someone may think “I am rich – such a system would not destroy me” but it can destroy you, and it will destroy you.

    Indeed, off hand, the only Western leader, whose name I can think of, who might oppose a system (a “public-private partnership” “using social media technology for Progressive objectives to reform society”) that punishes people for their opinions is PRESIDENT DONALD TRUMP.

    Perhaps that is the real reason the establishment hate President Trump.

  • Mr Ed

    Mary C you are quite right, the Duke of Westminster case has been effectively killed off, at least for the following taxes:
    (a) income tax, (b) corporation tax, including any amount chargeable as if it were corporation tax or treated as if it were corporation tax,
    (c) capital gains tax, (d) petroleum revenue tax, (e) inheritance tax, (f) stamp duty land tax, and (g) annual tax on enveloped dwellings, but I think that the genesis of this was in fact the Finance Act 2013, with revisions in 2016. Part 5 of the 2013 Act has the following:

    General anti-abuse rule

    206 General anti-abuse rule

    (1) This Part has effect for the purpose of counteracting tax advantages arising from tax arrangements that are abusive.
    (2) The rules of this Part are collectively to be known as ā€œthe general anti-abuse ruleā€.

    And the sinister Section 207, note the provisions of 207 (5), even if we approve something, we might then disapprove it and go after you. This is where any pretence of legality vanishes. Do people want to be ‘honoured ‘by this lot?

    207Meaning of ā€œtax arrangementsā€ and ā€œabusiveā€

    (1)Arrangements are ā€œtax arrangementsā€ if, having regard to all the circumstances, it would be reasonable to conclude that the obtaining of a tax advantage was the main purpose, or one of the main purposes, of the arrangements.
    (2)Tax arrangements are ā€œabusiveā€ if they are arrangements the entering into or carrying out of which cannot reasonably be regarded as a reasonable course of action in relation to the relevant tax provisions, having regard to all the circumstances includingā€”
    (a) whether the substantive results of the arrangements are consistent with any principles on which those provisions are based (whether express or implied) and the policy objectives of those provisions,
    (b) whether the means of achieving those results involves one or more contrived or abnormal steps, and
    (c) whether the arrangements are intended to exploit any shortcomings in those provisions.
    (3) Where the tax arrangements form part of any other arrangements regard must also be had to those other arrangements.
    (4) Each of the following is an example of something which might indicate that tax arrangements are abusiveā€”
    (a) the arrangements result in an amount of income, profits or gains for tax purposes that is significantly less than the amount for economic purposes,
    (b) the arrangements result in deductions or losses of an amount for tax purposes that is significantly greater than the amount for economic purposes, and
    (c) the arrangements result in a claim for the repayment or crediting of tax (including foreign tax) that has not been, and is unlikely to be, paid,but in each case only if it is reasonable to assume that such a result was not the anticipated result when the relevant tax provisions were enacted.
    (5)The fact that tax arrangements accord with established practice, and HMRC had, at the time the arrangements were entered into, indicated its acceptance of that practice, is an example of something which might indicate that the arrangements are not abusive.
    (6) The examples given in subsections (4) and (5) are not exhaustive.

  • terence patrick hewett

    Apropos of nothing: Siemen’s is starting to test an electric, driverless, rail-less tram – matching systems and projects in Singapore. The long process of the displacement of railed transport with electric/rail-less/driverless – battery/capacitor powered has begun.

  • Ozymandias

    Here in the US the courts have been careful to distinguish between tax avoidance, which is quite legal, and tax evasion, which isn’t. there’s nothing wrong with figuring out a way to legally avoid a tax while evading a legally owed tax will get you busted. If they’re serious about this all rich people will be on the list — they employ legions of lawyers and accountants to figure out how to avoid taxes.

  • The Pedant-General

    Staghounds,

    I think you’ve just uncovered a new irregular verb:

    I am arranging my tax affairs
    Your avoidance is controversial
    He is abusive.

    šŸ™‚

  • Lee Moore

    Mary, and Mr Ed’s revision, are right, up to a point.

    The reality is that the actual statutes are of limited relevance to tax, as the Lords / Supreme Court have essentially imposed the rule of judges in preference to the rule of law in tax, over a period of forty years or so. In a series of cases, starting with the infamous Ramsay case, the Lords allotted themselves the right to overrule unambiguous statute law if they felt there had been too much “avoidance.” At first they did it in a sheepish embarrassed fashion (or as sheepish as judges can manage, which is not very, since they are as arrogant a bunch of expletive deleteds as you could wish to find.)

    After a while, as lawyer commentators who had grown up with, er, actual law, pointed out the glaring logical inconsistencies in their rulings, and the crashing contradictions from one anti avoidance case to the next, they had the face to announce that they were “developing” the Ramsay principle and they had not yet determined its limits. In the end they simply adopted the mantra “purposive construction” which meant that they would announce ex cathedra some unwritten purpose that they perceived in the law, which allowed them to arrive at the decision they wanted to arrive at. Which was “You lose, Mr Tax Avoider.”

    But let us not forget the efforts of the legislators either. The appalling G Brown gleefully announced retrospective taxation, and then later congratulated himself for doing so. And when the creep Osborne got in, he followed suit with his own retrospective tax laws.

    The idea that tax and law are any longer related concepts in the UK is a ship that has long since sailed.