A judge has ruled in favour of HMRC in a case against Take That crooner Gary Barlow and others using the Icebreaker scheme, declaring their use of the scheme against the rules.
The defendants have until 2 July to decide whether to appeal the ruling. Nonetheless, some politicians have already called on Mr Barlow to renounce his OBE to "show a bit of contrition" for the fact that the court agreed with HMRC's interpretation of the tax law.
The Prime Minister also appeared on television to say that the pop star need not hand back his OBE. Good. A legitimate dispute with HMRC about tax law ought not be grounds for removal of an honour, even if the courts find in favour of the tax collectors. Assuming that they do not appeal, it is only now known with certainty what the relevant tax liability was. Even officially honoured pop stars have no obligation to pay any more tax than the law requires.
Rather than complaining about people engaging in complicated schemes to lower their tax burdens, law-makers should instead concentrate their thoughts on the somewhat harder job of simplifying our ridiculously opaque, complicated and burdensome tax law.
In June 2012, commenting on the same case when it was first revealed, I said:
Anyone who thinks it’s time that Jimmy Carr, Gary Barlow and City bankers – or anyone else – should pay their fair share must accept that serious tax reform is the only realistic way to fix our broken tax code. Lower rates, simpler rules, no exceptions. In other words, the 2020 Tax Commission’s Single Income Tax.
That's just as true now as it was then.