I've been getting quite pissed off recently at the way several politicians (current and past) - no names, no pack drill - have set up companies to receive all income other than parliamentary salaries. The usual form of explanation when questioned is that these politicians claim that they personally draw no monies from these companies and that the companies pay just expenses.

Please note that I believe this means that the company will pay for perfectly legitimate expenses that otherwise the MP would have to pay for out of taxed income if he was not operating through a limited company. Thus the company could pay for 5* hotels for him to stay in while on speaking assignments, for first class air fares to engagements abroad, for chauffeur driven cars to UK events and so on. All of these would be 'legitimate business expenses incurred in the course of providing the services of xxx MP' and thus allowable. The company could pay for his food while on speaking assignments too. If the company is VAT registered (and it almost certainly would be) much of the VAT could be reclaimed as well.

Nice work if you can get it and so many ex-Labour cabinet ministers seems to be able to get it.

Don't get me wrong I am not saying that people shouldn't try and minimse their tax liability, after all Lord Clyde, the judge in a case brought by the Revenue against a "tax avoider" in 1929 said:

'No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.  The Inland Revenue is not slow – and quite rightly – to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket. And the taxpayer is, in like manner, entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Revenue.'

However when the same MP criticises others for tax-avoidance, the cry of hypocrisy seems hard not to make.