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Lewis Hamilton cheated the taxman. He cheated the United Kingdom Government out of 3.3 million pounds worth of VAT.

He did not do this illegally as he acted within the letter of the law but it is debatable as to whether he acted within the “spirit of the law”.

I do not blame Hamilton one bit for this because I am sure this was an action that was carried out unconsciously to him by his advisors who are tasked to provide him with the “best value for money”.

UK tax laws are complicated. It is used as both a stick and a carrot.

In my home region of Inverclyde in Scotland the use of enterprise zones has regenerated parts of the country which would otherwise be laid to waste and barren areas of joblessness with little prospect. Often this is received by offering tax breaks to companies to invest in those areas which has money returned back to shareholders.

I can see the complexity of this and how it works. I can see the benefits of both people seeking a job and for the Shareholders investing their money, therefore I think this is a win win situation.

It is hard though to see how Lewis could argue that point once he had found out what had actually happened.

Within the letter of the law Lewis can set up a company. He can be the Shareholders, he can be the Chairman and Chief Executive and he can apply for the tax breaks that exist within an enterprise zone or other tax envelopes to allow him the benefit.

In short this is what happened with his private jet scheme and he was allowed to bypass the VAT rules as a company. Somewhere along the line though the letter of the law becomes the spirit of the law and reasonable usage applies. 3.3 million pounds worth of tax relief to someone worth 131 million when my wife’s work does not have enough to give a children’s cancer nurse a laptop to write her notes upon seems to me to be a little bit harsh.

It’s not though what happens when your advisors perform an action for you which has been unknown to you.

It’s how you react when that happens and how you decide to reapportion that money in a proper way to make amends for what has happened.

I am sure Lewis Hamilton’s charity foundation has raised enormous amounts of money for disadvantaged people both in Africa and in the United Kingdom. It professes to say that it changed lives, to aid disability and to help children in Africa. This is not a story against Lewis Hamilton. This is a story about what is reasonable and what is in good taste and what is not. Lewis Hamilton flies a bright red private jet around the world for personal use yet accepts the advantage of tax relief as though it was a hire business.

Ethologically it is a disaster but for his convenience he is able to pay the price of a running such a machine.

It is just questionable as to whether it should be subsidised by the British taxpayer.

Blog post number: 1470