The death was announced recently in the United States of Leona Helmsley, pejoratively known as The Queen of Mean and famous for her dictum that “only little people pay taxes”.

A hatter’s daughter from Brooklyn, in 1972 she became the second wife of Harry Helmsley the “King Kong of New York real estate.” Helmsley divorced his previous wife of 38 years in order to marry the younger Leona. By the 1970s, Helmsley’s companies had control of six of New York’s top hotels, as well as the Empire State Building, the Lincoln Building and 1 Penn Plaza. At its peak, his empire had assets of more than $50 billion.

In 1989, the Helmsleys were charged on 235 counts of evading more than $5 million in income tax. As the details gradually became known, former employees lined up to vent their rage. Their stories revealed that Leona Helmsley was a woman who, convinced that employees were trying to cheat her, treated her staff with malicious vindictiveness. A former housekeeper testified at her trial that her employer had once told her: “We don’t pay taxes. Only little people pay taxes”.

Harry Helmsley was ruled unfit to stand trial because of ill-health, but after a nine week trial his wife was convicted on 235 counts of tax evasion and sentenced to four years in jail. To mark her first night in jail her husband ordered all the lights in the Empire State Building to be switched off.

After 18 months in prison she was released on parole and ordered to complete 750 hours of community service. This involved wrapping presents for the poor and for hospital patients, but she complained that people gawked at her and she urged the authorities to allow her to wrap the presents at home. Naively, they agreed, but it soon became apparent that she had ordered her domestic servants to do the work. She was then sentenced to an additional 150 hours of community service, to be performed in public.

Few of us enjoy paying income tax, but we recognise that it is a necessary and an inevitable part of civilisation. Of course, the vast majority of individual taxpayers are subject to the deduction of PAYE tax at source, and have few opportunities to evade tax. And for those that might be in a position to practise tax evasion, no statistics, other than convictions in court, are available.

Tax evasion seems to know no social barriers. The late Mr Justice Bristowe, it was said, once refused to convict a taxpayer that had been charged in the Transvaal Supreme Court with various tax offences. It transpired that the judge himself had not filled in a tax return for some years. These were the days before PAYE tax had been invented and taxpayers had to account for the tax payable by means of quarterly tax returns. When he later confessed to the Commissioner for Inland Revenue, the judge said, in the words of Jerome Kern’s immortal song, “They wouldn’t believe me.”

Judge Bristowe so hated paying tax that when he retired on a pension equal to his judge’s salary, he emigrated to the Channel Islands where the climate was sunny and income tax was only 20%. Professor Ellison Kahn, Professor Emeritus of Law at Wits University, has doubts about the accuracy of this story but, as he says: “se non è vero, è molto ben trovato – if it is not true, it is very well invented”.

Perhaps the greatest achievement of tax legislation throughout the world is in the ingenuity of some of the arguments that the law provokes. In Norman v Golder, a case decided by the Court of Appeal in London, medical expenses had been incurred by a professional short-hand writer in the Royal Courts of Justice. His illness was caused, he alleged, by unhealthy working conditions, and he claimed to be entitled to deduct the expenses on the grounds of wear and tear
of plant.

Lord Greene, Master of the Rolls and the senior Civil Law Judge in England, said: “It is quite impossible to say that the taxpayer’s own body is a thing which is subject to wear and tear, and that the taxpayer is entitled to deduct medical expenses because they relate to wear and tear. It is wear and tear of plant and machinery that is envisaged in the legislation. Your own body is not plant, your horse conceivably may be”. The judge admitted that under Employers’ Liability Acts the body has been held to be plant, but his Lordship said that he had never heard anybody, other than the appellant, suggest that a taxpayer’s own body could be regarded as plant for income tax purposes. It was a controversial decision.

Lord Greene is famous for another statement, which traditionally has warmed the hearts of tax collectors all over the world. In the well known tax avoidance case of Lord Howard de Walden v Inland Revenue Commissioners, Lord Greene said: “For years a battle of manoeuvre has been waged between the legislature and those who are minded to throw the burden of taxation off their own shoulders onto those of their fellow subjects. It would not shock us in the least to find that the legislature has determined to put an end to the struggle by imposing the severest of penalties. It scarcely lies in the mouth of the taxpayer, who plays with fire, to complain of burnt fingers”. Needless to say, Lord Howard de Walden, an enormously rich aristocrat and landowner with a title dating back to the 17th century, lost the case.

But, of course, this was a judgment handed down during the second world war when many judges, probably quite rightly, at the time, regarded tax avoidance as unpatriotic. The Howard de Walden title is one of the few that is allowed to pass down the distaff side of the family, and the present 10th Baroness Howard de Walden features as number 31 in the 2007 Sunday Times Rich List, with assets valued at an estimated 1 600 million. The Howard de Walden Estates own more than 100 acres of prime land in central London, and the behaviour of their ancestors, who played with fire, clearly did little to diminish their wealth.

Penelope Webb, who for some years worked in industry, is a former tax partner of a large international accounting firm.