If there’s one thing we’ve learned from Angela Rayner’s resignation, it’s that human beings make bad decisions. However clever we think we are, and however much we post-rationalise what we’ve done, the system can still be heavily stacked against us.
Rayner’s situation is a complicated one; she did choose to get legal advice when buying a property. However, she brushed away the recommendation of expert tax advice; which in her case would have been invaluable. In her resignation letter to the Prime Minister, she lamented, “I deeply regret my decision to not seek additional specialist tax advice given both my position as housing secretary and my complex family arrangements.”
Faced with the prospect of paying thousands for expert advice, most of us will take the easy route. We’ll hear what we want to hear. Someone who doesn’t want to do “that complicated tax thing” anyway will be only too happy to listen to their business-owner mate who says they don’t have to bother. This is a deliberately ground-level example, but it comes down to the same thing: making an objectively bad decision, based on our own desire to shortcut.
In this, it’s worth remembering that however deeply entrenched they are, the intuitions informing decision-making can be wrong. Loss aversion plays its part, too, along with our old friend Dunning-Kruger, which makes us overestimate our abilities without realising (sure, I can do this myself). It’s why, when our stocks go down, we fight the natural urge to sell them, choosing to wait until we at least get back to breakeven. We’re hard-wired to avoid losing our money.
In an increasingly complex world, with an increasingly complex tax system, we can all become victims of the machine. Indeed, if HMRC can catch out reasonably clever people, we could even argue that the tax system isn’t fit for purpose. As a government minister, Rayner’s outcome was particularly severe – she has ultimately lost her job as well as facing a financial penalty – but the average person would be penalised for the same thing.
What can we learn from this? The key lies in knowing what you’re risking before you risk it. There can be a spectrum of approaches to a certain situation, but bad decisions often go hand in hand with disproportionately bad outcomes. We only have to look at the news to see more examples. The hundreds of employees and employers who’ve said the wrong thing and lost their jobs. The New York lawyer who chose to use AI for his research (citing cases in court that didn’t even exist), and who then ended up facing a legal case of his own. The list goes on.
For this reason, I’d advise a hearty dose of caution when you’re dealing with anything legal or financial. If you’re selling your business, for instance, your requirements will span many different sectors – all of which it’s necessary to master in order to get a good outcome. That’s why so many people choose to ask Hive for help: we’re able to work across different areas of expertise, and take real care on behalf of our clients. We never want to see business owners struggling because they’ve handled it themselves – or used AI – and consequently made a minor error with major repercussions.
So do be careful, and question everything you think you know when you’re dealing with an issue. There’s every chance that the path of least resistance could be filled with pitfalls. And if you’re not sure, remember you don’t have to rely on intuition alone – you can always give us a call.
