The Guardian\’s still wrong on Ashcroft\’s tax

However it emerged this year that Ashcroft had not become a permanent resident when he took up his peerage. Instead he had persuaded officials to allow him to acquire a different status – as a long-term resident – meaning that the peer, who has a large business empire in the Caribbean and US, had not been paying tax on his income from abroad and the Treasury had not been receiving large cheques from him. Last week, Ashcroft told the Telegraph: \”The negotiations [in 2000] with the government for me to join the House of Lords did not include any commitment on my part to be taxed on my worldwide income.\”

OK, this is a semantic thing but there\’s a difference between \”income from abroad\” and \”worldwide income\”.

Money which came to the UK from abroad (ie, income from abroad) paid full UK tax. Money which was earned abroad and did not come to the UK (ie, worldwide income) did not pay UK tax.

And to be honest with you that\’s a (fine) distinction that I\’m just fine with.

After all, the claim is that you should pay tax where the economic substance of an activity is….abroad is abroad….where you enjoy the protection of the government in either earning or enjoying that money made….abroad is indeed abroad….and finally, that taxing the rich reduces inequality….and money that stays abroad doesn\’t contribute to UK inequality, does it?

3 thoughts on “The Guardian\’s still wrong on Ashcroft\’s tax”

  1. It’s wrong on another – fundamental – level as well.

    The complaint outlined in your quote is all about tax on income, yet the move highlighted by the Panorama programme refers to IHT – Inheritance Tax – saved by the transfer of shares a day before new legislation came into force.

    Apart from the obvious difference between income tax and IHT, there’s the rather moot point that Ashcroft has not yet expired and therefore no tax can yet be due.

    Between the share transfer, the new legislation and Ashcroft’s ultimate death, the question of IHT is redundant since many other events may occur between now and then which may render it unnecessary.

  2. What #1 writes is not strictly correct. IHT can be chargeable on transfers of wealth during the lifetime of the disponor. Transfers into most forms of trust are, since 2006, now so chargeable, subject only to the availability of exemptions etc. The change in law was a NuLab ruse which, like so many others, was made without prior consultation, did not stand up to scrutiny by the experts and was near universally slated.

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