Ritchie’s just so bloody ignorant, isn’t he?

The country’s leading tax expert and tax campaigner seems to know alarmingly little about the tax system.

Now, we know that Dame Angelina got her title for services to William Hague but this is taking matters a little far. Apparently the opinion of someone who might want ‘a foothold for work’ here but is not actually resident, and who is unlikely ever to be so, let alone become domiciled, apparently matters enough to be reported as a matter of significant UK political concern.

Well, if that’s the case then let me contextualise this, and offer a response. First, Angeline, there are a lot of people already here and who have rather more than a foothold in UK work who would dearly love a house in this country; any house; and can’t get one. That’s in no small part because people like you have dragged London house prices way out of any scale that they will ever be able to afford. And all you want is to use them as a ‘foothold’, and not live in them.

Second, we only really want people to come here if they are willing to pay our taxes chosen by our democratically elected government. If you don’t like that, please don’t bother to create a foothold or anything else as we think paying tax is the obligation that arises from any such presence.

So, err, what’s the implication of Angelina Jolie doing some work in the UK? Whether she becomes resident or domiciled or not?

Well, actually, the implication of an actor doing some work in the UK (and this does matter, we’ve a fairly large studio over at Pinewood and so on) is that they pay UK income tax on the earnings in this country. There’s even a specialist HMRC unit that deals with such matters:

General

Q. Why pay tax twice – at home and in the UK?

A. The UK is entitled to tax on any income arising there; money due is collected from non-resident entertainers through a withholding tax. There is a misconception about withholding tax that it is in addition to tax paid in the person’s home country. This is not so. The UK has Double Taxation Agreements with over 100 countries to prevent double taxation.

When an entertainer or sportsperson pays UK tax on income they will be given a certificate (form FEU2) confirming the amount of tax paid. This certificate can be used to support any claim to foreign tax credit relief in their home country. In general, assuming the entertainer or sportsperson has sufficient tax liability in their country of residence, it will be possible to claim credit for the whole of the UK tax deducted.

The man’s simply ignorant of the subjects he decides to opine upon, isn’t he?

If Angelina Jolie works here she will pay tax here, as our democratically elected government has decided she will.

Is there no beginning to this man’s knowledge?

53 thoughts on “Ritchie’s just so bloody ignorant, isn’t he?”

  1. >who would dearly love a house in this country; any house; and can’t get one. That’s in no small part because people like you have dragged London house prices way out of any scale that they will ever be able to afford.

    He starts off talking about living in a house anywhere in the country, and ends up complaining about the situation in London. (Sure high house prices in London do have some effect on house prices outside, but the further away you go the less the effect.)

  2. Angelina’s complaint was about Labour’s proposed Mansion Tax. It would fall outside the scope of double-taxation treaties, just as Council Tax does.

  3. “we think paying tax is the obligation that arises from any such presence.”

    Ritchie didn’t say working here is what should give rise to taxes, but simply being here. At all. For a day.

  4. He also completely misrepresented what she said.

    Second, we only really want people to come here if they are willing to pay our taxes chosen by our democratically elected government.

    Yes, and what Angelina quite specifically said was that she’s probably not going to buy a house here because of the threat of a tax likely to be introduced by the next democratically elected government — which of course implies that she would pay any tax due. If she were going to somehow dodge the tax, it wouldn’t affect her decision, would it? And this he uses to imply that she’s a tax dodger. Fucker.

  5. It almost read as though a decision by Jolie *not* to buy a house in the UK because of the tax would constitute tax avoidance – the only compliant behavior would be to buy the house and pay the tax.

    I’m sure he didn’t mean that, of course.

  6. “Ritchie didn’t say working here is what should give rise to taxes, but simply being here. At all. For a day.”

    Was this not an issue for a lot of sports stars who set foot in the country? Something about their global sponsorship deals then becoming liable to UK tax? Perhaps a tax expert could explain.

  7. “who would dearly love a house in this country; any house; and can’t get one. That’s in no small part because people like you have dragged London house prices way out of any scale that they will ever be able to afford”

    From a bloke from London who moves to Norfolk and buys the most expensive house in his postcode, Worth twice as much as three-quarters of his neighbours.

  8. Grauniad reports that film star who has done some charity work might not move here because a future labour government would increase taxes on her gaff.

    Ritchie and his regular commenters are probably wanking themselves into a rage as much at the Graun as with Jolie, given that this story appears to have gone a little off message.

    Ironic really that somebody who campaigns on behalf of Amnesty should be rounded upon by a bunch of lefties for exercising her freedom of speech

  9. > Was this not an issue for a lot of sports stars who set foot in the country?

    That’s actually a rather interesting issue. If you’re being paid to wear a logo in public, it would actually make sense for your tax on that pay to be divided between jurisdictions as you travel around. An absolute bloody nightmare to calculate or enforce, though.

  10. GlenDorran – the issue is that HMRC want to tax sports stars on the proportion of their earnings which is attributable to stuff they do in the UK, rather than the amount which is directly related to UK events.

    There is an exception to the normal rules about when income is taxable in the UK, which says that your income from taking part in a UK competition is taxable here even if you’re not UK-resident.

    Except that it doesn’t say income from the competition, it says “payment or transfer connected with the relevant activity”, and this is a vexed question.

    The problem is that sports people might have some sponsorship income, plus match fees and winnings; and they might say that they’ll get the sponsorship whether or not they play in the UK, so it’s not really connected to the visit to the UK.

    However, HMRC’s view is that if you play in say 10 competitions, 1 of which is in the UK, then 1/10 of your total sponsorship income must be due to the match you played in the UK. Your sponsorship is a global payment for global branding, the UK is part of that (as evinced by the fact that you played here), so part of that payment is UK-related. You don’t need a close connection between the income and the UK activity, you just need some sort of tenuous link.

    Why 1/10 of your regular contract income might be UK-related one year, none the next, and 2/11 the next, based on an accident of geography, is not a question that HMRC consider to be terribly relevant.

    This is why we have the specific exemptions for the Olympics and World Cup and so on. Sports stars who wouldn’t normally come to the UK, but who spend a month here for the Olympics, run the risk of the UK deciding that 1/12 of their overseas sponsorship income must be UK-related and taxing it here. But they’re not coming to compete in the UK, they’re going to compete at the Olympics, which just happens to be in the UK this time; so it seems fair (to the IOC) not to let the UK (or any host country) tax the income.

  11. If we built the homes we need in this country then rich people buying homes here would not cause any problems for the rest of us.

  12. His PI insurers must hope he is not advising people on this.

    Bit of a problem, tax, they do change it a lot

  13. What David said
    Plus – we should have enough homes if Tony Blair hadn’t decided that an extra million-plus young people (2 million instead of a little under 1 million) need to live away from home eight months of the year, but still have bedrooms at home to use in the vacations to study for frequently irrelevant degrees instead taking apprenticeships at a factory near home nor training on the job so hundreds of thousands more houses are inhabited part-time by students are empty part-time and we then need hundred of thousands more houses to accommodate Polish plumbers and electricians because we don’t have enough plumbers and electricians because the kids off to uni to take a degree in sociology or media studies instead of an apprenticeship.
    If I was nasty I might suggest that there are a lot of houses under-occupied by divorced women like the first Mrs Murphy and that family break-up is one of the causes of housing shortage to which he (but not I) has contributed.

  14. Pellinor

    “Why 1/10 of your regular contract income might be UK-related one year, none the next, and 2/11 the next, based on an accident of geography…”

    Well no, not really. If you are a tennis player and the 1 in 10 is, oh let’s say, Wimbledon, that’s hardly an accident of geography is it. Likewise a golfer participating in the Open (for Americans, that’s the Open; not the British Open ) isn’t exactly experiencing an accident of geography. And that athlete’s endorsement income stops when he/she stops competing and stops turning up at the leading events that give her/her and his/her sponsor the exposure that makes the sponsorship commercially viable. So it seems to me it is being earned in the UK and so is “connected” or “derived directly or indirectly” as I believe we used to say.

    Oh, and Angelina has indeed filmed in the UK, as has Brad. So they have paid tax here, so Ritchie is ignorant of tax. And any man who publicly suggests a woman’s title derives from sexual favours given to William Hague is…ignorant doesn’t seem to cover it really does it.

  15. I imagine the following is only a repeating what has been said before on the subject of this imbecile but…

    Why let facts, knowledge or understanding get in the way of a fulsome chin-wobbly moralising tirade delivered from the saddle of your high horse, eh Ritchie?

    Cunt.

  16. It was, I believe, Andre Agassi who lost a high profile tax case on the subject of taxation of world-wide sponsorship income. The UK wanting a slice of total income from a sportsperson based on their sporting appearences in the UK. Yay! The UK taxman won!

    Oh, the result is that high profile sports people have stopped coming to the UK unless they really really have to or they get a tax exemption for the event.

    So the UK public have less chance to see top sports stars but squaking tax pundits are happy.

  17. Isn’t the question, “Who’d she sleep with to get that gig?” usually considered exceedingly sexist, particularly (though not exclusively; I think it is too) by Our Murph’s fellow travellers?

  18. Ironman – the accident of geography would be doing Wimbledon one year, so 10% of your income becomes UK-related; and not the next (maybe you’re injured?), so none of it is. If your sponsorship contract is a 3-year one for participating in grand slam tournaments globally, then that sort of erratic UK liability seems odd.

    The oddness stands out better if you think of someone who has only ever played in the US and gets a sponsorship contract on the strength of it, who then goes to Wimbledon as an unknown – and finds that a great chunk of the US dollars paid by a US sponsor because of their US endorsements is now taxable in the UK. I can see HMRC’s point, but I can also see why people think it a bit unfair.

  19. I’m actually coming to the conclusion that Richard Murphy is a good thing- the pettiness, humourlessness, spite and envy that pour out of every post reveal the true evil beneath the veneer. I live in hope that one day he, and his even more monstrous followers will be forcibly dragged on a plane bound for either Raqqa or Pyongyang and never allowed back…..

  20. @Cal – Lefties are firm believers in the trickle down theory of house prices, but less keen on the trickle down theory of wealth.

  21. She would also be paying £1.75m stamp duty on that £25m apartment.
    (Yes I know the cost might be borne by or at least shared by the seller…)

  22. Pellinor

    “I can see HMRC’s point, but I can also see why people think it a bit unfair.”

    Yes, that’s very well put my friend.

    Andrew C

    “Oh, the result is that high profile sports people have stopped coming to the UK unless they really really have to or they get a tax exemption for the event”

    No, they haven’t stopped coming, they really haven’t. The top tennis players come to Wimbledon, wouldn’t dream of skipping it. The top golfers come to the Open, every Formula 1 driver and MotoGP rider turns up for the Grand Prix. So the Olympics can strongarm our government – that’s a question about the government. So football gets a cosy deal – well it’s got cosy deals out of bigger players than us, hasn’t it.

  23. “It almost read as though a decision by Jolie *not* to buy a house in the UK because of the tax would constitute tax avoidance – the only compliant behavior would be to buy the house and pay the tax.”

    Actually, I think that’s exactly what Murphy is arguing.

  24. Sometimes you have to wonder why Robert Mugabe hasn’t reached out to Murphy for economic and tax advice. It’d be a perfect fit in more ways than one.

  25. Where I come from its the current house owner who gets to decide what price to sell it at, not the buyers. Perhaps Ritchie should be ranting at the London SELLERS who are wanting so much money that x number of people cannot afford to buy.
    Angelina will not be buying so she’s nothing to do with the problem of house prices, maybe a problem for a seller now there’s one less buyer…?
    Hey, hasn’t Ritchie sold a house and therefore contributed to the problem of people being unable to buy? Or did he sell his house cheaply enough so that anyone could buy it?

  26. @ironman

    I did say sportsman have stopped coming unless they really have to. Sure, US golfers turn up for the Open and tennis players for Wimbledon but that’s about it. You won’t find them doing a ‘tour’ of UK events. Athletics and golf in particular sees top performers just not bothering with the UK unless the money is huge – i.e. the top events only.

    It’s the maths. While it might be worth while turning up for a lower prize money event if that’s all that’s at stake but if it’s also going to cost you tax on 10% of your world-wide endorsement income you aren’t coming.

  27. I have a vague recollection of the BBC athletics commentators bleating that the sponsorship taxation thing was bad because all the top drug cheats… er… athletes wouldn’t turn up to run arround a track in Birmingham or Glasgow so it was bad for British Athletic Fans.

    The irony of the Beeb arguing against taxes is the thing that stuck in my mind so I may have the details wrong.

  28. “The country’s leading tax expert and tax campaigner seems to know alarmingly little about the tax system.”

    Isn’t that a requirement for any activist? That they should be ignorant of the topic they are campaigning about, from tax to fracking, GM foods and back?

  29. Richie’s post was a rant at a multi-millionaire sleb voicing an opinion on UK tax policy. She’s entitled to voice her opinion, and he’s entitled to take issue with it. Whilst not being exactly supportive of the mansion tax, on the grounds that it’s a bad implementation of an almost-good idea, I’m on Richie’s side when it comes to having no sympathy for the parade of slebs who have been rolled out to say how terrible it would be to have to pay tax on their land.

    His post was nothing to do with income tax. There is no misunderstanding there. He’s just saying, in his own special way, that if she doesn’t like the idea of a mansion tax then she’s free to not live here and pay it.

  30. TTG what was she supposed to say? I have no time for the daft woman generally, but here it seems she was asked a question and gave a fairly honest answer. I couldn’t give a shit what she thinks on any subject at all, but she seems better than Murphy or any one of 1,001 standard leftist dickheads I could name on that basis alone.

  31. Andrew C

    But what events and which top class sport have we lost?

    The recent ATP Tour finale for instance, staged in London. Sure the yax isn’t a bug draw for them , it the prize money and prestige is.

    BTW The tax is set of against their tax back home. So for this particular tax they don’t lose out unless they live in, say, Monaco. Most don’t.

  32. What’s the problem? Person who aims to to own property in highly valuable real estate area for a couple of weeks a year is put off by property tax. Exactly what we want. Just like people who want to drive in Central London in peak hours are put off by congestion charge. Free market at its best.

  33. Interesting Luke, I don’t share your bigotry. Talented immigrants being put off coming here isn’t exactly what I want.
    As regards Angelina, I personally would rather she wasn’t put off coming here. I would rather she, being a talented and successful producer joined other talented people here, grew her business and paid loads on tax (at a competitively low rate) on that income.

  34. @ Interested

    I’d like to think that if I had her money, then I’d be honest about the fact that a modest property tax would make fuck all difference to my decision on whether to buy a fancy house in London. Because it wouldn’t. And if she hasn’t even bought that house yet, she won’t even pay it because it’ll be annuitised and knocked off the purchase price. Mansion tax will be a one off hit on all those who own the relevant properties today – the majority of which will be people who’ve made way more than the value of it in untaxed gains anyway. The only people who get a raw deal are people who’ve only recently bought their £2m houses.

    But, like I said, she’s got a right to an opinion. I don’t know why she gave it – maybe she volunteered it, maybe she was asked a direct question. Either way, I disagree with what she said – not the fact that she said it.

    Also, like I said, Murphy has got a right to say that in HIS opinion, most British people won’t be bothered by rich people whinging about paying some tax on their lovely houses. His graceless manner of expressing his view grates, as it usually does. But he’s probably right.

  35. The Thought Gang

    Well he says they won’t be interested, but is interested enough himself to take the time to.scream ‘slag’ for daring to disagree with him.

  36. At the risk of repeating myself:

    The MurpMonster is alleging that Angelina Joile’s honoray Damehood was given ‘for services to William Hague’

    I think we can recognise simple envy here and cut him some slack. All he gets is an occasional muff-diving session on Margaret Hodge.

  37. Andrew,

    > Oh, the result is that high profile sports people have stopped coming to the UK unless they really really have to or they get a tax exemption for the event.

    Oh, diddums. Look, Murphy is wrong to accuse Jolie of doing this, because she’s clearly not, but he is at least right that we want people who enter the country to obey the law while they’re here. I see no reason why kicking balls accurately or running very fast or whatever should create an exemption to that principle.

    > So the UK public have less chance to see top sports stars but squaking tax pundits are happy.

    Are you implying that we should not tax anyone that a lot of the public might like to see? Taylor Swift, for instance?

    Pellinor,

    > Why 1/10 of your regular contract income might be UK-related one year, none the next, and 2/11 the next, based on an accident of geography, is not a question that HMRC consider to be terribly relevant.

    It isn’t relevant. There is no accident of geography. Yes, they qualify for some events some years and not others, but I’m pretty sure that that fact about the very nature of sport has occurred to the people who draw up the contracts and is taken into account in the price.

    > The oddness stands out better if you think of someone who has only ever played in the US and gets a sponsorship contract on the strength of it, who then goes to Wimbledon as an unknown – and finds that a great chunk of the US dollars paid by a US sponsor because of their US endorsements is now taxable in the UK.

    I seriously doubt this ever happens. The guys at that level have agents. If those agents don’t make a call to the sponsor to say, “My client’s playing in the UK this year, so you’ll be wanting to give them more money, then, won’t you?” they’re not doing their job. More likely, that call isn’t necessary because there’s a clause in the existing contract to cover it.

    In the highly unlikely event that they really are being paid only for their US appearances, well, no-one’s stopping them wearing clothes with no logos on them while they’re in the UK.

    As an aside, there used to be a band (I forget their name) who put gaffer tape over the logos on all their guitar amps until they got an endorsement deal. Said if the advertising was worth so much money they wouldn’t do it for free.

    TTG,

    > There is no misunderstanding there. He’s just saying, in his own special way, that if she doesn’t like the idea of a mansion tax then she’s free to not live here and pay it.

    But what Jolie said was that she doesn’t like the idea of a mansion tax so she probably won’t live here and pay it. If Murphy’s in complete agreement with her, why the lambastation?

    > And if she hasn’t even bought that house yet, she won’t even pay it because it’ll be annuitised and knocked off the purchase price.

    You have noticed that Miliband is not PM right now, yes? That we don’t have a mansion tax? Jolie was talking about not buying now due to the risk.

    worzel,

    > Ironic really that somebody who campaigns on behalf of Amnesty should be rounded upon by a bunch of lefties for exercising her freedom of speech

    It’s not remotely surprising when you remember that Jolie is a proud supporter of Israel.

  38. Tennis/golf endorsement contracts usually (not always; there are varients) have the follwing features

    : a base amount, dependant upon playing a minimum number of events in a calendar year. If they drop below that number the base is reduced pro rate
    : A requirement to complete a small number of modelling/public appearance days
    : Bonuses for reaching certian rankings in the year. These rankings are based upon ‘points’ earned at tournaments. If those tournaments are in the UK, then they are earned at UK tournaments
    : bonuses for winning or doing very well at specific named tournaments. The UK is lucky in having some of the most prestigious global tournaments in a number of sports.

    However, it is worth noting that if a non-entertainer comes to the UK for a short time to earn loads of money e.g. a movie director or producer, he/she will not be resident, will not be regarded as having a UK PE and will not be charged in the UK. In that respect Taylor Swift is losing out. She is obviously also losing out because she has never met me!!!!!!

  39. If they’re not resident and don’t stay here long enough for there to be a permanent establishment then no, not chargeable in the UK.

    You’re missing the central point though, Taylor Swift not getting to meet me.

  40. Squander Two – if the player gets more money for playing in the UK, then I would consider that extra to be UK-related. I don’t think it fair to take an arbitrary number as being UK-related.

    Say the US-only player gets $200k a year sponsorship, then gets a $10k bonus for playing one of her five tournaments in the UK. What’s the UK-related income? I’d say $10k, HMRC would say $42k.

    It could work the other way round, of course: if she gets an extra $100k, the UK-taxable amount is understated. Either way, HMRC’s position is arbitrary and I prefer tax to be levied on amounts more connected with the commercial position.

  41. If a sponsor pays a.tennis player to wear their clothing whilst competing in tennis tournaments – for that is indeed when they wish the TENNIS PLAYER to wear the closing – and one or other of the tournaments, the biggest and most watched in fact, is in the UK, then where is the money being earned?

  42. Pellinor,

    But consider what the actual job is. The task performed in exchange for the money is to wear prominent logos in public. In which case, the amount of time spent in the jurisdiction is hardly arbitrary.

    If they were being paid to advise on tennis racket design or something, that would be different. And, I suspect, covered by a different contract.

  43. To me it comes down to: the contracts and payments are complex, and this is a very simple treatment of them. Failing to recognise complexity leads to differences between tax and accounts, which leads to unfairness one way or the other.

    I like simplicity, but you can over-do it 🙂

  44. (I typed that before reading your last comment, by the way.)

    > Failing to recognise complexity leads to differences between tax and accounts, which leads to unfairness one way or the other.

    Agreed, but what’s the alternative here? Track the amount of time the person is visible in public and to how many people? You’d need to take into account the fluctuating viewing figures of the their TV appearances too. And how many logos they’re wearing at any time, and perhaps how prominent the logos are. And should there be a different rate for, say, T-shirts and shoes? Shoes clearly matter more.

    I think simplicity is the better approach here.

  45. Pellinor

    Agreed, so we should read the contract. If the contract contains the sort of clauses I say they tend to, then it becomes difficult to argue that the income is not earned in the UK.

    However, we can lose sight of the wood very quickly here. We are not talking about a tax:no-tax issue. We are instead looking at WHERE the income should be taxed. International agreements tend to follow the OECD model, a main aim of which is making sure income is taxed only once. I hope you don’t take offense if I say your suggestion that this is ‘unfair’ doesn’t seem to stand up.

  46. The main unfairness comes from the OECD model. HMRC say that income is taxable in the UK because you played here for a bit. The US says it’s taxable there because you live there, get paid there, and play there quite a lot.

    You say maybe the IRS could talk to HMRC and work something out so you don’t get taxed twice? The IRS says there’s nothing to talk about, they’re clearly right.

    You say maybe HMRC could talk to the IRS work something out so you don’t get taxed twice? HMRC say there’s nothing to talk about, they’re clearly right.

    You mention the DTA and the OECD to them, and they each say they’re correctly following the rules laid down. You ask for mutual agreement procedures to be invoked; they both say OK, but it’ll be a while before they get round to it.

    Meanwhile, your tax bills keep landing on the doormat, and your advisor is sending more of his own…

  47. Admittedly, you’ll get that problem however HMRC calculate your UK income, but an arbitrary number is harder to talk to other tax authorities about.

    The closer the income is tied to a country, the easier it is to persuade other countries to let go of it.

  48. Pellinor

    Well i thin the U.S. is clearly wrong. However, I take your point entirely. The situation you are encountering is rediculous and the mutal agreement proceedures do not seem fit for purpose. That doesn’t, however, make the OECD model unfair or indeed make HMRC’s application of it arbitrary.

    You might well think an article of the model relating purely to entertainers and sportsmen is now anachronistic. You might alternatively think that taxing income where it is earned rather than on the basis of residence is a better way of going about things – I’m sure the Scottish Executive is about to form that view ha ha.

  49. I’m not looking forward to the consequences of the Scots income tax rate being the same as the UK one, but having to distinguish between them because nationalism. Lots of time (much of it mine!) is going to be wasted, I suspect 🙁

    Why aren’t people trying to harmonise things, instead of creating more artificial barriers and differences?

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