How hugely amusing about Ed Miliband’s tax bill

Here.

The argument seems to be that the deed of variation would have led to a tax saving but the law has been changed since then meaning that there’s not in fact a tax saving.

So that’s alright then.

Except see what happens when Ritchie talks about Amazon. OK, so they don’t make profits globally so they’re not in fact dodging tax. But they use offshore structures so that’s not alright because they’re setting themselves up to potentially avoid tax.

Which is what Miliboy did and which is not alright then, is it?

24 thoughts on “How hugely amusing about Ed Miliband’s tax bill”

  1. And oh how slippery his explanation sounds. I would call the Deed.of.Variation “plain vanilla” tax planning
    Would Ritchie agree?

  2. Two interesting points:

    Had she retained a 100% share, and her home had one day been sold for £575,000, the IHT bill would have been £170,000; after the deed of variation the same event would have triggered a bill of £78,000.

    so, at the time of the variation, or ‘rewriting the will of someone already dead’ as I prefer to call it, tax would have been avoided.

    Until 2007, every individual had an IHT allowance and anything they left over that would have been taxed at 40% (since then, couples have been able to transfer any unused allowance, and today a surviving partner could transfer up to £650,000 before facing a bill).

    So, a Labour government (in which both Milibands were cabinet ministers) changed the law to make avoiding tax on inheritance easier (it was always, apparently, legal).

    Why would they do that, I wonder?

  3. Tax hasn’t been avoided only if the yax hasn’t been paid. If the law is subsequently changed to obviate the need for the avoidance, then it’s still avoidance.

    Funnily enough this story hasn’t appeared yet on Tax Research UK. A genuine tax expert would have something to say about it.

  4. Funnily enough this story hasn’t appeared yet on Tax Research UK. A genuine tax expert would have something to say about it.

    I think you have answered your own point there.

    I heard him on Radio 5 yesterday – I had managed to avoid him up to now.

    Three times he claimed to have helped write the anti-avoidance law pass by the coalition.

    His opponent, Mohammed Amin was calm, modest, reasonable – and correct on every point.

    Quite a contrast.

  5. Rather thoughtful of the Guardian to disable comments for this one.

    All Guardian articles are equal, but some articles are just a little more equal than others.

  6. Varying a will is probably at what Lord Fink would call the vanilla end of avoidance.

    But the current position is that Marion, Ralph’s widow, is living in a house owned 40% by David (Ed having sold his 20% share to David). For any tax bods out there, does she have to pay David 40% of the rental value to prevent the whole thing being a sham? (Could be deferred I suppose.)

  7. “His opponent, Mohammed Amin was calm, modest, reasonable – and correct on every point.”

    Mohammed Amin is a retired senior tax partner from PW/PwC. Murphy left some other firm when he was barely qualified as an auditor.

  8. Has anyone ever seen Lord Fink and Richard Murphy together in the same room?

    Could it be that the LHTD has a pistachio doppelgänger?

    See picture here

  9. I’m finding it very amusing to see Ed’s arrangements being described online as “no more tax avoidance than ISAs or EIS”. ‘Plain vanilla’ as they would like to say but can’t.

  10. ALD

    Yes, CG avoidance was a prime reason for house flipping. And they all did it. And they all said they hadn’t broken any rules and so hadn’t done anything wrong. And ‘tax experts’ should have had a lot to say about it but didn’t.
    Strange when truth needs to be spoken to power and when it doesn’t.

  11. The standard line on here is :they’re all doing it so its alright then. The standard line on Greece was that they were all avoiding tax so the shits deserved what they got.

  12. DBC

    I take you point.
    However, I don’t it is the standard line on this blog. We all seem concerned at the double standards being employed across the spectrum.
    I would also point out that nobody in the UK, regardless of political persuasion, is approving of tax evasion. It is endemic evasion that has done so much to undo Greece.

  13. @Luke: “But the current position is that Marion, Ralph’s widow, is living in a house owned 40% by David (Ed having sold his 20% share to David). For any tax bods out there, does she have to pay David 40% of the rental value to prevent the whole thing being a sham”

    I think (and I stand to be corrected by the far greater tax minds on here than I) that because the sons inherited their share at the same time as she did (from the father upon his death) there is no retained benefit if they allow her to live in their share for free. Whereas if the parents, while still alive, had give the sons a share of the house and not paid rent, then that would be retained benefit, and the transfer would be voided for IHT purposes.

    The argument as to whether this is tax avoidance or not is slightly semantic. I would argue that if you do something to mitigate the amount of tax that would be due if a fairly common event occurs in the immediate future (an elderly person dying is something that could happen at any point) then that is tax avoidance, even if subsequently the events do not happen as you thought they might. Its the intention at the time of action that counts. And the only reason for the deed of variation was to reduce the amount of tax payable if the Milliband’s mother had keeled over after having inherited the house from her husband.

    Its all perfectly understandable, I have benefited personally from just such sort of manoeuvers myself, which time proved not to have been necessary. But for EM to stand on his hind legs and lecture everyone else on the moral outrage of tax avoidance when he pulled this little stunt makes me incandescent with rage at the utter hypocrisy of the rancid little turd.

  14. Vanilla’s about the 2nd most expensive flavouring (after saffron), and grown rarely. It would be better described as oregano or rosemary avoidance.

  15. @ DBC Reed
    I engage in the tax avoidance that has been deliberately and specifically encouraged and legislated for by governments, to wit pension contributions, Gift Aid and ISAs. That *is* all right.
    Lord Fink stated that the main form of tax avoidance in which he enmgaged was giving large amounts of his income to Charities. I contend that that is all right.
    Virtually no-one here claims fraudulent tax evasion is all right, whether here or in Greece.
    That to which many of us object is this attempt to smear the innocent majority of HSBC clients – you are welcome to read the statement by HMRC that only 1,000 (or 1,100 – depending on which media channel you read) out of the 7,000 HSBC accounts even merited investigation after HMRChad compared the data with the account-holders’ tax returns – by an individual who had benefitted from a legal but artificial tax avoidance stratagem.

  16. This is surely ripe for a Rusbridger-style tweet from Murphy Richards confirming that Milliboy’s completely above board.

  17. @ Ted S
    That is a topic for a whole separate debate which has been going on since before we were born and is likely to continue after our children die.

  18. It’s definitely not as simple as an ISA.

    With an ISA the tax exemption is a direct legislative consequence of investing under the ISA rules.

    With a Deed of Variation the tax saving is a secondary or even tertiary consequence, moreover a consequence that you need a reasonable level of knowledge of tax to work out

    (that part of the house doesn’t go to the widow, so doesn’t qualify for the spoke exemption, but isn’t taxable because of the nil rate band, then isn’t part of the widow’s estate when she dies, so the saving comes then, or did before they changed the law)

    – although simple to those of us who understand tax, that is a lot more complex than “the law says interest on an ISA is tax-free”.

  19. It was a straightforward tax avoidance manoeuvre: I speak as one wot dunnit too, m’lud. Clear and unambiguous: nothing “semantic” about it. One can give to charity and look on the tax avoidance as a bonus, but DoVs (as I learnt to call them) are straightforward to-my-advantage-bruv tax avoidance in the tradition famously advocated by Lord Clyde.

    “a Labour government (in which both Milibands were cabinet ministers) changed the law to make avoiding tax on inheritance easier… Why would they do that, I wonder?” Because one of the Tories (Osborne?) said that they’d push the nil rate band up to a million, and the polls showed that this policy was remarkably popular. Hence Labour’s panic, and the introduction of the transferable nil rate band – a device that “privileges” married couples in a way that would have had The Left howling at the moon if the fell Tories had done it.

    And, lo, the Tories anyway had to enter a coalition with Cleggie and the boys, so that the million pound NRB never was introduced anyway. Jolly funny, what?

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