Dame Vivienne’s taxes

In 2002, Dame Vivienne’s UK business sold the rights to her trademarks to Luxembourg-based Latimo SA, which she also controls, for £840,000.

A year later Latimo SA became “the ultimate parent company” of the UK business by “virtue of its acquisition of the entire share capital”.

Accounts for the year ending December 31, 2013 show the company paid just over £2 million to Latimo SA for “licence fees” and a further £2 million the year before.

By paying the money to Latimo, the profits of Dame Vivienne’s UK business have been reduced by £2 million a year. In 2013, the UK company registered an operating profit of £3.2 million and a corporation tax bill on that of £780,000 – about a quarter of the operating profit. By paying her Luxembourg company £2 million, the UK company avoided paying an additional £500,000 to the UK Exchequer.

It’s an international brand. So, of course there are going to be brand payments to some company somewhere or other. And this really isn’t tax dodging for two reasons.

The first is that tax avoidance is, as Ritchie says, using a provision of tax law in a manner that Parliament didn’t intend. Yet for such brand and royalty payments the EU states that it’s actually illegal for a country to try and tax these payments on their way out. Meaning that the use of a royalty collection company is not just expected but expressley recognisde in law.

The ohter point is that given that Dame Vivienne is a UK resident she can’t actually get the money out without paying entirely normal tax on it. At best this delays a tax bill, not deletes it.

On the other hand the idea that the Green Party is being funded by what they themselves call dodged tax has me laughing like a drain.

13 thoughts on “Dame Vivienne’s taxes”

  1. Various online sources put the Luxembourg corporate tax rate at 29%, higher than the UK rate. So where exactly is the tax advantage in Vivienne’s manoeuvre?

  2. bloke (not) in spain

    Somewhat annoying, the Telegraph inserting “similar to Starbucks” in the piece.
    The tax situation may well be similar. But the article’s trying to make an issue out of the La Westwood empire being originally Brit & finagled over to Luxembourg. And Starbucks has never been the slightest bit Brit, up until it flogged its first cup of coffee in-country.

  3. The Meissen Bison

    …expressley recognisde in law.

    The ohter…

    Telegraph subs take over Worstall blog shock!

  4. The words “3.2m profit” and Vivienne Westwood shouldn’t be in the same sentence. Or maybe I underestimate the number of women who want to dress like characters from Tim Burton movies.

  5. Vivienne might be UK resident but she regularly travels abroad. Hasn’t she basically made a pot of money available for when she travels that is UK tax free and doesn’t affect her UK income.

  6. Does the fact that she donates to Caroline Lucas’ party account for Ritchie claiming not to have heard of this little issue? Certainly I do not expect him to say a single little word about it.

  7. What is happening to R?
    First he accepted Vines family company, with no condemnation of artificiality, then he notices a blog on the banks but not a Telegraph story on Westwood?
    Does he need prodded?

  8. Andrew M
    “Various online sources put the Luxembourg corporate tax rate at 29%, higher than the UK rate. So where exactly is the tax advantage in Vivienne’s manoeuvre?”

    In the deal you can cut with the Luxembourg authorities to pay an artificial rate of tax engineered with offshore borrowings (deductible interest & no tax on dividends received) all covered by a letter of comfort from the Lux govt.

  9. As I thought. When it’s one of his own he will.make any excuse. The £300k donation to the Greens is apparently showing some sort of repentance for the millions she’s made through her tax arrangements. He calls this “investing” in the cure. Thay she still has those arrangments in place doesn’t seem to pact on his investment in repentance. What a steaming hypocrite.

  10. Is the sale of IP rights to an overseas company a taxable transaction? Does it have to be at an arms length price? It looks like the Lux company got a good deal, but £840k might have been a fair number in 2002.

  11. The Thought Gang

    The rules on IP are different now. However, the fundamentals are pretty much as you describe them. It may have been a decent price back then, or it may not. And the royalty being paid now may or may not be a decent price. The devil is in the detail. Actually, the devil in sitting in a shed in Norfolk allying double standards.

  12. @Ironman:

    Ritchie’s probably a bit narked that Westwood sought her indulgence from the Greens rather than seeking forgiveness from him (in exchange for a small admin fee of course).

    Any bets that Westwood’s company will be awarded a Fair Tax Mark soon?

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