Isn’t this just the most horrendous scandal?

Theresa May’s husband’s investment bank employer has paid no UK corporation tax in the past eight years, it was revealed today.
Philip May, 60, works as a relationship manager for Capital Group, an American financial services company with assets of £1.1 trillion with offices in Belgravia.
Since 2009 the company has turned over £467million but made losses of £125million meaning they don’t have to pay corporation tax – a levy on profits.
Despite the huge losses it directors were paid £43million in salaries, pensions and other benefits – but it is not know what Mr May earns.

Company making losses doesn’t pay a tax upon profits. And the workers keep being paid all the same!

British Leyland wasn’t paying profit taxes – and the workers still got paid too.

And what the fuck is this idiot saying?

While tax expert Prem Sikka added: ‘It’s very odd a business can pay substantial amounts to directors while not turning a profit.’

No it’s fucking not.

We’ve an 8 year period here. How many directors? 10 say? No, dunno either.

£500 k each? For directors of a wealth management company in the City? That’s not actually large by the standards of the place an time you know.

Then there’s this idiocy:

Labour MP John Mann told the Mirror: ‘It is fundamentally un-British to avoid tax. The Prime Minister should raise this at the breakfast table immediately.’

Paying people a salary or a bonus gains twice (actually, more than that) the tax of making a profit an paying corporation tax instead.

36 thoughts on “Isn’t this just the most horrendous scandal?”

  1. Bloke in North Dorset

    Reminds me of the, probably apocryphal, story during the early days of building out what was to become Orange and 121.

    The story circulating in Orange was that at a 121 company meeting the CEO was asked if there was going to be any profit sharing. His response was that no, and there wasn’t going to be any loss sharing either, or words to that effect.

  2. Bloke in North Dorset

    Just a thought, but with the the threat of a Labour government nationalising the utilities and Network Rail perhaps a profit/loss sharing scheme for the workers might concentrate a few minds.

  3. From the comments:

    “Why doesn’t the UK Government make it illegal to pay more than the minimum wage & no bonuses etc to any employees of an insolvent company ? Of yes – our PMs are part of the scam. It almost makes Jezza attractive.”

    Fucking hell.

  4. What does him working for a company have to do with his wife’s job?
    Presumably he’s not solely making the loss – and yes companies can and do make losses that get carried forwards. Other years they will make profits and be taxed on them.

    Its using the tax rules exactly as they should be – and someone has a problem with that of course!
    Now if companies that made a loss didn’t pay staff then that WOULD be illegal.

  5. Rob Harries – the UK government has made it illegal to pay wages and bonuses to employees of an insolvent company.
    They get paid as a creditor if there is any money left, or insolvency service can pay them something based on money owed but its often only a fraction of what is owed.
    And staff come before some other creditors.

    Process of payment of wages owed can be a year or two.

  6. As we’re on the nostalgia kick (previous post)… recall how pissed I was as a twenty-something struggling to pay the rent and eat, overhearing a Director at an adjacent desk buy himself a sack of gold Kruggerands. I also remember how, when the organisation went through a tough time, he reduced his pay and scrapped executive bonuses, to keep everyone at the bottom of the pile in work. As with ‘my word is my bond’, those days are probably long gone.

  7. Martin

    I assumed and interpreted that the commenter believed that May’s employers is ‘insolvent’ because they dont turn a profit somehow, yet the directors were still paid salaries.

    Otherwise its an even more strange non-sequitur than the point I think they were trying to make.

  8. As ever, “journalists” should pay tax on their expenses. Guardian pays for your first class flight flight to New York? Well, under your rules, there’s a few grand tax right there. And no whinging about “But it’s my job”.

  9. Managing £1.1 trillion in assets and the company’s own assets that could be sold to provide creditors with money are very different things.
    My bank has £20 of my money but that £20 is my asset, not the banks.

  10. I raised this with various Corbynites on a Facebook thread after Mr. May’s company had been ‘exposed’ as doing something perfectly legal (investing in Bermuda) by the ‘Paradise papers’ and they laid into the PM. Apparently wives are fair game under Corbyn so if that’s the case why the hell aren’t the Tories going hell for leather into the private affairs of Corbyn’s partner, or Diane Abbott’s husband? When are these clowns going to wake up? We are closer to becoming the new Pyongyang than at any time in our history, and there’s strong rumours that the voting age will drop to 16 and then 12 to ensure permanent Corbinism – people need to wake up and smell the coffee…

  11. Notwithstanding the fact that the article refers to a company with assets rather than managing assets, a turnover of £467 million over 8 years for managing £1.1 trillion suggests they’re pretty crap managers. If they’d delivered worthwhile returns, one would assume their fees would be north of 1%, not south of 0.01% p.a.

  12. After a bit of digging, I found out that it basically does wealth management for private individuals. As such, their clients probably respect the fact that they don’t gouge them for fee income. Back in 2009, morningstar rated them very highly. They are not really in the retail fund management game where you would expect higher fees. I stand to be corrected if someone knows better

  13. I assume that the people making this a story, even the halfwitted Sikka, understand what is actually happening.

    They’re just happy to lie in order to boost the “Moar taxes!” and “Them Tories are evil!” narratives.

  14. We pay as little corp tax as possible.

    By paying ourselves bonuses. Which are subject to social security and income tax.

    I believe it’s called “profit-sharing” or “distribution of profits to the workers” when the sufficiently left-wing do it.

  15. So bespoke wealth management is cheaper, much much cheaper, (and likely more effective) than a retail fund?

    And you wonder why people think the economy is rigged in favour of the super-rich! What could possibly give them that kind of idea?!

  16. MC
    In my opinion you attribute too much sense to the epsilon semi-moron Sikka.

    Murphy is a mixture of malign and stupid. Sikka seems to me to be a simple case of someone who is irredeemably thick and who, inexplicably, has tenure at a UK Uni as a professor.

  17. Capital Group is predominantly a US-based money manager for US-based institutional clients.

    Forbes estimates its annual revenues at $7.3bn, which is equivalent to about 0.5% of assets under management and would make sense.

    The UK operation is a branch plant with some well-paid staff – the US bit probably pays the UK a cost-based service fee.

  18. “So bespoke wealth management is cheaper, much much cheaper, (and likely more effective) than a retail fund?”

    Yes. But your minimum inlay will likely be in 6 figures, whereas for a retail fund it’ll be in two or the low-three figures.

    Can’t imagine why dealing with a small number of 6-7-8 figure clients might be more cost-effective and have a lower overhead than a zillion investing in the 2-3-4-5 figures.

    I have a friend who’s an investment banker at a smaller firm – they won’t touch you at less than 500k CHF. Some of the more adventurous and bigger firms will go down to 120k or so.

  19. Because all you actually have to do is manage the fund. Who owns how much of it at any point is totally irrelevant for traded funds, naturally there will be fees to buy in or sell out. Whereas with wealth management clients you need to deal with their ever-shifting priorities and risk appetite.

  20. “And you wonder why people think the economy is rigged in favour of the super-rich! What could possibly give them that kind of idea?!”

    Where do you get these gems Biggie? An early purchase of Christmas crackers?

    Of course any economy meddled with extensively by the state will favour the rich.

    In state socialist shitholes that will be the “poor” rich–party hierarchies etc. And in corporate socialist semi-shitholes that will be the rich rich–those connected with the state, those kissing its arse, those with a cash highway to bureaucrats and polipigs “hearts”. At the moment zero interest rates and cash creation schemes are helping the rich buy up shitloads of valuable assets that will help them get richer. They are in a position to gain advantage from the state’s bungling and stupidity.

    Would that we all were.

  21. “Labour MP John Mann told the Mirror: ‘It is fundamentally un-British to avoid tax.”
    Crikey!!! Then all those people I used to see in Calais. With their UK registered cars & their Union Flag t-shirts & their southeast accents. Shopping for their duty-free booze & fags. They weren’t British. Well knock me down with a feather. Must have been Hungarians.

  22. @BiS

    It’s nice to see the British left finally feeling a bit of patriotism for once.

    Shame they channel it the way they do, but it makes a pleasant change.

    (/refuge of the scoundrel and all that)

  23. BiG one of the big costs for a retail fund is the marketing – think of all those ads in newspapers and magazines and blogs for companies such as Vanguard, Fidelity, M&G, Standard Life – all competing to get the graph on the back page of the Sunday Supplements with the line going straight up. Not to mention all those mailshots and the endless brochures they send out once they have your address. On the other hand, until today I had never heard of Capital Group. Notwithstanding, I just checked Hargreaves Lansdowne – they earn fees of about 0.4%, which is in line with what Cadet suggests above

  24. Diogenes

    Hargreaves Lansdowne must have deforested half of Scandinavia considering the amount of crap they send me.

  25. Capital Group is a US based asset manager, the majority of whose assets under management are institutional, ie managed on behalf of pension funds, endowments etc. These guys are surrounded by advisors and are extremely tough on fees, so the likely 40bps does not reflect the investment management skills of Capital just the wholesale price of money management. As I understand it, Phillip May is a relationship manager rather than an investment manager, i.e he will be liasing with the UK based pension funds who have their money managed by capital. Likely the actual assets are managed in the US and there will be a recharge.
    The real story should be, “British Pension funds screw US asset manager on fees while Chancellor collects a lot of tax and NI” but that doesn’t suit the SJW narrative.

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