So, any actual tax dodging in the Paradise Papers?

Askin’ fer a friend and all that:

The world’s biggest businesses, heads of state and global figures in politics, entertainment and sport who have sheltered their wealth in secretive tax havens are being revealed this week in a major new investigation into Britain’s offshore empires.

The details come from a leak of 13.4m files that expose the global environments in which tax abuses can thrive – and the complex and seemingly artificial ways the wealthiest corporations can legally protect their wealth.

Is there anything in there which shows anyone actually dodging their taxes?

38 thoughts on “So, any actual tax dodging in the Paradise Papers?”

  1. Bizarrely, the Beeb is giving the Queen beans for having funds in places where she happens to be head of state.

  2. For a project that has apparently been running for a year there is precious little tax dodging on view, but a lot of smear and innuendo. The best that they can come up with is that the Queen has £10m of her £550m portfolio invested through tax havens, but as is well known to all except the BBC and Guardian, the Queen isn’t liable for any UK tax on her private income hence there is no avoidance. She does actually volunteer to pay income tax on an amount calculated every year with full disclosure.

    The only other fact that they can come up with is that she has a £3,000 holding (0.0005% of her assets) invested in a company that was fined recently. The BBC were making a similar fuss over a sum that they pay Gary Lineker for 15 minutes of work.

  3. “380 journalists have spent a year combing through data that stretches back 70 years”
    Gasp!
    Never have so many overcredentialed ignoramuses been assembled before. The very fabric of spacetime must have been under considerable strain.

  4. @Alex

    I think the Beeb will run a dribble of increasingly inconsequential pieces until the ‘fact’ is established that the rich never pay any tax, and another ‘established truth’ will have come into being.

    I’m gonna run a kickstarter for Ecks’ rope purchases.

    It’d be easier to swallow if I didn’t suspect that BBC execs wouldn’t flog their firstborn’s places at Eton to do the same as the names on the list, except they are too dumb or scared to offshore their assets.

  5. “380 journalists have spent a year combing through data that stretches back 70 years”

    What a waste of money. No wonder they are all going bust.

    Anyway, in the full interests of openness, I imagine all MPs and newspaper columnists are going to publish their tax returns, all details of the bank accounts, all sources of income? I mean, we don’t want any ‘secrecy’, do we? That would be wrong.

  6. The irony is that the more the BBC and others whip up a mob over absolutely fuck all like this, the more likely anyone with brains in their head is going to move their wealth to some place the mob can’t get their hands on, i.e. not here.

  7. @J^2: The BBC’s hand should be stayed, but probably won’t be, by the fact that its own £12.9 billion pension fund is invested with Blackrock (i.e. held offshore in the BVI) and invested in Google, Amazon, Facebook etc.

  8. I thought the Queen didn’t pay tax anyway, so she’s hardly likely to be using an offshore account for tax dodging.

  9. As so often, I return to Lord Clyde in the case of Ayrshire Pullman Motor Services v Inland Revenue [1929] 14 Tax Case 754, at 763,764:[10]

    “No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue”

  10. As Alex notes it is all smear and innuendo. All they have evidence of is rich people being rich and the insinuation that their wealth is taken from ‘us’ and if ‘we’ took it off them, ‘we’ would be rich too,

    This is a good one: https://www.theguardian.com/news/2017/nov/05/trump-commerce-secretary-wilbur-ross-business-links-putin-family-paradise-papers

    3,000 words to reveal that Ross’s PE company* bought a minority stake in an oil and gas shipping company. The company then secured a contract from a Russian firm. Then Ross’s company increased its holding and now has a majority stake. The Russian firm was run by Putin’s son-in-law.

    It also notes that the firm participated in a takeover of Bank of Cyprus, which also involved “Russian billionaire Dmitry Rybolovlev” who bought a house off Trump in 2008.

    Trump made a big profit on the house (not a surprise as he bought it as a distressed asset and sold it in early 2008, before the market fell) but this is suspicious because obviously the psychic Russkis were bribing him for influence knowing he would become POTUS eight years later.

    *they try desperately to fudge the difference between monies managed by Ross and Ross’s money of course.

  11. I confess; I confess all. I have an ISA, I have a SIPP, I even have money with ns&i. Shoot me now and be done with it.

    The only iffy thing that I can remember was keeping a stash of Deutschmarks I had back in the days of Bad King Harold (Wilson). I was only keeping them between jaunts to Germany; honest, guv.

    If anyone here can tell me an honest way of keeping some cash in CH I’d be grateful. It would have to be done from the UK.

  12. “If anyone here can tell me an honest way of keeping some cash in CH I’d be grateful. It would have to be done from the UK.”

    The Swiss banks do now disclose their UK account holders to HMRC so won’t do much for you.

    The only good thing will be that, if there is tax paid on interest earned in CH – that is tax that will be paid lawfully and therefore not even avoided – that is thereby denied to HMRC. 🙂

  13. The queen pays tax. Currently 75% tax rate.
    It was 85% but reduced so the nation can benefit from work on a particular building (its really not going to benefit her).

  14. I see Lord Ashcroft’s name appears in connection with this latest feeding frenzy over tax avoision.

    Wouldn’t it be delicious if Murphy had a senior moment in forgetting his past indiscretions and made further indelicate public comments implying the Lord was evading tax?

  15. People asking for actual proof are missing the point.

    There was no actual proof of witchcraft in Salem, was there?

    The lack of proof didn’t get in the way there, did it?

  16. Oh yes, they have some actual tax dodging now. 3 actors in a BBC financed production routed their pay through Mauritius and took the cash as a loan.

  17. According to the Beeb, some of the actors from Mrs Brown’s Boys diverted their income to offshore companies which then indefinitely lends them the money back. That’s the same trick that Jimmy Carr was caught using back in 2012.

    I presume this is actually illegal; or at least some part of it is (e.g. not declaring the scheme under DOTAS).

  18. @AndrewM: I am not convinced that the actors in Mrs Brown’s Boys are UK resident. This could well be an Irish variant of the UK K2 scheme, relying on similarly dodgy interpretation of the relevant law.

  19. Alex,
    The series is filmed in the UK, so presumably they spend enough time here to be tax-resident. They even used the same accountant as Jimmy Carr.

    Another possibility is that the revelations are out-of-date; and that they did use the scheme a few years ago, but stopped at the same time as Jimmy Carr et al.

  20. AndrewM,
    At the very least they would have to be deemed to be self-employed to fall outside the normal NI rules and whether they are tax resident in the UK would be a question of the facts. There is a double tax treaty at work here – in the UK-Irish treaty if there is little to decide residence in the two states (e.g. permanent residence, domicile etc) then they go with nationality. Up to a few years ago they could fly in for a few days a week for quite a lot of the year and stay non-UK resident (a la Philip Green).

  21. “If anyone here can tell me an honest way of keeping some cash in CH I’d be grateful.”

    Open an account at a Swiss bank. You have to declare the income on your tax return.

  22. @AndrewM: Sorry, just looked at the Irish UK treaty. It falls to be taxed in the UK irrespective of normal tax residence (Art 16).

  23. Alex,
    I defer to your knowledge. I’m not an accountant; merely a layperson who digs slightly deeper into the details than most journalists.

    Timmy’s original point still stands; that after poring over millions of documents for a year, the best they can claim is that a handful of lesser-known actors might be fiddling their taxes.

  24. “As I have explained repeatedly on this blog and elsewhere, government spending is not funded by tax” – per the potato.
    So what’s the fuss about tax havens?

  25. Bloke in North Dorset

    TomJ,

    Thanks for the Lord Clyde quote, a useful addition to a debate elsewhere.

    I see from Guido that the Guardian and Labour Party are, as usual, leading the charge of the Hypocrites Brigade.

  26. BiND

    And from the Quixotically named Judge Learned Hand (from the USA) comes the following judgement dating from 1947:

    “Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.”

  27. @BiND: “I see from Guido that the Guardian and Labour Party are, as usual, leading the charge of the Hypocrites Brigade.”

    And the depressing part is that they are given a free hand by the MSM/BBC to get their message over without being called out for their inaccuracies or their hypocrisy. And the Conservative Party are largely too supine to do or say anything.

  28. “…And the Conservative Party are largely too supine to do or say anything.”

    I was working for PwC a couple of years ago and spoke to someone high up enough to be occasionally questioned by politicians and the media and he said PwC had basically decided that there was no point in trying to put their side of the argument across. No one was listening and any attempt to properly defend themselves would be cast as “defending the indefensible”

  29. –any attempt to properly defend themselves would be cast as “defending the indefensible”–

    There’s nothing like defending a principle, and that’s nothing like defending a principle. There are very good commercial reasons to use tax havens – tax related but not tax avoidance related. The classic one is that a company wanting to raise finance for its business in country A, will be well advised to raise the finance in an offshore jurisdiction O rather than A and lend the money into A. Why? Because instead of worrying about the withholding taxes between A and the rest of the world (on which either the borrower or lender has to take a risk), the company only has to worry about withholding taxes between A and O and can rely on the fact that O is very unlikely to impose withholding taxes on the payments of interest that made from O to the ultimate lenders who may be anywhere in the world. Classic arrangement used for years totally innocuously, but of course never mentioned by all these journalists having a go at tax havens.

  30. TomJ, you should be aware that the UK has a General Anti Avoidance Rule in place. So the Clyde doctrine should be used with caution. Furniss v Dawson was the start of the courts looking for artificial transactions designed to reduce tax.

    Alex, using tax havens is also handy if you are transacting in many currencies and want to be able to bring the maximum amount back to be taxed in the UK

  31. :@Diogenes: The judgement in Furniss v Dawson is an extension of the principles in WT Ramsey v IRC, which are both cases that turn on the issue of inserted steps that have no commercial purpose, with, as the case may be enduring or no enduring consequences. Absent those, the cases and subsequent case law do not detract from the general principle stated by Lord Clyde nor that of Lord Tomlin in the case of IRC v The Duke of Westminster:

    “Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax”

  32. OK, so having seen the Panorama programme, forget the Queen because that is a non-story. Basic story is
    (1) Lewis Hamilton may have got a cushy deal on his IoM VAT refund because he may use his jet for pleasure as well as flying round the world to Grands Prix.
    (2) The IoM government may have changed their law to facilitate a scheme that was never sold.
    (3) A whole lot of nobodies including the Irish TV actors are playing the Jimmy Car scheme via Mauritius
    (4) Apple don’t pay a lot of tax in Jersey.
    That’s about it.

  33. Bloke in Costa Rica

    None of these journalistic cunts would get the point even if you inscribed “AVOIDANCE IS LEGAL” in pokerwork on a baseball bat and clubbed them to death with the fucker.

  34. @BiCR V true, but they are playing a crafty game, conflating big names who have done little wrong (HRH, Hamilton &Apple) with some sleazebags (the Jimmy Carr mob) whose deals probably wouldn’t stand up in court. None of which is actually illegal, but neither would they be likely to be taxed as hoped

  35. Very good interview on Radio 5 just before 6.00 a.m. this morning which won’t be repeated much, I am sure.

    They had a representative of the Guernsey authorities and from the OECD.

    Guernsey bloke was great. Denied wrong doing, said that this was a political attack on off-shore finance centres, pointed out there were 7,000 people employed doing real jobs in Guernsey, pointed out that Guensey was cooperating with OECD, pointed out that part of the BBC pension fund was located in an off-shore finance centre, pointed out that John McDonnell was being paid a pension the fund of which was located in an offshore finance centre. Explained that the idea of these arrangements was that the income was only taxed once (and here the BBC interviewer snidely muttered “in Guernsey, in Guernsey” – showing bias and ignorance) and that was when the pension was received by the pensioner. BBC interviewer asked whether Guernsey ‘could survive’ without finance sector. Guernsey bloke asked why that should be an issue, again pointed out that real 7,000 people were employed doing real jobs on the Island.

    Interview moved swiftly on to OECD representative who confirmed that Guernsey was cooperating, started to explain that lots was being done in the field of anti-avoidance, BBC interviewer interrupts “but only because of the Panama papers and the Paradise papers”, not so says the OECD person, this initiative has been going since 2009 and predates Panama. Generally lots of good news on this front.

    Program moved swiftly on to something else. Probably about how nail bar slaves are being used as part of a tax dodge.

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