Obviousness and lies

Philip Green’s wealth has shrunk as Arcadia’s fortunes have faded

Well, yes, that’s how capitalism works. Own something going up in value you get richer. Own something on the downside you get poorer. That’s rather the point of the system in fact.

This though is a lie:

A large chunk of that money came from a £1.2bn dividend in 2005, the biggest in British corporate history. No tax was paid on the dividend paid to Tina Green because of her base in tax-free Monaco.

Corporation tax was paid before that distribution. For that’s how the tax system works. Dividends are taxed at the corporate level before distribution.

21 thoughts on “Obviousness and lies”

  1. I wonder what credentials Rupert Neate, the Wealth correspondent, has for his job? It sounds just the way to employ the family idiot… Find a wealthy person and publish a stream of unevidenced smears. Ask Prof Murphy for advice.

  2. Isn’t there another lie, here?
    “No tax was paid on the dividend paid to Tina Green because of her base in tax-free Monaco.”
    If the dividend was paid to Tina Green, then the wealth must be Tina Green’s. Do we know that Philip Green has any money in Arcadia whatsoever? That her dividend is mentioned but not his would seem to indicate he hasn’t. Yes, you can aggregate the couple’s wealth & say that has declined. But for a feminist supporting newspaper like the Graun, doesn’t that rather run against the grain?

  3. No… The intent of what you are saying is right, but you should get it technically correct.

    The profits are subject to corporation tax. The dividend is paid out of distributable reserves, which would mainly be built up from profit after tax.

    The dividend itself has not been taxed. That it comes from profits that have been subject to tax already is a fair point.

    Also, would dividend withholding tax have been applied? I do not know the tax rules at that point in time for a dividend paid to a non-resident.

  4. This is a yeah but no but yeah thing.

    Women are entirely independent and what’s theirs is theirs. But taxation should be of married couples. Can’t remember who it was – Lawson? – who insisted that we tax individuals not households but the dichotomy is always there. Murphy has been particularly egregious – no surprise – over this.

  5. Yes, but reserves are previously taxed profits. You can’t pay out a dividend of more than today’s profits plus reserves…..

  6. Bis, you are right of course but have you forgotten the outrage in the Graun and from the useful idiot Lefties such as John B, dsquared etc etc when the dividend was paid? The idea of principles is alien to Lefties

  7. Dividends paid to tax free Monaco resident – bad

    Capital gains on sale of auto trader paid to tax free Cayman Islands shell company – good.

  8. “No tax was paid on the dividend paid to Tina Green because of her base in tax-free Monaco.”

    More accurately….

    No UK income tax was due from Tina Green on the dividend paid to her because she was not UK tax resident when the dividend was paid. That she was in Monaco (rather than France, Germany or Timbuctoo) at the time had no bearing on the UK tax position.

    It’s a point often overlooked by the whining left that the location of an individual or company in a tax haven, rather than a heavily taxed country, doesn’t affect the UK tax position. The UK would have got no more income tax if Tina Green had been in France.

    @ Im “Also, would dividend withholding tax have been applied?”

    It’s complicated. In 1973 the UK introduced what was known as Advance Corporation Tax which was a sort-of withholding tax on dividends which had to be paid before a dividend was paid. But ACT was abolished in 1999. There was a notional tax credit attached to dividends but it was not actually a tax handed over to HMRC. The notional tax credit was abolished in 2016 (not that Spud noticed, he was still talking about notional tax credits on dividends earlier this year). So at the time the dividend was paid to Tina Green, there would not have been any withholding tax.

  9. “No tax was paid on the dividend paid to Tina Green because of her base in tax-free Monaco.”

    I wonder if even a hint of embarrassment flitted across the mind of the person who wrote this. My guess is no, they simply don’t do standards, consistency or shame.

  10. ‘withholding tax’

    It is a withholding for tax. It is not a tax.

    “The idea of principles is alien to Lefties”

    True. The Left thinks the Right invented principles just to confuse people.

  11. No tax was paid on the dividend paid to Tina Green because of her base in tax-free Monaco.

    Foreigner living in foreign didn’t pay UK tax. Er, so what?

  12. Hallowed Be said:
    “weren’t the reserves funded by a massive loan which then were paid out as dividend?”

    No, because a loan doesn’t create reserves. Only profit (current or prior years) generates reserves, so you need profits (which presumably were taxed) to pay a dividend.

    You also need cash to pay a dividend, so the company might take out a loan to raise the cash, but that can’t be because it hasn’t made profits, rather that it’s spent them on buying assets (buildings, equipment, takeovers, etc.).

  13. RichardT and Tim, Ok thanks. so that’s the accounting principle followed. The business decision was – we don’t need this 1bn of reserves because we’re going to take a loan out to fund the cash needs of the business so we’ll transfer it to to our owner.

  14. Gamecock

    HMRC receives the withholding for tax. If the recipient of the dividend is not able to claim the credit for that, then HMRC has effectively got tax from the payment of the dividend. That was the point I was making.

    Tim – you still can’t say that the dividend was taxed. It wasn’t. I agree with you in everything else but you can’t say someone is lying when they say the dividend wasn’t taxed. It may be misleading. It may show ignorance, but it is not a lie. And it won’t further your cause by saying so.

  15. Lm, surely the thrust of the smear is that the dividend was not subject to UK income tax. I don’t get the impression that Rupert Neate really cares about the niceties of international tax. He probably thinks that Monaco doesn’t have a treasury

  16. IIRC this arose after a sale and leaseback deal for some of the properties. Arcadia sold some of its freeholds to a Special Purpose Vehicle owned by Tina who borrowed the money (probably from the dodgy banker at HBOS who used to hangout on PG’s ‘other yacht’) to fund it. On receipt of funds, Arcadia paid our a special dividend to Tina as shareholder in Monaco who back to back paid off the debt. Voila! As they say in Monaco. Tina now owns a property company outright that receives large tax free rental income from Arcadia – so offshore tax free income from untaxed Arcadia revenues – Philip stays a UK tax resident long enough to get his knighthood, probably draws no UK income while offshore Tina ‘pays’ – then off to the yachts thereafter. Meanwhile His old ‘bagman’ Richard Caring suddenly gets rich enough to expand his restaurant and nightclub empire as a non Dom including Annabels, which PG refers to as ‘my club’. Bit like the Candy brothers

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