In the week in which the coalition will announce massive cuts to public services three high-ranking cabinet ministers face accusations of tax avoidance.
In the week in which the coalition will announce massive cuts to public services three high-ranking cabinet ministers face accusations of tax avoidance. Chancellor George Osborne – the man who on Wednesday will spell out the cutbacks the country must suffer – international development secretary Andrew Mitchell and transport secretary Philip Hammond are all named in tonight’s Dispatches, to be broadcast on Channel Four at 8:00, as having saved millions in taxes.
The programme will reveal that Mr Mitchell invested at least £130,000 into offshore investment funds, one of which is based in the Caribbean tax haven of the British Virgin Islands. A British Virgin Islands company won’t pay corporation tax; if it was a UK company owning the property it would pay corporation tax – so clearly there’s a saving there.
The benefit to investors of investing in such a fund is that they will pay tax as and when they cash in, but in the meantime there are better investment returns because the company has got 100 per cent to reinvest rather than about 70 per cent.
Of Mr Hammond, the programme reveals he “did a Philip Green” – i.e. he transferred some of his assets over to his wife, resulting in a much-reduced tax bill for the millionaire. Last October, he transferred 40 per cent of his shares in Castlemead Ltd. (a company which has paid him £3.75 million in dividends since 2003) to his wife.
By transferring shares to his wife, the programme explains, any payouts she receives from the company could be taxed at a lower rate, and the fact that Mr Hammond made this transfer last October – just six months before the new higher rates of tax for high-earners was introduced this April – makes this potential tax saving even more valuable. According to tax experts, she stands to make a tax saving of £180,000 for every £1m of profit.
On to Mr Osborne, and Dispatches reveals his family has set up offshore trusts, one of the most common ways for the super rich to avoid paying inheritance tax – put simply, there will be no inheritance tax to pay on the death of Mr Osborne’s father, a saving of up to £1.6m.
Mr Osborne no longer declares his interest in his family trust in the House of Commons register of members’ interests.
Left Foot Forward has repeatedly highlighted the allegations of tax avoidance made against the Tories, and the party’s refusal to take action against it, from Lord Ashcroft to Philip Green and the circle of hedge fund managers surrounding the chancellor, and in February, we reported how the Conservative party’s MEPs voted against reforms to clamp down on tax dodgers.
For all the rhetoric of Danny Alexander…
“We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra. This will mean: A crackdown on those hiding money offshore. And that includes not only those who illegally evade tax but those who use entirely legal means to avoid paying their fair share to the taxman.”
And Nick Clegg…
“We will crack down on the super rich who hide money overseas.”
…it appears that their coalition partners have no intention of closing down the loopholes from which so many of them appear to have benefited so generously at the expense of us all. We’re all in it together, so they say; some more in it than others.
• Dispatches: How the Rich Beat the Taxman airs tonight at 8:00 on Channel Four, and is available to view online on 4oD soon after.
165 Responses to “Osborne, Mitchell and Hammond accused of tax avoidance”
sabcat's blog » Bollocks to the Cuts
[…] While public sector workers at best face deteriorating pay and conditions the banks who are at the root of the financial crisis, after taking billions in tax payers money in bailouts are going to save £19 billion in tax . Vodafone have been let off a £6 Billion tax bill. The man who bankrolled the Tory election campaign Lord Ashcroft avoided £3.4 million. Philip Green who has reported on government waste has avoided £300 million. Even the vile Gideon Osborne himself and two other cabinet members are embroiled in tax avoidance allegations. […]
David Ward
RT @leftfootfwd: Osborne, Mitchell and Hammond accused of tax avoidance: http://bit.ly/ak0h6K – watch @C4Dispatches tonight at 8
Stuart
For the incredulous Tories above, here are why this might interest people:
the only people likely to be avoiding tax are people who are very wealthy. Whereas the vast majority of the working public receive their wages and pay their income tax and have to do so, this very wealthy minority have such a large bundle of cash lying around spare that they can pick and choose how they’ll be taxed, and it makes sense for them to try and maximise its value. The objections to this are 1) that these people have this spare wealth lying around when other people barely have bugger all and 2) that the rules allow them to pick and choose how to maximise this wealth. This is why the argument isn’t necessarily against people who take out ISAs, which are something applicable to almost all of the working population, nor against these super-wealthy tax avoiders, who would indeed be strange to want to maximise how much tax they pay. Rather, in summary, it’s an argument against 1) the conditions that allow this kind of wealth to accrue to individuals in the first place, and 2) the fact that this kind of wealth is then allowed to multiply itself i.e. more shall be given to those who already have more. If you’re perfectly happy with both of these conditions, and no doubt you have arguments about why, then tax avoidance is clearly not going to bother you.
Adam
They make benefits cheats look like saints. RT @leftfootfwd: Osborne, Mitchell and Hammond accused of tax avoidance http://bit.ly/aC27fc
Pat
Well said, Stuart.
Yes, John Lees et al, there’s maybe nothing illegal about “tax avoidance” as described, but …… surely it is wrong for Government Ministers to preach about the “fairness” of their cuts then use loopholes like these to avoid the effects of their cuts and “maximise their wealth” just because they can, when others, who can’t, will be losing their jobs, their benefits, their homes and their services with no alternatives for them!