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”
Graham
Heres why the Condem coallition makes me sick!
1)Nick Clegg “We will crack down on the super rich who hide money overseas.”
Really, you can start with Andrew Mitchel then?
2)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 what is Mr Hammond doing by transfering his assets to his wife?
Leo Vidal Consulting
Osborne, Mitchell and Hammond accused of tax avoidance | Left Foot …: A British Virgin Islands company won't pay… http://bit.ly/ahHJSy
Kevin Richards
"Do as I say not what I do" – hypocracy RT @leftfootfwd: Osborne, Mitchell and Hammond accused of tax avoidance http://bit.ly/aC27fc
Ebon Orca
See the Tories are on the defensive again. This is the kind of hypocrisy that saw them sink in 1997.
(1) tax avoidance is not illegal because of the loop holes that were put in the tax legislation by labour, conservative, libdems, MPs, lords, party activists, donors, think tanks,… what ever…. boils down to those with influence and money.
(2) Given the conservatives…. sorry coalition want to make tax legislation simpler and cut the amount of red tape it could look as though they are only doing so, so that it is easier for those with money and influence to avoid paying tax on investments.
(3) The libdems have made a commitment (sorry, started laughing as I typed that) to crack down on tax evasion and tax avoidance by making in harder. This would seem to be another insurmountable difference between those who would make tax law simpler and those who would make it harder. Never mind I sure Cameron and Clegg will sort it all out. Especially when a significant amount of your cabinet would appear to have both money and influence.
Stephen W
Dear BourgJoe. It is convenient that you manage to make yourself look daft with your own words. “Tax Evasion” is illegal, being defined as illegal efforts to avoid paying tax. What they are being accused of is tax avoidance, that being legal efforts to avoid paying tax. And this individuals are still probably paying vastly more tax than you or me or most people, so no, nobody cares about this.
And the millibands are being mentioned because they used some complicated scheme to minimise inheritance tax on their father’s expensive london house. Tax avoidance one could even say. And good luck to them. But considering LFF’s love of everything miliband rank hypocrisy to condemn tories but conveniently not mention it. Also, if you don’t think there are plenty of millionaires on the labour front bench then you’re as stupid as you sound.
Maybe you should actually try working out what it is we’re talking about before opening your mouth.