Paradise Papers: Tax Havens Exposed

[WelshBluebird]

Even 'rich' is a relative term. I own my own house after paying a mortgage for 25 years and probably appear rich to someone paying £2000 a month to rent a small fiat, or someone unemployed in social housing.

But we aren't talking about people who own their own homes. We are talking about companies or individuals who earn millions and billions. Individuals who aren't just in the top 1%, or even the top 0.1%, but the top 0.01% of the country.

This probably isn’t “fair”, but it is a reality and blaming them as individuals for doing so is counter productive, in my view.

Why? They have free choice in what they do!
And especially when you are talking about corporations rather than individuals. When you have the CEO of Apple saying that "A company’s profits should be taxed in the country where the value is created" and yet at the same time hiding away the billions it has in offshore accounts that do not get taxed where the value is created.

 

[DarloRich]

I shall have to read that then. I thought you said earlier their tax affairs were secret.

They are - until someone sends a memory stick of information to the Guardian and others to look at. Whilst that is clearly a breach of trust it may ( depending on your viewpoint) be in the public interest.

 

[ComUtoR]

His main business is driving formula one cars so I assume he uses the jet to commute to work.

Which is what he does. The F1 season is worldwide and they travel between countries.

Can I get a VAT refund on my car because I drive it to work everyday?

I couldn't precisely say. However, how does company car tax work ?

 

[DarloRich]

Hamilton is essentially doing the same thing as the self employed plumber. Ok, he happens to be doing it on a private jet rather than a transit van, but the principles are the same.

Agreed - although i doubt the plumber uses his van to drive his family to Hawaii for a holiday.

From what I’ve read of this, this is an example of the normal operation of the VAT system and it is for the relevant tax authorities to investigate and challenge the arrangements through the courts if they believe they breach relevant laws.

The IOM authorities are adamant he would have got the same VAT rebate deal in the UK and don't understand why he bothered with all the palaver!

Where I do agree with you is that people with the level of wealth to own homes in various countries, private jets etc. will inevitably be able to pay for advisors etc to arrange their (very complex) tax affairs in a manner which minimises their exposure. They can also benefit by arbitraging the differences between different taxation systems around the world.

This probably isn’t “fair”, but it is a reality and blaming them as individuals for doing so is counter productive, in my view.

I don't, really, blame them for using such schemes. The government should, at least, change the law to make it harder to do so.

 

[Bromley boy]

I don't, really, blame them for using such schemes. The government should, at least, change the law to make it harder to do so.

Herein lies the rub.


How do you change the law to clobber Hamilton while not also clobbering our plumber (and thousands of other self employed people)? You might decide that’s very difficult or impossible to do.


You might also decide the cost of doing so and litigating won’t raise enough additional revenue to make it worth while.


It’s also true to say that what Hamilton’s doing isn’t a “scheme” as such, he’s just claiming a VAT refund on a business asset.


The general anti avoidance rule and culture within financial services has already moved away from a lot of the more aggressive “schemes” of old - a good example of these was film sale and leaseback arrangements.


There were different variations, but they went something along the lines of

• government creates a tax relief to stimulate investment in the media sector
• Investment firms create a complex “scheme” by which high net worths borrow money to invest in said scheme and receive a massive income tax break
• Investment firms rush out and market said scheme to high net worths via their accountants and IFAs
• Government realises what is happening, decides the tax leakage outweighs the original benefits to the media sector, tweaks the legislation to close it down and attacks the existing schemes on the basis they are illegal
• HMRC and the investment firms both run off and produce QC’s opinions telling them the scheme is/is not illegal
• Entire thing drags through the courts for years, and it’s very uncertain whether the tax that may or may not eventually be recovered is worth the cost of the litigation

I’d agree with you this is getting more towards an aggressive manipulation of the tax system.

I’d still maintain the fault for his exploitation lies with the treasury for not designing the relief system better in the first place. It is for the courts, not for the treasury and certainly not for HMRC to decide whether the legislation actually works in the way it is intended. However there has been a cultural shift away from this kind of thing, which is a good thing in my opinion.


By far the most effective means of reducing tax avoidance is:

• Set tax rates at a sensible level so as to make avoidance not worth while, as far as possible. When the advisors fees approach the value of the tax saved it quickly becomes pointless;
• Draft clear, well thought out legislation that is fit for purpose and not ambiguous/open to interpretation.

 

[GB]

The IOM authorities are adamant he would have got the same VAT rebate deal in the UK and don't understand why he bothered with all the palaver!

.

It wouldn't be him bothering with all the palaver, it would be his team of advisors. If your financial advisor told you if you put x amount of your money in xx and you will save (legally) on your tax bill I'm sure you would be quite happy to let them get on with it.

Incidentally, on the much lower end of the scale, I wonder how many people come back from holiday from abroad and don't pay the right amount (or any amount) of duty on items they might bring back.

 

[Tetchytyke]

Everyone, please remember this when we're told that we need to make cuts that (as usual) the poorest in society will face.

The Queen has shares in Bright House, who are successful purely because of the cuts facing the poorest people in society.

I spend my working life helping the customers of the likes of Bright House, and that freeloader is profiting from the misery they bring. Makes my blood boil.

 

[Xenophon PCDGS]

They are - until someone sends a memory stick of information to the Guardian and others to look at. Whilst that is clearly a breach of trust it may ( depending on your viewpoint) be in the public interest.

Two Labour controlled authorities were mentioned in the BBC North-West News earlier today with regards properties they have benefitted from in terms of taxation, one of which was the large Bootle shopping precinct. I wonder if the Guardian will choose to run an article on this matter?

 

[Tetchytyke]

I know a lot of rich people most self made, and none are laughing at the poorer working classes, many were just the same themselves at one time, but through hard work and being prepared to take risks have made it pay off.

Ah, the old fallacy that rich people "work harder" than poor people. I was wondering when that old chestnut would make an appearance.

Tax e-voidance is stealing as much as nicking a telly is. Surely you can see that?

Tax e-voidance makes it harder, not easier, for the entrepreneur to succeed. The big corporates don't need to bother paying tax on their profits, and their directors and managers don't need to bother paying tax on their compensation. And so they can undercut the smaller businesses who can't avoid/evade tax in the same way.

But the people who are being truly shafted by the hyper-rich let them away with it, thinking that "hard work" will get them into the club too. It won't. The richest man in Britain is the Duke of Westminster, and his hereditary wealth goes back 1000 years. "Hard work and risk taking" my arse.

 

[Xenophon PCDGS]

The Queen has shares in Bright House, who are successful purely because of the cuts facing the poorest people in society. I spend my working life helping the customers of the likes of Bright House, and that freeloader is profiting from the misery they bring. Makes my blood boil.

Were not Bright House recently in the news for, shall we say "untowards matters"?

 

[Tetchytyke]

Were not Bright House recently in the news for, shall we say "untowards matters"?

They'll go bust rather than repay all those people they ripped off. Can't have the shareholders out of pocket, can we?

Provident will do the same.

 

[Kite159]

Do you really think old Liz actually knows where her personal wealth is getting invested, she will probably be shocked to find out some of it ended up in Bright House (once someone tells her what Bright House is)?

 

[DarloRich]

Two Labour controlled authorities were mentioned in the BBC North-West News earlier today with regards properties they have benefitted from in terms of taxation, one of which was the large Bootle shopping precinct. I wonder if the Guardian will choose to run an article on this matter?

Hopefully. If they don't perhaps the Mail or the Express will. They don't seem to worried by all this tax stuff though. Wonder why?

Do you really think old Liz actually knows where her personal wealth is getting invested, she will probably be shocked to find out some of it ended up in Bright House (once someone tells her what Bright House is)?

Indeed - but someone inside the "firm" should be setting the ethical boundless for what is and is not an appropriate investment. Bright House seems the wrong side of the line.

 

[Bromley boy]

Tax e-voidance is stealing as much as nicking a telly is. Surely you can see that?

Tax e-voidance makes it harder, not easier, for the entrepreneur to succeed. The big corporates don't need to bother paying tax on their profits, and their directors and managers don't need to bother paying tax on their compensation. And so they can undercut the smaller businesses who can't avoid/evade tax in the same way.

This is quite a rant - have you been to the pub?

Have you read the quite detailed discussions of tax avoidance over the last few posts.

If you believe tax avoidance (which can be as innocuous as opening an isa account, claiming tax deductible expenses, or paying into a pension) is the same as “stealing a telly” (a criminal offence) you have quite evidently not understood a single word of it.

 

[Bromley boy]

The Queen has shares in Bright House, who are successful purely because of the cuts facing the poorest people in society.

I spend my working life helping the customers of the likes of Bright House, and that freeloader is profiting from the misery they bring. Makes my blood boil.

You’re being very unfair here. The queen doesn’t personally own shares in BrightHouse, so your statement above is factually incorrect.

Her monies have been invested into funds whose managers have then, rightly or wrongly, chosen to make investments into equity portfolios which includes shares in BrightHouse. This is a completely different thing to saying "the queen has shares in BrightHouse".

I have no doubt the palace is mortified at what is clearly a massive error of judgement on the part of her advisors, but it’s not as if the queen has rung up her stockbroker and commanded him to buy shares in BrightHouse so that she can laugh at the peasants paying £25 per week * 50 years for a crappy washing machine.

I absolutely agree with you that BrightHouse is a contemptible company who exploit the desperate/the poor/those who are not bright enough to realise what they are getting into and the FCA should intervene to make these kind of credit agreements illegal.

 

[Condor7]

Ah, the old fallacy that rich people "work harder" than poor people. I was wondering when that old chestnut would make an appearance.

Tax e-voidance is stealing as much as nicking a telly is. Surely you can see that?

Tax e-voidance makes it harder, not easier, for the entrepreneur to succeed. The big corporates don't need to bother paying tax on their profits, and their directors and managers don't need to bother paying tax on their compensation. And so they can undercut the smaller businesses who can't avoid/evade tax in the same way.

But the people who are being truly shafted by the hyper-rich let them away with it, thinking that "hard work" will get them into the club too. It won't. The richest man in Britain is the Duke of Westminster, and his hereditary wealth goes back 1000 years. "Hard work and risk taking" my arse.

The only reason this is an old chestnut is because people like you constantly berate the rich, I didn’t just pluck that post out of the air it wasn’t me that started this discussion, it was to add some balance to the proceedings.
Of course there are some like the Duke of Westminster whose wealth dates back hundreds of years and more than likely was obtained unfairly, but that is hardly the current Dukes fault, and besides we are talking about less than one percent of the population here, most of the wealthy are self made or their parents were.

Is tax avoidance the same as nicking a telly? If you think that you have serious problems. As already mentioned an ISA is a way of avoiding tax available to everyone, it was introduced specifically to help anyone to avoid paying tax. If you are self employed there are numerous ways to legally and morally avoid paying tax. If you use your home as an office you can avoid paying a small amount of tax. Are you really saying anyone doing that, or taking out an ISA is the same as someone breaking into your home and stealing a tv? I think you need some serious mental adjustment.

All that being said I think it is clear that some mega rich while maybe not doing anything illegal do things that are morally questionable but as I said in a previous post that is not restricted to the rich, taking cash in hand or not declaring Ebay sales is not just morally questionable but is against the law.

So I put it to you, what is worse someone using a legal but maybe morally questionable way of avoiding tax or someone who deliberately evades paying tax? Just because one are large sums of money and others small does not make any difference at all.

 

[Condor7]

The mega rich don't have to break into your house to "rob" you. They are doing it now. Self made businessmen of the type you or I could know ( and i know several who I went to school with) are not the issue. They are small fry in the grand scheme of things and easy prey for HMRC. Even they don't earn enough to make off shore tax planning really worth the trouble and expense. I am sure they have their have bought/leased their wagons in such a way as to save a bit of money but it will pale into insignificance alongside the sums being discussed in these papers.

All I want is a fairer society. To me that means people who have had the benefit of all that our society has to offer and have done very well out of it return some of that benefit to the next generation by paying a touch more in tax. I am not naive enough to expect an equal, just or fair society but i think we can make society a bit fairer. That is why when I see people with lots & lots of money who seem to have a choice about how much tax they pay, when the rest of us have no real choice, choosing to stash their money off shore and not contribute to our society i get a touch annoyed. The law may allow this. My view is it should make it harder to achieve.

As mentioned previously I don’t agree will all you say, but I do understand your frustration and desire for a fairer society and to be honest find that hard to disagree with, unfortunately it’s an imperfect world and I’m not sure we will ever achieve that.

 

[Xenophon PCDGS]

As mentioned previously I don’t agree will all you say, but I do understand your frustration and desire for a fairer society and to be honest find that hard to disagree with, unfortunately it’s an imperfect world and I’m not sure we will ever achieve that.

I am pleased to see such a posting as this, steeped in realism, appearing on such an emotive thread as this one.

 

[DarloRich]

As mentioned previously I don’t agree will all you say, but I do understand your frustration and desire for a fairer society and to be honest find that hard to disagree with, unfortunately it’s an imperfect world and I’m not sure we will ever achieve that.

We will by people standing up and saying they have had enough of it. The problem is too many people ( as shown here) don't care that their hard work and taxation is being laughed at by those who seem to have a choice about whether they pay tax and contribute to our society at all - I find that disgusting yet clearly many people do not.

BTW - I am not naive enough to believe an equal or even fair world will be created. I simply want things a bit fairer. That means the rich paying a touch more of their money back to us in tax and the system making it harder for them to avoid paying that tax.

I am pleased to see such a posting as this, steeped in realism, appearing on such an emotive thread as this one.

I'm alright jack eh? Do you understand why us mere plebs are a tad unhappy about being ripped off like this. You may be happy that the rich can behave like this. I am not. It should be stopped.

BTW Paul - things like this bring Corbyn closer to power. That will worry you............

EDIT - before anyone starts i am not jealous or envious of those who are rich. That seems to be the standard Tory response to challenging those with money. It is tiresome.

I am glad these people have done well and hope they continue to do so. Many ( but not all) are the best at what they do and have worked hard to get there. If they could pay a bit more in tax I would be happy. I would be really happy if the system allowed us all to have a bit more cake and made it harder for them to keep it all.

 

[Xenophon PCDGS]

They'll go bust rather than repay all those people they ripped off. Can't have the shareholders out of pocket, can we.

I think that Caversham Insurance (Malta) Ltd operates in the UK as Caversham Finance Ltd trading as BrightHouse, so I wonder who exactly are these shareholders to which you refer?

 

[Xenophon PCDGS]

I'm alright jack eh? Do you understand why us mere plebs are a tad unhappy about being ripped off like this. You may be happy that the rich can behave like this. I am not. It should be stopped.

Who, at this moment in time, will be those with the power to effect change, who will "stop" the state of affairs? As long as there is a democratic society in Britain rather than a "Corbynesque" pale imitation of flights of fancy George Orwell utopian society, you are entitled to put your views in print, as I am to rebut them also in print.

 

[DarloRich]

Who, at this moment in time, will be those with the power to effect change, who will "stop" the state of affairs? As long as there is a democratic society in Britain rather than a "Corbynesque" pale imitation of flights of fancy George Orwell utopian society, you are entitled to put your views in print, as I am to rebut them also in print.

The Conservatives will never tackle this issue other than in the most superficial manner as they have to much to lose and their snouts are well and truly in the trough. The problem for them ( and you) is that Corbyn is appealing to large sections of the population who feel left behind and abused by the Tories and this is all grist to his mill. The plebs are getting restless.

My views on Corbyn are clear. Yet despite the best efforts of the press he did less badly than expected at the last election and continues to increase his strength. May sneaked home and is utterly devalued.

This kind of thing simply drives more people at the margins and the bottom towards him. While that isnt really a problem for the Tories it drives people in the squeezed middle towards him. Those of us working hard and paying tax every month while trying to keep the show on the road. It is those people you need to worry about losing. It might be worth thinking about what that means. Sometimes you have to give a little to preserve the whole.

 

[Xenophon PCDGS]

The Conservatives will never tackle this issue other than in the most superficial manner as they have to much to lose and their snouts are well and truly in the trough. The problem is that Corbyn is appealing to large sections of the population who feel left behind and abused by the Tories and this is all grist to his mill. The plebs are getting restless.

My views on Corbyn are clear. Despite the best efforts of the press he did less badly than expected at the last election and continues to increase his strength. This kind of thing simply drives more people at the margins and the bottom towards him. While that isnt really a problem for the Tories it drives people in the squeezed middle towards him. Those of us working hard and paying tax every month while trying to keep the show on the road. It is those people you need to worry about losing. It might be worth thinking about what that means. Sometimes you have to give a little to preserve the whole.

Perhaps if Corbyn came to power, we would see similar postings on this website from those who complained that the result of the referendum was because the "plebs" part of the electorate were too "thick" to fully comprehend the underlying nuances of implication that were so entailed therein, when Corbynesque utopia meets the "real political world" in reality. "Reaping and sowing" still so prevail.

 

[DarloRich]

Perhaps if Corbyn came to power, we would see similar postings on this website from those who complained that the result of the referendum was because the "plebs" part of the electorate were too "thick" to fully comprehend the underlying nuances of implication that were so entailed therein, when Corbynesque utopia meets the "real political world" in reality. "Reaping and sowing" still so prevail.

Perhaps - but as with Brexit those concerns could be shouted down with bland slogans like " will of the people" "or doing our country down" or " you lose - deal with it" or some other guff.

It might mean something is done to start tackling inequality in the UK. That might mean the rich having to pay a bit more back to the society they took all the benefit from before pulling up the ladder for the next generation. Sorry.

 

[Xenophon PCDGS]

My views on Corbyn are clear. Despite the best efforts of the press he did less badly than expected at the last election

"Less badly" hides the black and white fact that the last Labour campaign, running on the crest of a Socialist populist wave, was still not enough to see the Labour Party voted into office. They were not greatly enhanced by the seats gained in that last General Election than they gained in the 2010 General Election.

Much is made of the actual percentage of the vote gained by the Labour Party at the last General Election, but this has to be balanced by the actual percentage of the vote gained by the Conservative Party in that election.

 

[Dai Corner]

Perhaps if Corbyn came to power, we would see similar postings on this website from those who complained that the result of the referendum was because the "plebs" part of the electorate were too "thick" to fully comprehend the underlying nuances of implication that were so entailed therein, when Corbynesque utopia meets the "real political world" in reality. "Reaping and sowing" still so prevail.

I have the impression the Corbynesque Labour Party is mainly courting the middle-income public sector workers. They want to make 'the rich' pay 'a little more' and spend it and and borrowed billions on things like expanding public services (more jobs for said workers), giving them pay rises and paying off all student loans (not just those of the poorest graduates) so those rises won't be swallowed up.

 

[DarloRich]

"Less badly" hides the black and white fact that the last Labour campaign, running on the crest of a Socialist populist wave, was still not enough to see the Labour Party voted into office. They were not greatly enhanced by the seats gained in that last General Election than they gained in the 2010 General Election.

Clearly. However, the problem is that wave continues to roll and hasn't gone away. Corbyn becomes more popular by the day. I don't like the man or many of his views but he isnt going away.

Much is made of the actual percentage of the vote gained by the Labour Party at the last General Election, but this has to be balanced by the actual percentage of the vote gained by the Conservative Party in that election.

Indeed - but May still limped over the line and is only in power thanks to a shady deal with the DUP. Luckily she found that magic money tree that couldn't be found when the NHS or schools or the police needed more resources. Phew. That was lucky.

I have the impression the Corbynesque Labour Party is mainly courting the middle-income public sector workers. They want to make 'the rich' pay 'a little more' and spend it and and borrowed billions on things like expanding public services (more jobs for said workers), giving them pay rises and paying off all student loans (not just those of the poorest graduates) so those rises won't be swallowed up.

What I don't understand is how you can think that better public services is a bad thing. How can more doctors, nurses and policeman be a bad thing? You make out like people having jobs and being paid a proper wage is a bad thing.

To deliver those services the government needs tax revenues. Why should a bit more of that money come from the richest instead of us in the middle or at the bottom?

 

[Xenophon PCDGS]

It might mean something is done to start tackling inequality in the UK. That might mean the rich having to pay a bit more back to the society they took all the benefit from before pulling up the ladder for the next generation. Sorry.

I often wonder why the Cromwellian era only lasted for such a short period of time in Britain, when this was the last physical attempt to totally change the political face of the country by removing the monarchy (and its head in more ways than one) and introducing new ideas as how the country should be run. Have you ever looked deeply into the military campaigns of Cromwell and the views inherent in them during that time period?

Perhaps the "Corbynesque" views when fully entailed in power could borrow from the monarchistical ideas of Henry VIII which were put into operation at the time of the Dissolution of the Monasteries and take over ownership of large edifices such as the remaining cathedrals to sell off to those with the available finance, such as those tribal monarchies of the Middle East, with the funds put towards such Socialist truisms.

 

[Dai Corner]

Clearly. However, the problem is that wave continues to roll and hasn't gone away. Corbyn becomes more popular by the day. I don't like the man or many of his views but he isnt going away.



Indeed - but May still limped over the line and is only in power thanks to a shady deal with the DUP. Luckily she found that magic money tree that couldn't be found when the NHS or schools or the police needed more resources. Phew. That was lucky.



What I don't understand is how you can think that better public services is a bad thing. How can more doctors, nurses and policeman be a bad thing? You make out like people having jobs and being paid a proper wage is a bad thing.

To deliver those services the government needs tax revenues. Why should a bit more of that money come from the richest instead of us in the middle or at the bottom?

I think efficiently delivered and targeted public services are a good thing for the taxpayer and service users. Over-generously funded, poorly delivered public services are only good for public sector workers and those nasty capitalists who charge what they can get away with. Having worked in the public sector I know how much money can be wasted and how much better services can be delivered without any increase in costs.

 

[northwichcat]

"Less badly" hides the black and white fact that the last Labour campaign, running on the crest of a Socialist populist wave, was still not enough to see the Labour Party voted into office. They were not greatly enhanced by the seats gained in that last General Election than they gained in the 2010 General Election.

Much is made of the actual percentage of the vote gained by the Labour Party at the last General Election, but this has to be balanced by the actual percentage of the vote gained by the Conservative Party in that election.

Only a month before the snap General Election Labour did very badly in local elections and I seem to recall the Conservatives had unexpected victories in former mining towns in the North East. It looked like the General Election would be a landslide for the Conservatives but Theresa May announced a couple of unpopular policies and then seemed to hide from the media as much as possible. I think Robert Peston gave a good summary when he said Corbyn likes to think the public have moved to the left but we have to remember Theresa May's election campaigning was dire.