Paradise Papers: Tax Havens Exposed

[DarloRich]

I believe the VAT in question is on the purchase price of the aircraft, the use of which must be such that it meets the relevant definition of "business asset". Perhaps it's leased out to others while he isn't using it, etc.

There is a very complex ownership/lease structure underpinning it all, as you would expect. All terribly legal. All barred to the likes of you and me.

 

[Tetchytyke]

Lewis Hamilton genuinely and legitimately doesn't live here. Like most F1 drivers, he lives in Monaco. I actually don't have a problem with people living where their money is. I don't see Hamilton do much wrong.

Where I do get angry is where there are artificial transactions made to move profits from one jurisdiction to another. Starbucks and Amazon are two infamous examples. I understand why they do it, and I understand that it is perfectly legal. It is also morally and ethically bankrupt.

The standard arguments against those who see it as wrong are either "you're jealous" or "you don't understand". I actually do understand but, because I don't make my money doing it (I make my money dealing with the victims of Bright House, Wonga, etc) I don't defend it. It doesn't make me clueless.

 

[Tetchytyke]

So your attitude basically is that the only thing that could ever possibly wrong with the NHS is that it’s underfunded and certainly couldn’t learn a thing from the evil private sector.

I've asked for concrete examples of where the private sector does better in a directly comparable situation. The silence has been deafening.

My experience is that the private sector, when working on directly comparable contracts, have all the same issues that the NHS trusts have. I am aware of several examples in the mental health sector where private companies have moved in promising efficiency savings and then promptly walked out again six months later when the realise the NHS trust thought of the same idea and discounted it as unworkable ten years ago.

Private hospitals have a quicker throughput because they don't have emergencies and they don't have bed-blocking. The main and fundamental reason for this is that private hospitals select who they will treat. It's much easier to run any service of you can choose who you will see, and when.

Everyone can always learn. But that is so facile a statement as to be meaningless.

Truthfully, if private companies can provide the same service with the same staff levels and pay at a cheaper price, then let them fill their boots. The history of the NHS, however, is that generally they can't. They cut services or they cut pay or they cut staff. Or if they can't do that they hand back the keys.

 

[Tetchytyke]

An interesting article about how rich people really feel about tax.

"It's a game."

https://amp.theguardian.com/inequal...in-how-the-top-1-really-feel-about-paying-tax

 

[cactustwirly]

There's a simple ish way to solve this, get the government to force a tax rise in Bermuda, Jersey, IOM, Cayman Islands etc.

 

[Dai Corner]

There's a simple ish way to solve this, get the government to force a tax rise in Bermuda, Jersey, IOM, Cayman Islands etc.

Have exactly the same taxes all over the world? Good luck trying to achieve that!

 

[Xenophon PCDGS]

There's a simple ish way to solve this, get the government to force a tax rise in Bermuda, Jersey, IOM, Cayman Islands etc.

Is there any legal way under British law that this could occur?

 

[cactustwirly]

Is there any legal way under British law that this could occur?

They are part of the UK, so I would hope so

 

[Xenophon PCDGS]

They are part of the UK, so I would hope so

One of those quoted items in your post was the Isle of Man. My understanding, correct me if I am wrong, is that the Isle of Man is a Crown Dependency which means it is technically a possession of the Crown but is NOT part of the United Kingdom and I feel that it is also NOT a territory of the United Kingdom.

 

[Dai Corner]

Even if Westminster could bring the taxes in the Territories into line with those in the UK proper, somewhere else in the world would then become the best place to avoid tax and people would move their assets there (probably at the touch of a button).

 

[Bromley boy]

They are part of the UK, so I would hope so

They are not part of the UK. The IoM and the Channel Islands are self governing crown dependencies.

They legislate over their own domestic affairs and it would be difficult for the UK government to do this without triggering a constitutional crisis, and may be illegal.

Wikipedia gives a decent overview.

https://en.m.wikipedia.org/wiki/Crown_dependencies

Westminster retains the right to legislate for the Islands against their will as a last resort, but this is also rarely exercised, and may, according to legal opinion from the Attorney-General of Jersey, have fallen into desuetude — although this argument was not accepted by the Department for Constitutional Affairs. (The Marine, Etc., Broadcasting (Offences) Act 1967 was one recent piece of legislation extended to the Isle of Man against the wishes of Tynwald).

The States of Jersey Law 2005 established that all Acts of the United Kingdom and Orders in Council were to be referred to the States, thus giving greater freedom of action to Jersey in international affairs.

 

[Tetchytyke]

The Isle of Man has a customs union with the UK, so it's not beyond possibility that Tynwald could change their views on other taxes, though then again their business interests are lucrative. The Channel Islands don't- which is why you can buy duty-free fags and booze- and they're not going to give up their lucrative business interests either.

The solution is not to force other countries to tax the same as us, the solution is to make it very difficult to offshore money whilst living and working in the UK. Get rid of non-Dom status and treat anyone who owns property in the UK as being domiciled in the UK, that would do it. That and clamp down on secretive limited companies: forcing the naming of the beneficial owners would not be difficult, should there ever be the political will.

As for "we'll leave the UK": no you won't. Your kids are at Eton, your home is in Belgravia, the night life in Bermuda is crap. Ultimately they won't leave.

I've no problem with people paying tax where they live, whether it's Lewis Hamilton in Monaco or the ex-pats in Dubai. What I do have a problem with is people taking all the benefits of living in the UK and then parking their money elsewhere. Live where your money is.

 

[Dai Corner]

One problem with your idea is that we can't introduce capital controls (which is what you're describing) while we're in the EU @Arctic Troll . If we want to be in the Single Market and/or Customs Union after we leave we may well have to accept free movement of capital whether we want it or not.

 

[Bromley boy]

The solution is not to force other countries to tax the same as us, the solution is to make it very difficult to offshore money whilst living and working in the UK. Get rid of non-Dom status and treat anyone who owns property in the UK as being domiciled in the UK, that would do it. That and clamp down on secretive limited companies: forcing the naming of the beneficial owners would not be difficult, should there ever be the political will.

Abolishing non Dom status - how much additional revenue do you think it would raise if lots of them depart these shores?

For balance, it's worth considering that the much derided non doms, who of course are liable to tax on U.K. and remitted income, currently contribute as much tax to the treasury as 10 million lower income taxpayers in the U.K. Is that a golden goose you want to risk strangling?

http://www.telegraph.co.uk/news/gen...uch-tax-as-10-million-low-income-workers.html

To match the £8.2 billion* from just under 115,000 non-domiciled residents, you would need the contributions of around 10 million lower-income income taxpayers. The income tax paid by the bottom 50 per cent of taxpayers, around 14.65 million people, would marginally beat the amount paid by the non-doms, comprising 9.8 per cent of the total income tax take.

As for uk property ownership = U.K. Tax domicile for the beneficial owner, well no it wouldn't if the property was acquired by a company, itself owned by a chain of entities going up through several jurisdictions. Trying to force disclosure of the ultimate beneficial ownership would be impossible as soon as you encountered a "black box" entity in a foreign jurisdiction that lacked the political will, of which there are many around the world.

I'm no great fan of ghettos in Chelsea where foreign owned palaces sit empty, but around 5% of our total tax revenue comes from non doms and I'm not sure risking strangling a £9.5bn golden goose is such a good idea. Neither is futile fiddling around to "force the naming of beneficial owners", adding yet more complexity to the tax system, and unlikely to achieve anything one PwC's finest get to work anyway.

*now £9.5bn according to the FT

 

[Tetchytyke]

Abolishing non Dom status - how much additional revenue do you think it would raise if lots of them depart these shores?

Non-doms won't leave, the whole reason why they are non-doms is precisely because they don't want to leave the exclusive schools and social life of London.

If the likes of Lord Rothermere, non-dom owner of the Daily Mail, want to leave then I'll drive them to the airport myself.

As for the tax income from wealthy people,it's true that they pay more in pounds and pence. But as a proportion of income it is significantly less. It depends how you wish to look at fairness. I think looking at percentages is the way of justifying fairness. Taxing a small percentage from someone with nothing is less fair than taxing a higher percentage from someone with lots.

The problem, of course, is that many don't pay any tax, or only the tiniest percentage. The owner of Boots brags of paying less tax than his cleaner. It's just taking the mick.

I find it bizarre that the middle classes, paying through the nose on PAYE, vote to defend this. It's these people who pay the price for the wealthy tax dodging. The idea the hyper-rich will ever let them join the club is laughable.

 

[Dai Corner]

The boss of Boots apparently lives in Monte Carlo so unless there's one rule for racing drivers and another one for business leaders him paying his tax outside the UK should be ok by you?

Oh, and Boots is part of Walgreens Boots Alliance, Inc which is a company listed on NASDAQ so anyone can buy shares. You might even have some indirectly if you're in a pension scheme.

 

[Tetchytyke]

"People with pensions have shares, so everything a listed company does is ok".

I think we've got the full set now

If he lives and works in Monaco, and his business is purely in Monaco, then he can fill his boots. Sadly, like Philip Green (the pension thief...so much for the joys of shareholding when I retire!), he doesn't.

 

[Bromley boy]

Non-doms won't leave, the whole reason why they are non-doms is precisely because they don't want to leave the exclusive schools and social life of London.

If the likes of Lord Rothermere, non-dom owner of the Daily Mail, want to leave then I'll drive them to the airport myself.

As for the tax income from wealthy people,it's true that they pay more in pounds and pence. But as a proportion of income it is significantly less. It depends how you wish to look at fairness. I think looking at percentages is the way of justifying fairness. Taxing a small percentage from someone with nothing is less fair than taxing a higher percentage from someone with lots.

The problem, of course, is that many don't pay any tax, or only the tiniest percentage. The owner of Boots brags of paying less tax than his cleaner. It's just taking the mick.

I find it bizarre that the middle classes, paying through the nose on PAYE, vote to defend this. It's these people who pay the price for the wealthy tax dodging. The idea the hyper-rich will ever let them join the club is laughable.

Very simply, for many, pragmatism trumps lofty ideas of “fairness”.

At first sight it may seem “unfair” that the wealthy pay a lower percentage of their income in tax, but it should be remembered that’s a lower percentage of a huge number. It keeps the lights on at the NHS and pays for the welfare state.

The truly wealthy (non dom level of wealthy) are a tiny number of individuals, around 120,000, who contribute a disproportionately large % of the tax take. In fact 5% of the total.

As for the middle classes, the treasury already reaps the vast majority of the tax take from high earners - the top 25% of earners pay 75% of the tax revenue.

The lowest 50% of earners only just about match what the non doms pay, according to the figures I posted earlier.

That is the pragmatic reality of UK tax revenue. It also sounds pretty “fair” to me! The wealthiest are paying by far the biggest numerical share.

Would you rather live in your idea of a “fair” system, where the wealthy are taxed out of existence until they leave and we end up with less money overall, or a system which is pragmatically designed to maximise the tax revenue it receives to spend on public service?

I guarantee a system that maximises tax revenue will be a pragmatic one, close to what we have now.

 

[Dai Corner]

"People with pensions have shares, so everything a listed company does is ok".

I think we've got the full set now

If he lives and works in Monaco, and his business is purely in Monaco, then he can fill his boots. Sadly, like Philip Green (the pension thief...so much for the joys of shareholding when I retire!), he doesn't.

You can probably choose to keep your pension money purely in cash or Government bonds if you want.

Just like Hamilton he works in various places all over the world.

 

[Bromley boy]

"People with pensions have shares, so everything a listed company does is ok".

I think we've got the full set now

The point that’s being made is that the profits of listed companies, maximised through tax efficient planning, flow back to institutional investors such as pension funds and insurance companies.

I’m afraid the fact you apparently don’t appreciate this once again belies your own, very poor, understanding of how the financial system works.

 

[Bromley boy]

If he lives and works in Monaco, and his business is purely in Monaco, then he can fill his boots. Sadly, like Philip Green (the pension thief...so much for the joys of shareholding when I retire!), he doesn't.

Is it so difficult to grasp the concept
that businesses grow beyond their core markets and operate internationally? If someone owns a multinational company you can’t simply say “that person must be taxed according to where their business/money is” if the business is incorporated in many countries and they have residences around the world.

Taking the example of Philip Green - behaved disgracefully in relation to the BHS pensions scandal, I’d agree - but how much do his businesses contribute to the U.K in terms of tax via employment and tax revenue?

 

[SS4]

I find it bizarre that the middle classes, paying through the nose on PAYE, vote to defend this. It's these people who pay the price for the wealthy tax dodging. The idea the hyper-rich will ever let them join the club is laughable.

They're constantly told by the media (owned by a few of the hyper-rich) that the left wish to crush them and take their wealth and redistribute it amongst those deemed to be a lower class. There's also what Steinbeck referred to as temporarily embarrassed millionaires where the middle class believe that they can/will be millionaires/hyper rich one day if only they work hard enough so why would they vote for policies which would take away their money once they actually get it?

It's seldom mentioned that the super rich hold a huge amount of wealth and when it is it's always abstracted e.g - large companies instead of the people themselves - all people know it when money is taken from them personally but it's easy to be apathetic when you don't know anyone affected.

In addition people are told to hate those below them (i.e lower classes) including, but not exclusively - the unemployed (note how the stories typically refer to how they have Sky/iPhone but also on benefits...), the working poor (get another job) as well as the sick and disabled (faking it).

 

[Bromley boy]

It's seldom mentioned that the super rich hold a huge amount of wealth and when it is it's always abstracted e.g - large companies instead of the people themselves - all people know it when money is taken from them personally but it's easy to be apathetic when you don't know anyone affected.

I think most people are aware the super rich hold a huge amount of wealth. That’s what makes them super rich.

As a matter of fact, large companies tend to be owned by institutional investors and a few, very wealthy, individuals.

Can you please explain what the rest of your post means as I can’t make head nor tail of it!

 

[SS4]

I think most people are aware the super rich hold a huge amount of wealth. That’s what makes them super rich.

As a matter of fact, large companies tend to be owned by institutional investors and a few, very wealthy, individuals.

Can you please explain what the rest of your post means as I can’t make head nor tail of it!

The tl;dr version is that the media tells people to hate the poor and not the rich.

 

[Dai Corner]

The tl;dr version is that the media tells people to hate the poor and not the rich.

Huh? The left wing media tells people to hate the rich! And it's worked judging by many posts in this thread.

 

[Bayum]

Fewer resources?!?!?

There are, of course, many reasons. A smaller caseload, for one. The fact that the private sector only deal with routine problems, for two. A more stable and educated client base, for another. Who are paying handsomely for the service.

It's easy to have few cancellations, and no complications, when you're dealing with people who are fundamentally stable. They will turn up to their appointmentsike good boys and girls. And, as they're not emergency cases, there won't be complications and staff won't be called away to deal with a major crisis elsewhere because the crises get dumped on the NHS.

Private practice "efficiency" is nothing more than the efficiency of being able to pick and choose who you treat.

Have you got any statistics to back up private practise 'cherry-picking' what they'll take on and deal with? I've known many people with significant co-morbidities go private for that reason - they're willing to have a go at a difficult, complex case whereas the NHS were prepared to leave be and manage analgesia with strong opioids.

Just this week, one of my student's grandparents was saying they were looking into private practise for analgesia because the NHS area she is in refuse to try analgesia though there are consultants, including her own, who have said local anasthetic into the spinal space will provide significant analgesia, but they're not allowed to perform it on the NHS in their pain clinics. Only a few years ago you were hearing about obese patients who surgeons weren't willing to operate on because of the risks of surgery, but when the patient decides to pay money they've taken them on for bariatric surgery. So I'm not certain you're being entirely accurate with your representation of private practise only taking on 'simple' cases with patients who are 'less-poorly'. They may be 'unwell', but I'll bet your last pound that they will also take on some poorly poorly patients also.

 

[Bromley boy]

The tl;dr version is that the media tells people to hate the poor and not the rich.

Too long, didn’t read?

I read it. Much of it was stream of conscious, conspiracy theory type stuff.

The middle paragraph was the most coherent. I’d invite you to respond to my comments on it, raised in my last post.

 

[Xenophon PCDGS]

The solution is not to force other countries to tax the same as us.

Quite so, as Britain is in no position to impose its collective financial will these days upon other nations.

 

[Bromley boy]

Quite so, as Britain is in no position to impose its collective financial will these days upon other nations.

True. Although the U.K., as with most other countries, has double tax treaties in place with many jurisdictions around the world.

These follow an OECD model and are essentially mutual cooperation arrangements which aim to increase certainty for taxpayers by avoiding “double taxation” (ie taxation of the same income in different countries), clarifying permanent establishment rules, providing for information exchange etc.

Needless to say, where these arrangements are not in place (as they most certainly are not between the U.K. and most “tax havens”) punitive anti avoidance measures, such as withholding taxes, will apply to payments between the countries concerned.

 

[Dai Corner]

Needless to say, where these arrangements are not in place (as they most certainly are not between the U.K. and most “tax havens”) punitive anti avoidance measures, such as withholding taxes, will apply to payments between the countries concerned.

Just to clarify in my mind, does that mean when a payment is sent from the UK to Mr Megarich's account in Taxhavenland a part of it has to be deducted and remitted to HMRC towards his UK tax liability? Presumably not to do so would be tax evasion and therefore illegal.