Posts tagged "Jimmy Carr"

Morally repugnant tax avoiders can rest easy under David Cameron | Tanya Gold

With insane hubris, a few treaties and a lot of money moving from tax haven to tax haven is called a success

Lord Fink, the Tory donor (ennobled 2011) and party treasurer, who succeeded to the post after Peter Cruddas was caught out offering meetings with David Cameron for donations of up to £250,000, has revealed that he asked George Osborne to make Britain more like a tax haven, so we, er, don’t lose jobs to other tax havens, because everyone knows that Guernsey is an economy that dwarfs all others.

What Fink means, I suspect, is that Britain should be more like a tax haven so he doesn’t lose money to anything as morally perverse as a tax system. This is the neoliberal cure for the problem of tax havens, and it makes sense if you love money and hate people. Make everywhere a tax haven. This, in the government’s exhausted social equality jargon, could even be called “fair”.

Not that Osborne agreed with Fink. We know what the chancellor thinks of tax avoidance, because he was moved to comment on it even before the comic Jimmy Carr was exposed as a tax avoider in June and instantly stopped being funny. In his budget speech Osborne denounced “tax evasion and indeed aggressive tax avoidance as morally repugnant”. Morally repugnant? Are you sure? I thought it was welfare recipients, with their pesky need for food and healthcare and jobs (see the whispered philosophising of Mitt Romney) who are morally repugnant; you would certainly think so, from the number of briefings from civil servants hitting the tabloids, moaning about immigrants living in mansions and laughing at the “squeezed middle”.

Other ministers sing the anti-tax avoidance song – Danny Alexander, Vince Cable, even the prime minister, whose private fortune was enhanced by careful investment in tax havens, courtesy of his late father. But while welfare scrounging is morally repugnant enough to act on, tax avoidance, it seems, is not – you can endorse it, and still be Lord Fink (ennobled 2011) and party treasurer. Nothing changes, which makes me wonder if the only person in government telling the truth is Francis Maude who, when accused of trying to turn Britain into a tax haven by a Labour MP 20 years ago, said: “Thank you very much, I appreciate the compliment.” This is an anecdote he tells journalists, so he must think it makes him sound wonderful.

No one is sure quite how much revenue is lost to tax havens and complex avoidance schemes because invisible money is hard to count. You are more likely to see the tax gap wandering down Bond Street than find a note of it in a drawer at HM Revenue and Customs. The Treasury says that almost 14% of the UK tax gap is due to legal tax avoidance. The Times put it at £5bn a year in an investigation this week, with at least £1bn being lost to British citizens living in Monaco, if you can call it living.

Of six Monaco-based donors to – surprise! – the Tory party, one, David Instance, lent Cameron a helicopter in his leadership campaign, so he could fly to meetings and harm the world, like James Bond in reverse. I have seen Monaco; it is all street signs pointing at Prada, billionaires cruising, as if on spring break, and defibrillators at bus stops for when they actually do break. Only a person who thinks paying capital gains tax is the same thing as being beaten up by a gang of social democrats would actually live there, but they do.

In the report The Price of Offshore Revisited, James Henry, formerly the chief economist at McKinsey, puts the amount invested through tax havens between £13 trillion and £20tn, which is more than US and Japanese GDP combined. It enough to write off third world debt, reinstitute Sure Start, even in a property market as inflated as Monaco, and buy the prime minister enough helicopters to fill the skies. He could spell out his name in them.

Action is promised, but always snuffed out. The G20 said it would “close the door on tax havens” in 2009, after taxpayers bailed out banks and bankers – the state does have uses, you see, despite its baffling hunger for tax revenue. The G20 showed the robustness of its determination by flexing its giant fists and, er, requesting more transparency from tax havens, which they were, amazingly, reluctant to provide. And why would they when the people asking for transparency are so often the same people languishing offshore? This week the Guardian reported that 68 peers and MPs work for firms that operate in tax havens.

Meanwhile, the amount held in bank accounts in tax havens was £1.7tn in 2011 – the same as in 2007. With insane hubris, the crackdown, a few treaties and a lot of money moving from tax haven to tax haven, was called a success. What would they consider a failure?

In November, Angel Gurría, general secretary of the Organisation for Economic Co-operation and Development, or, as I am calling it, the Organisation for Talk, Wait and Do Nothing, told the G20: “The era of bank secrecy is over.” The most amusing result was that Jersey was seriously rattled: in June, Sir Philip Bailhache (knighted 1996) the island’s assistant chief minister, threatened to declare independence from the UK. On that, too, we are still waiting.

Twitter: @TanyaGold1


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Posted by admin - September 22, 2012 at 08:29

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Why morality is fashionable again

From David Gauke railing against cash payments for plumbers, to the prime minister criticising Jimmy Carr’s tax affairs, politicians and public figures can’t stop moralising. After decades of self-interest, ethics are suddenly a talking point again

Not so long ago, it seemed that “morality” was a dirty word, or rather a word whose function was to make sex look dirty. Its primary associations were with groups such as the the Moral Majority in America, which seemed obsessed by the horrors of homosexuality, teen sex, unmarried couples and working mothers. In Britain, the archetypal image of a moral crusader was Mary Whitehouse, a Disgusted of Tunbridge Wells for the nation.

Now, however, it seems morality has been taken back from the moralisers and has once again become the high ground from where public figures look to command. On Monday Treasury Minister David Gauke said it was “morally wrong” to pay tradesmen in cash to avoid tax, following in the footsteps of his party’s leader, David Cameron, who called Jimmy Carr’s tax avoidance “morally wrong”. Cameron made his remarks having himself been recently tainted by the charge of immorality by Cardinal Keith O’Brien, who said it was “not moral” to ignore victims of recent financial disasters “while the rich can go sailing along in their own sweet way”.

Over recent weeks, we have heard the Labour MP Margaret Hodge tell the House of Commons Public Accounts Committee that the BBC allowed tax arrangements which were not “morally right” and political activist Peter Tatchell claiming that the International Olympic Committee had “abdicated its moral responsibilities” by not agreeing to a minute’s silence for the 40th anniversary of the murders of Israeli athletes in the Munich Olympics. We have seen François Hollande set up a cross-party government committee to look into putting more morality into French politics, read Anthony Seldon, Wellington College’s Head, bemoan the lack of a “moral compass” in British public schools, and heard leading American public philosopher Michael Sandel continue to decry the moral limits of markets.

If you had fallen asleep, Rip Van Winkle-like, a decade or so ago, all this talk of morality might well strike you as, well, wrong. Inspired by respect for diversity, fear of “cultural imperialism” and a kind of democratic relativism, for some time it was considered arrogant to judge the morality of others. Who are you to say what’s right and wrong? Isn’t that just your opinion?

What has changed is that it has finally been accepted that we can’t function without values. (Indeed, the very project of avoiding moral judgments itself rests on the firm belief that they are wrong.) But the suppression of morality-talk has served another very good purpose: the language itself is being used differently, as if it needed time in retreat in order to purge itself of its puritanical associations. It left the stage muttering about people shagging each other and strode back on later lamenting how the privileged are screwing the masses. Look at how the uses of moral language have been pressed into service in recent weeks and you’ll find that they do not concern mere private behaviour but the point at which individual actions have consequences for wider society. Morality has recovered its political dimension.

So why is this happening now? There are several possible reasons. One is that moral shoulder-shrugging is much easier when times are good. “Each to his own” is an attractive philosophy when you own plenty and fully expect to get even more. Similarly, it’s less distasteful to see people getting filthy rich if you’re getting more comfortable too. But when the economy came crashing down, the scales fell from our eyes and we saw more clearly that society’s spoils are not being fairly shared, and that many of the rich are simply high-rollers gambling with our cash. The only reasonable response to this is a moral one. The only language that is up to the job is moral language.

However, even before the crash, the ground was being prepared for the return of morality. As far back as the 1970s, the sociologist Ronald Inglehart suggested that as material wealth increased and people became more economically secure, their attentions would turn to their non-material needs, such as for autonomy and self-expression. He saw us entering a period of post-consumerist disillusion, where we look for things that are meaningful, not just fun, expensive or fashionable.

Inglehart possibly underestimated the extent to which people would continue to lust after ever more unnecessary consumer goods, and the ingenuity of capitalism to encourage them to do so, but there was clearly some truth in his hypothesis. There is widespread dissatisfaction with rising material prosperity as a goal in itself and a yearning for something more.

Hence the boom years created their own moral unease, a discomfort with our material comfort. Among the “something mores” people looked for were experiences rather than objects, and various vague forms of spirituality. Few were explicitly looking for a greater sense of moral purpose, but once people start looking for the deeper, more serious things in life, eventually they are going to have to grapple with the distinction between what is good and true and what is corrupt and false. At that point, morality enters the picture.

We have also needed to revert to moral ways of talking to do justice to the major global issues facing us. There are many examples of this. Take poverty and disease in the developing world. When I was growing up, the main lens through which to see these issues was charity. Helping others was good, but it was voluntary and individual. But as decades of aid failed to end poverty and eradicate disease, it became increasingly obvious that there were structural issues at work, that debt and trade restrictions were core parts of the problem. There was no other way to describe this than injustice. The morality of global inequality stopped being purely a matter of the individual charitable donor and her conscience and entered public discourse with a political dimension.

Or take the environment. There has always been a moral aspect to green thinking, but for years, in perception at least, it was based around rather nebulous and dubious ideas such as respect for nature as a thing valuable in itself. When people thought of greens they thought of Friends of the Earth, with its suggestion that the object of concern was the big rock we live on, not the people who inhabit it.

Over the past decade or so, however, green politics has been based more on tangible harms to real people, present and future; from the poor who will bear the brunt of rising oceans, to our generation’s children, who may have to cope with food scarcity and a harsher climate. And once again, if you want to articulate what is wrong with all this, only moral language is up to the task.

Much as the return of morality is to be welcomed, it does carry with it certain risks. One is that when governments find themselves unable to control the economy and run public services, they look to present themselves as guardians of other things: if your vote cannot halt economic decline, perhaps you can be persuaded to use it to prevent moral decline instead. It is perhaps no coincidence that the longer the coalition has been in power but apparently incapable of turning the economy around, the more moral rhetoric we have seen coming from it. Much as we might complain that politicians are not just there to increase national wealth, the idea that their main role is to protect our moral virtue might seem even scarier. As the Labour MP Austin Mitchell said about the kind of low-level, cash-in-hand tax avoidance condemned by Gauke: “There would have to be large-scale surveillance to stop it. You can’t control people’s morals like this and it is best not to try.”

This also points to the danger of skewing moral priorities. Mitchell said that Gauke was “unnecessarily moralistic” and focusing on “petty stuff” rather than massive tax avoidance. That does not necessarily mean that Gauke was wrong to say tax evasion is immoral, merely that in a world of much bigger sins, it is not so immoral as to be a major priority. And there is always a risk that governments, or even lobby groups, can create a kind of moral panic about an issue which is not critical, but which diverts our attention away from more serious wrongs. Cynics might think that trying to turn the spotlight on builders and plumbers is using just this kind of tactic to take the heat off financiers and politicians.

The most fundamental problem with morality’s return, however, is that society still lacks a sense of where it comes from and who is qualified to make claims for it. Not coincidentally, the decline of morality in the latter part of the 20th century paralleled the decline of respect for the authority of the church, as we stopped looking up to clerics as moral authorities. Now that we find ourselves compelled to talk about morality again, it does not seem clear to whom we should turn for guidance. Public reaction to recent pronouncements by politicians suggests that we are deeply sceptical about their claims to speak for what is moral. “Can’t quite believe I am reading about a politician saying the words ‘morally wrong’ out loud,” is typical of the online responses to Gauke’s comments. Scientists are sometimes treated as though they are qualified to pronounce on the morality of what they do, but their expertise is not ethical and in any case, there is now as much suspicion of the horrors science and technology might unleash as there is respect for the white lab coat.

One reason why we are not sure about where to find moral wisdom is that there is no clear, shared understanding of what exactly morality is. The idea that it is a set of rules prescribed by an authority, usually religious, has been understandably rejected. What should take its place is the idea that morality concerns the ways in which our social interactions affect the welfare of others. If what I choose to do is not in my own best interests, that may be imprudent but it is not morally wrong. But if what I do makes life worse for others, merely for my own gain or for no good reason at all, that is immoral.

It may sound obvious but, in one important respect, it radically changes how morality has often been understood. Morality becomes essentially social, not personal. And because it is social, that means the only way to deal with it is socially. So we shouldn’t be looking for new moral authorities to replace the church. Rather, we should see public moral issues as requiring a negotiation between all of us. That conversation does not value every voice equally, but for final decisions to stick, they have to reflect a kind of social consensus.

However, if radio phone-ins, online comments and tweets sent to television programmes are anything to go by, we are nowhere near ready and able to raise public discourse to the level required for this. And so the danger is that we will either fall back on the old authorities or allow new moral leaders to emerge who may well base their pronouncements on little more than populist sentiment. Angry mobs are most dangerous when manipulative rabble-rousers make them feel that every drop of their indignation is righteous. We have remembered that a proper sense of morality is essential, but we also need to be mindful that a misguided one can be deadly.


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Posted by admin - July 25, 2012 at 08:34

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Five dilemmas in the money moral maze

A poll running on the Guardian website suggests that eight out of 10 people have paid in cash for services such as a plumber. Morally repugnant, or understandable when the rich routinely dodge their taxes? Here are five other money moral dilemmas to consider

Treasury minister David Gauke is pretty clear where he stands on paying people in cash to get a discount – he says it is “morally wrong” to do so. This made us wonder where other money issues lie on the moral spectrum. Here are a few issues we think could cause contention – where do you stand on them?

1. Finding money
In the last fortnight alone, a friend has found £60 in 10- and 20-pound notes at the train station. Should she hand it in to the station guard? Her husband says the guard will just pocket the money himself/herself. Is that a sad (and inaccurate) reflection of modern life? Should she just give it to charity? Or is it OK to just pocket it?

2. Being undercharged
When you are undercharged for something, is it just karma? Some sort of payback for all those times that you are overcharged without realising? When your local cafe forgets to add the cost of the croissant to the capuccinos you were sharing with friends, do you look the other way? Or will the minimum-wage waiter have it taken from her pay? Why do so many people differentiate between being undercharged by a local retailer (the poor struggling business) compared to Tesco (oh, it’s just a drop in the ocean compared with their profits). Sainsbury’s once failed to charge me the £50 cashback I’d taken (I only noticed when looking at my bank statements later). A friend I imagined to be moral in most parts of her life, described it as “dream” undercharging.

3. Returning something you’ve worn
How many men have bought a suit for an interview, to return it a day later and ask for the money back? I witnessed a prolonged row in a Marks & Spencer as the manager accused a returning shopper of doing just that. It seems some women do the same with dresses for weddings. A case of “borrowing” with no harm done, or just plain fraud?

4. Overclaiming expenses
As a youthful journalist, I soon discovered that London black cab drivers would hand you a wad of blank receipts if you tipped them generously (oh for the days when one could claim for taxis …). How many people exaggerate petrol/mileage on company car forms? Or stay at the relatives and claim for a hotel? It’s not just MPs who fiddle their expenses, after all.

5. Earning a bit on the side
Those people doing a once-off rental of their homes for the Olympics and popping off to Spain for a holiday with the money. Will they tell the taxman and pay up? Or the people who just do that ocassional bit of freelance work, earning them just a couple of hundred of pounds a year. Does that end up declared on a self-assessment form? It’s hardly tax avoidance on the scale of Jimmy Carr. But what he did was actually legal. Earning and not declaring is worse. Isn’t it?

What do you think? Are these moral dilemmas you have agonised over, or are the answers quite straight forward?


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Posted by admin -  at 08:33

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Tax avoiders may be ‘named and shamed’ by HMRC

Treasury’s proposed crackdown comes in the wake of the row over comedian Jimmy Carr’s tax affairs

The Treasury will announce a crackdown on tax avoidance schemes on Monday in the wake of the row over the tax affairs of the comedian Jimmy Carr.

Promoters of aggressive tax avoidance schemes may be forced to disclose client lists to inspectors, according to David Gauke, the minister with responsibility for tax matters.

It follows revelations about the financial loopholes used by the rich and famous to legally sidestep large tax bills. In one scheme, Carr was paying 1% tax on his income.

The plan, which is going out to consultation, has been greeted with scepticism by Labour. One shadow minister said the Tories were so closely associated with tax avoiders they would not have the political will necessary to change the tax system.

Gauke will tell the Policy Exchange thinktank that scheme operators will be “named and shamed” for sharp practice.

Officials often hit a dead end when investigating schemes that are based offshore but, under the proposals, UK promoters will be made to hand over customer databases. That information will be used to formally warn clients about the deals they have signed up to and to work out how much the amount of tax they would owe if the scheme failed.

Under the reforms, a promoter who has been penalised for not complying with the rules will also have to provide extra information to HM Revenue & Customs (HMRC) on all of their schemes, not just the one they were reprimanded for.

Gauke will say: “We are building on the work we have already done to make life difficult for those who artificially and aggressively reduce their tax bill.

These schemes damage our ability to fund public services and provide support to those who need it. They harm businesses by distorting competition. They damage public confidence and they undermine the actions of the vast majority of taxpayers, who pay more in tax as a consequence of others enjoying a free ride.”

HMRC is also looking at formally requiring individuals, as well as firms, to comply with the rules, which would help it when a firm is dissolved or moved offshore, or an individual promoter moves from firm to firm.

Last month, Carr found himself at the centre of criticism about K2, a legal scheme that allows its members to pay income tax of as little as 1%.

Carr, 39, reportedly used the scheme to shelter £3.3m a year, channelling money from DVD sales and television appearances into a company that gave him back “loans” which are not subject to tax. The comedian later apologised for his “terrible error of judgment” in using a tax avoidance scheme.

Gauke’s announcement at Policy Exchange comes a day after one of the thinktank’s trustees was disclosed to have been involved in an aggressive tax avoidance scheme. The Mail on Sunday reported that Conservative donor George Robinson had been ordered to pay back millions of pounds in tax after a judge ruled against the tax scheme.

Simon Danczuk, the Labour MP for Rochdale, said: “It tells you everything you need to know about this government that ministers have chosen to give a speech on tax avoidance at an organisation whose trustee, the Conservative donor George Robinson, has just been found to have used an offshore avoidance scheme and had to pay back millions of pounds.

“With billions of pounds estimated to be lost each year, this government is failing to tackle tax avoidance, while also giving a tax cut to millionaires. How can it be fair to cut taxes for the very richest while ordinary families, pensioners and businesses are feeling the brunt of this double-dip recession?” he said.

Tax avoidance represents nearly 14% of the UK tax gap, according to the Treasury.


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Posted by admin - July 23, 2012 at 18:01

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Tax avoidance is ‘morally repugnant’

Treasury minister says 2p in the pound could be saved from ordinary person’s tax bill by cutting avoidance by a quarter

Danny Alexander, the chief secretary to the Treasury, has waded into the row about tax avoidance, claiming an ordinary person’s tax bill could be reduced by 2p in the pound if avoidance, or the tax gap, could be reduced by a quarter.

He refused to follow David Cameron in condemning the comedian Jimmy Carr’s specific tax plans but said all aggressive tax avoidance schemes were “morally repugnant”.

“As a Treasury minister I wouldn’t get into any individual’s tax affairs,” Alexander said, in a tacit criticism of Cameron’s decision to single out Carr.

Carr’s scheme was seen as a particularly outrageous example by the prime minister, who last week described the set-up as “morally wrong”. Cameron believes there is a distinction to be made between sensible tax planning to preserve a pension, and wholesale tax avoidance.

Speaking on the BBC’s Politics show, Alexander attempted to define the schemes that are wrong, and those that could be construed as legitimate planning, saying: “What we are talking about is schemes that are set up, perhaps within the letter of the law as it stands at any particular moment, but which are set up purely with the purpose of reducing someone’s tax bill.”

His remarks came as the former prime minister Tony Blair said the mood on the debate had changed. “In the end this is a tough time and people need to know that the pain’s being shared,” he said.

The chairman of the powerful House of Commons public accounts committee (PAC) will reveal on Monday that parliament is going to investigate tax loopholes. Writing in the Times, Margaret Hodge, said some of the practices that had emerged “wouldn’t look out of place in a banana republic”.

She said the PAC will report on the issue of salaries paid through private companies to avoid PAYE and national insurance contributions in the next few weeks.

Alexander added: “These sorts of schemes which save wealthy people potentially many tens of millions of pounds in tax, they are paid for by everybody else.

“If we could narrow the tax gap in this country by a quarter we could reduce income tax for every basic rate taxpayer by 2p in the pound.

“So it’s the working people of this country who are paying the difference because so many of the wealthiest think they can get away without paying their fair share of tax.”

He was pressed by presenter Andrew Neil on whether the coalition had introduced a minimum tax level, as promised by the deputy prime minister, Nick Clegg, through his pledge of a tycoon tax.

Alexander said: “We took a major step in that direction at the budget in March. There were a number of tax reliefs in the tax system on things like interest payments, on business investments and so on which were uncapped, people could use them to the maximum. We’ve capped many of those reliefs. The only relief now that remains uncapped is charitable donations.”

He said: “Those reliefs had been limited to 25% of somebody’s income. If someone makes substantial donations to charity, which I think most people in this country would agree is a worthwhile thing to do, then they can reduce their tax bill.”

He also claimed the general anti-avoidance rule in the budget would pick up some of the worst examples of tax avoidance.


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Posted by admin - June 25, 2012 at 07:30

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Top Tory donor linked to Carr tax scheme

Romangate tax shelter, part of Rushmore scheme, had both George Robinson and Jimmy Carr as directors

One of the Tories’ biggest donors was signed up to a tax avoidance scheme that also included comedian Jimmy Carr, the Observer has established.

The revelation is intensely embarrassing for David Cameron, who attacked the comic’s use of such schemes as “morally wrong”.

Records at Companies House reveal that George Robinson, a hedge fund manager who has given the Tories more than £250,000, was – in the 12 months leading up until 21 January 2010 – a director of a company called Romangate. The Times reported last week that Romangate, which had more than 500 directors, including Carr and Robinson, was part of a tax avoidance strategy called Rushmore. The scheme was closed down in 2009, before its members could claim any tax relief, following an investigation by HMRC.

The scheme was thought to be legitimate when it was set up. However, the then treasury secretary, Stephen Timms, told parliament that the strategy was a “highly abusive, completely contrived arrangement” that “was set up with the sole aim of avoiding paying the tax due to the Exchequer”.

Robinson, who has an estimated wealth of £215m and whose Sloane Robinson hedge fund earns millions for its members, has donated money to a number of good causes. There is no suggestion that he benefited from being a director of Romangate because the company was closed down before any tax relief could be claimed.

However, his links to the scheme are likely to trigger awkward questions for Cameron and ensure that the issue of tax remains at the top of the political agenda. It will also raise questions about Cameron’s judgment in seeming to single out Carr for criticism by questioning the comic’s decision to put his money into “very dodgy tax-avoiding schemes”. The prime minister has come under fire for refusing to be drawn on separate claims that Gary Barlow of Take That put his money into a separate, legitimate scheme to avoid tax. Barlow campaigned alongside the Tory leader at the last general election and Cameron’s refusal to condemn the singer has drawn criticism.

Senior Tories have accused Cameron of “shooting from the hip” while critics have accused him of partisanship. “If only Jimmy Carr has given £50 to the Tories, Cameron would have had to pull his condemnation,” joked Lord Oakeshott, the former Lib Dem Treasury spokesman. A spokesman for the prime minister denied that Cameron had singled out Carr, saying that his attack was on the comic’s use of a particular tax avoidance scheme, known as K2, rather than the man himself. He declined to comment on what, if any, views the prime minister held on Robinson’s involvement in a tax avoidance scheme criticised by HMRC.

Robinson, a trustee of the Policy Exchange thinktank, has given £256,000 to the Tories since 2004, according to donations registered with the Electoral Commission. On 30 September 2010, he gave £54,000, and a further £50,000 last October.

The size of the donations would entitle Robinson to attend prestigious party events. An annual donation of £50,000 entitles donors to membership of the elite Leader’s Group. The party’s website explains: “The Leader’s Group is the premier supporter group of the Conservative party. Members are invited to join David Cameron and other senior figures from the Conservative party at dinners, post-PMQ lunches, drinks receptions, election result events and important campaign launches.”

The issue of tax is likely to dog the Tories in coming weeks. Next month the Lib Dems are launching a tax working group that will develop new policies to distance themselves from their coalition partners at the next election.

Oakeshott called on the Tories to address one matter urgently. “Non-doms is a big issue,” he said. “What are they going to do about it?” Richard Murphy, a tax expert, predicted that the focus would now switch from individuals’ tax affairs to big business. “Jimmy Carr has apologised, but if we were to expose the use of tax havens by multinationals they would change their behaviour too,” Murphy said.

A Conservative party spokesman said: “We are not going to give a running commentary on the tax affairs of others. All donations to the Conservative party are properly and transparently declared to the Electoral Commission.” Robinson’s secretary confirmed that he was aware of requests from the Observer for a comment, but calls to the financier’s office were not returned.


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Posted by admin - June 24, 2012 at 17:27

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Tax row: PM accused of ‘shooting from the hip’

Senior Tories say PM risks looking foolish after criticising comedian and staying silent on Gary Barlow’s tax affairs

David Cameron has been accused of inconsistency and “shooting from the hip” by some Conservative MPs who criticised his decision to remain silent over Gary Barlow’s tax affairs after lambasting Jimmy Carr.

As Downing Street said the prime minister had been too busy to fulfil his pledge to look at Barlow’s tax affairs, senior Tories were privately warning that the prime minister risked looking foolish.

“This is so typical of our prime minister. This is all about shooting from the hip without thinking through the consequences. He looks rather foolish. Downing Street seems incapable of any long-term thinking,” one said.

Conservative MPs accused the prime minister of adopting an inconsistent approach after he singled out Carr for criticism while refusing to be drawn on Barlow. The two entertainers were named by the Times [£] this week in an investigation into celebrities who have taken part in tax avoidance schemes.

Carr, who tweeted on Thursday that he had made a “terrible error of judgment”, sheltered £3.3m in the Jersey-based K2 scheme, which dramatically reduced his tax liability by lending him back money. The Times reported on Wednesday that some members of Take That, including Barlow, invested at least £26m in a tax avoidance scheme. Both schemes are legal.

In an interview with ITV News at the G20 summit in Mexico, Cameron was highly critical of Carr. But he was less forthcoming about Barlow, a Conservative supporter who appeared alongside him during the 2010 election.

“I will have a look at that scheme,” the prime minister said on ITV News on Wednesday of Take That’s tax arrangements. “I got up this morning and I managed to read about this Jimmy Carr situation and this K2 idea – the idea of putting money in an offshore account and getting a loan back. That seems to me just straightforward tax avoidance but the Treasury will have to look into it. But the Gary Barlow situation? As soon I get in front of a computer I will have a look at it.”

Downing Street said the prime minister had still not had time to read the Times report about Barlow. “He has been very busy,” the No 10 spokeswoman said of Cameron, who hosted Aung San Suu Kyi over lunch at Chequers on Friday.

No 10 drew a distinction on Thursday between tax avoidance and “aggressive” tax avoidance. By Friday it simply said it would not be providing a “running commentary” on individual tax affairs.

Lord Oakeshott of Seagrove Bay, the former Lib Dem Treasury spokesman, said: “I think on Jimmy Carr, [Cameron's] problem is he didn’t give £50 to the Tories. Then Cameron wouldn’t have objected to it. The serious point is there is a difference between morally repugnant and illegal, and I think it is right to draw that distinction, but the key point for David Cameron as the prime minister and George Osborne – who said it was morally repugnant – is what are we actually going to do about it now?

“How are we going to make this behaviour that is morally repugnant legally repugnant as well? A lot of this activity is deeply damaging to the country – we need the money – and it’s also deeply unfair. It is not technically illegal because the advisers to these people are far better organised than HMRC.”


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Posted by admin - June 23, 2012 at 21:44

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Top Tory donor linked to Jimmy Carr tax scheme

Romangate tax shelter, part of Rushmore scheme, had both George Robinson and Jimmy Carr as directors

One of the Tories’ biggest donors was signed up to a tax avoidance scheme that also included comedian Jimmy Carr, the Observer has established.

The revelation is intensely embarrassing for David Cameron, who attacked the comic’s use of such schemes as “morally wrong”.

Records at Companies House reveal that George Robinson, a hedge fund manager who has given the Tories more than £250,000, was – in the 12 months leading up until 21 January 2010 – a director of a company called Romangate. The Times reported last week that Romangate, which had more than 500 directors, including Carr and Robinson, was part of a tax avoidance strategy called Rushmore. The scheme was closed down in 2009, before its members could claim any tax relief, following an investigation by HMRC.

The scheme was thought to be legitimate when it was set up. However, the then treasury secretary, Stephen Timms, told parliament that the strategy was a “highly abusive, completely contrived arrangement” that “was set up with the sole aim of avoiding paying the tax due to the Exchequer”.

Robinson, who has an estimated wealth of £215m and whose Sloane Robinson hedge fund earns millions for its members, has donated money to a number of good causes. There is no suggestion that he benefited from being a director of Romangate because the company was closed down before any tax relief could be claimed.

However, his links to the scheme are likely to trigger awkward questions for Cameron and ensure that the issue of tax remains at the top of the political agenda. It will also raise questions about Cameron’s judgment in seeming to single out Carr for criticism by questioning the comic’s decision to put his money into “very dodgy tax-avoiding schemes”. The prime minister has come under fire for refusing to be drawn on separate claims that Gary Barlow of Take That put his money into a separate, legitimate scheme to avoid tax. Barlow campaigned alongside the Tory leader at the last general election and Cameron’s refusal to condemn the singer has drawn criticism.

Senior Tories have accused Cameron of “shooting from the hip” while critics have accused him of partisanship. “If only Jimmy Carr has given £50 to the Tories, Cameron would have had to pull his condemnation,” joked Lord Oakeshott, the former Lib Dem Treasury spokesman. A spokesman for the prime minister denied that Cameron had singled out Carr, saying that his attack was on the comic’s use of a particular tax avoidance scheme, known as K2, rather than the man himself. He declined to comment on what, if any, views the prime minister held on Robinson’s involvement in a tax avoidance scheme criticised by HMRC.

Robinson, a trustee of the Policy Exchange thinktank, has given £256,000 to the Tories since 2004, according to donations registered with the Electoral Commission. On 30 September 2010, he gave £54,000, and a further £50,000 last October.

The size of the donations would entitle Robinson to attend prestigious party events. An annual donation of £50,000 entitles donors to membership of the elite Leader’s Group. The party’s website explains: “The Leader’s Group is the premier supporter group of the Conservative party. Members are invited to join David Cameron and other senior figures from the Conservative party at dinners, post-PMQ lunches, drinks receptions, election result events and important campaign launches.”

The issue of tax is likely to dog the Tories in coming weeks. Next month the Lib Dems are launching a tax working group that will develop new policies to distance themselves from their coalition partners at the next election.

Oakeshott called on the Tories to address one matter urgently. “Non-doms is a big issue,” he said. “What are they going to do about it?” Richard Murphy, a tax expert, predicted that the focus would now switch from individuals’ tax affairs to big business. “Jimmy Carr has apologised, but if we were to expose the use of tax havens by multinationals they would change their behaviour too,” Murphy said.

A Conservative party spokesman said: “We are not going to give a running commentary on the tax affairs of others. All donations to the Conservative party are properly and transparently declared to the Electoral Commission.” Robinson’s secretary confirmed that he was aware of requests from the Observer for a comment, but calls to the financier’s office were not returned.


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Posted by admin -  at 21:42

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Tax avoidance loophole that costs HMRC a small fortune

We shine the spotlight on the controversial ‘loans’ that allow high earners to shield much of their income from tax

The claims made by specialist accountancy firms are beguiling. Running a successful business? You can cut your income tax bill to “virtually zero”. Earning a fortune? You can “have your cake and eat it”. Concerned HM Revenue & Customs (HMRC) won’t like it? Don’t worry – many of the staff at the accountancy firms previously worked there and know their way around.

At the heart of the tax-saving claims are controversial loans which companies can make to an individual rather than paying them a salary, thereby avoiding income tax. Earlier this week the spotlight fell on one scheme, alleged to be used by thousands of wealthy individuals, including the comedian Jimmy Carr.

An investigation by the Times accused the presenter of Channel 4’s 8 Out of 10 Cats and 10 O’Clock Live of sheltering £3.3m a year through the scheme, called K2. The arrangement was publicly criticised by David Cameron, and Carr now says he has changed his tax affairs, apologising for what he called “a terrible error of judgment”.

There is nothing new in companies loaning money to directors, or even to staff. Annual season ticket loans have been around for decades and are approved by HMRC. But what is striking is how company directors have begun to use loans, particularly from their pension schemes, to exploit extraordinary loopholes in the tax system.

One chief accountant of a major national accountancy firm explained to Guardian Money how wealthy individuals can avoid income tax almost completely through “employer-financed retirement benefit schemes” (EFRBS). But he was only willing to detail the schemes on condition of anonymity.

In traditional pension schemes used by the majority of employees, both the company and the individual receive tax relief on their contributions. But there are strict rules about where the money can be invested. For example, you can’t use a company pension to invest in residential properties, particularly your own home. The amount of tax relief is also capped on any contributions above £50,000 a year. And under no circumstances can you take a loan from your pension scheme.

But it’s different for directors. Let’s say a director is paid £2m. At the current marginal rate of 50%, nearly half of his or her earnings will go in tax. But if the company pays the director just £50,000 and puts the other £1,950,000 into an EFRBS, and then the next day he or she borrows £1.9m from the pension scheme to spend as they like, the tax bill will be almost nothing.

The company does not receive tax relief on the payment into the scheme as it’s above the £50,000 ceiling and therefore not “approved” – but it is also not subject to the same investment restrictions, including the bar on loans. There will be no tax to be paid on the loan – after all, it’s not income, it’s a loan and will supposedly have to be repaid one day. The only tax is on the £50,000 paid out as salary.

“These structures work so long as everyone agrees that the loan is repayable … but that’s where the smoke and mirrors come in. There is a nod and a wink that the pension scheme will never ask for the money back, and the loan stays in place for perpetuity, until the person dies. At death, it disappears. The trustees of the pension scheme meet and agree to write it off,” said our tax expert.

So during that time the individual has taken an income, spent it and not had to pay a penny in income tax.

Of course nothing in tax is quite as simple as the example above. HMRC has strict rules about EFRBS, and has put in place legislation to catch “disguised remuneration”. Many directors do, of course, repay the loans and pay their tax in full.

Many accountants refuse to enter into such “aggressive” tax avoidance schemes, on the basis that they carry a high risk that HMRC will later shut them down. “They tend to be set up by very, very clever people, mostly specialist tax lawyers. But some are so aggressive, and in this business, our reputation is everything,” says Richard Godmon, partner at Menzies, an accountancy firm that specialises in owner-managed businesses (who is not the anonymous expert quoted above).

“Only a tiny percentage of clients are prepared to enter into aggressive strategies. When we explain it to them, they say ‘I’d rather sleep at night.’ They don’t want these schemes to come back and haunt them in three or four years’ time.”

Godmon explains that directors’ loans, outside of the EFRBS pension arrangements, are more common and less aggressive, but still attractive.

“There is nothing to stop your company lending you money,” he says, but you are taxed as if it were an employee benefit. HMRC assumes you would have paid 4% interest on the loan if you had borrowed it on the open market. If you are a 50% taxpayer, that means you have to pay a 2% tax charge, but every year. What’s more, the company making the loan has to pay 25% of the amount of the loan to HMRC, which is repaid when the loan is repaid by the individual. “Directors’ loans can be a tax-efficient way of accessing funds over the short term, such as for buying a home,” says Godmon. “We have lots of clients who use them over the short term only.”

Can directors avoid repaying the loan (and any tax) by dissolving their company? It’s possible – once a company is struck off Companies House, essentially all balances due to the company cease. But HMRC may reject strike off applications if it feels there is unpaid tax.

Many Premier League footballers have been named as cashing in on directors’ loans. Typically, they have two contracts with their club – one as a footballer, where they earn a salary and pay income tax, and one for their “image rights”. The fee for their image rights is paid to their company, and then the footballer takes a loan against that fee – thereby paying just 2% tax – until (or if) the loan is repaid.


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Posted by admin -  at 10:12

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David Cameron accused of ‘shooting from the hip’ in Jimmy Carr attack

Senior Tories say PM risks looking foolish after criticising comedian and staying silent on Gary Barlow’s tax affairs

David Cameron has been accused of inconsistency and “shooting from the hip” by some Conservative MPs who criticised his decision to remain silent over Gary Barlow’s tax affairs after lambasting Jimmy Carr.

As Downing Street said the prime minister had been too busy to fulfil his pledge to look at Barlow’s tax affairs, senior Tories were privately warning that the prime minister risked looking foolish.

“This is so typical of our prime minister. This is all about shooting from the hip without thinking through the consequences. He looks rather foolish. Downing Street seems incapable of any long-term thinking,” one said.

Conservative MPs accused the prime minister of adopting an inconsistent approach after he singled out Carr for criticism while refusing to be drawn on Barlow. The two entertainers were named by the Times [£] this week in an investigation into celebrities who have taken part in tax avoidance schemes.

Carr, who tweeted on Thursday that he had made a “terrible error of judgment”, sheltered £3.3m in the Jersey-based K2 scheme, which dramatically reduced his tax liability by lending him back money. The Times reported on Wednesday that some members of Take That, including Barlow, invested at least £26m in a tax avoidance scheme. Both schemes are legal.

In an interview with ITV News at the G20 summit in Mexico, Cameron was highly critical of Carr. But he was less forthcoming about Barlow, a Conservative supporter who appeared alongside him during the 2010 election.

“I will have a look at that scheme,” the prime minister said on ITV News on Wednesday of Take That’s tax arrangements. “I got up this morning and I managed to read about this Jimmy Carr situation and this K2 idea – the idea of putting money in an offshore account and getting a loan back. That seems to me just straightforward tax avoidance but the Treasury will have to look into it. But the Gary Barlow situation? As soon I get in front of a computer I will have a look at it.”

Downing Street said the prime minister had still not had time to read the Times report about Barlow. “He has been very busy,” the No 10 spokeswoman said of Cameron, who hosted Aung San Suu Kyi over lunch at Chequers on Friday.

No 10 drew a distinction on Thursday between tax avoidance and “aggressive” tax avoidance. By Friday it simply said it would not be providing a “running commentary” on individual tax affairs.

Lord Oakeshott of Seagrove Bay, the former Lib Dem Treasury spokesman, said: “I think on Jimmy Carr, [Cameron's] problem is he didn’t give £50 to the Tories. Then Cameron wouldn’t have objected to it. The serious point is there is a difference between morally repugnant and illegal, and I think it is right to draw that distinction, but the key point for David Cameron as the prime minister and George Osborne – who said it was morally repugnant – is what are we actually going to do about it now?

“How are we going to make this behaviour that is morally repugnant legally repugnant as well? A lot of this activity is deeply damaging to the country – we need the money – and it’s also deeply unfair. It is not technically illegal because the advisers to these people are far better organised than HMRC.”


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