• Text size      
  • Send this article to a friend
  • Print this article

Taxing matter of the rich who do not pay their dues

Well, you have to feel sorry for a kept man, dependant on the charity of a former wife after his divorce; just as well the courts saw fit to make sure she paid up on the monthly allowance and specified an amount allowing him to keep body and soul together.

His small body and, you suspect, similarly shilpit soul.

And thus it is that little Bernie Ecclestone, currently of some interest to the German judicial system over alleged bribery offences, can at least rely on £60 million a year from his second wife Slavica (he's now on number three).

So was the diminutive Formula One boss smart enough to have married an heiress? Not exactly; but smart enough to stash away a fortune estimated by Forbes Magazine to make him the fourth-richest man in the land in a family trust fund in equally diminutive Lichtenstein, a wee country with a big interest in hiding personal and corporate profits from the taxman.

Ecclestone is a (small) piece of work. A Panorama investigation screened last night alleged that, after HMRC had been shining a light into the darker corners of his taxation arrangements for some years, he did a deal to pay them off with a £10m cheque. It is a pity that the sum allegedly due was £2 billion which he contrived to avoid by having the lovely Slavica's moniker on the relevant documents and exporting the trust fund.

It seems that, in some marriages, trust funds are now a girl's best friend, outranking diamond baubles, multiple homes, luxury cars and yachts; though, as it happens, they get these too. Neither is paying the least tax you can devise considered a matter of shame.

Sir Philip Green, boss of retail giant Arcadia, really owes it all to his wife Tina; or so it says on the tax paperwork. Handily, Tina lives in Monaco, which saves the tedium of paying tax on family dividends which, in one recent year, came to a cool £1.2 bn.

She's not a tax exile, protested hubby. She just lives in Monaco. Aye, right. So who better to make a knight of the realm and hire to root out government waste as a special advisor? Special, he indubitably is.

And , though the Government huffs and HMRC puffs, the big boys seem to be Teflon coated when their tax affairs are popped under the microscope.

The former permanent decretary at HMRC, you will doubtless recall, shook hands on a similar £10m settlement with Goldman Sachs, the US bank which, along with Credit Suisse and UBS, does the lion's share of shipping their clients profits safely offshore; out of sight, perhaps not out of mind, but out of the clutches of the tax collectors.

It may be that David Hartnett sailed a little too close to the flames of celebrity to keep entirely focussed. Coming under the relentless scrutiny of the Commons Public Accounts select committee, it emerged that he had been breakfasted, lunched, and dined no fewer than 107 times by city interests in the previous two years. You can only hope he was on the five and two diet at the time.

Thanks to a byzantine UK tax system whose loopholes have loopholes and a raft of companies whose speciality is utilising these to keep avoidance just on the legal side of evasion (mostly), it was estimated two years ago that a minimum of £21 trillion worldwide was deposited in offshore accounts. That's a lot of nothings to get your head around so let's just say it roughly equates to the GDP of America and Japan combined.

Quite a lot of safety deposit boxes were harmed in the construction of these "arrangements".

So who better to work out how to minimise their own tax bill than Goldman Sachs, who apparently paid just north of £4m on profits of £1.2bn, by "deferring" 99% of their national insurance dues.

It had earlier come up with a wheeze, much then utilised by others including a certain Rangers Football Club, to pay some bonuses through an employment benefit trust, via a subsidiary set up in the British Virgin Islands. This was ruled illegal nine years ago and, with varying degrees of resignation, the other miscreants paid up. Goldman Sachs instead did a deal that, according to taste, saved the company £30m or cost the Exchequers exactly that sum.

When deals such as those came to light, when it emerged that major international companies such as Vodaphone, Google, Amazon and Starbucks were paying small change out of large profits in taxes, the natives became more restless.

And when it appeared that Starbucks was simultaneously bigging up the UK as its fastest growing market place and posting £20m in losses because it technically traded from the Netherlands, the chairwoman of the PAC, Margaret Hodge, noted with some asperity: "If it is right that the UK is the best market in Europe and it is the most profitable, how on earth can it continue to file losses?"

Starbucks, belatedly cottoning on to the fact that the little coffee drinking people don't like to be the only folks paying proper taxes, has just announced it is re-locating its head office to the UK.

Some of these other major international players might like to take a similarly hard look in the mirror; not because they'll have a Damascene conversion to decency but because consumers, especially those dwelling on planet austerity, are beginning to realise that the one power they do possess is the ability to boycott trading operations that are taking them and the Treasury for a ride.

To go back to that nice Mr Ecclestone. He is one of a raft of billionaires whose exploits impinge on the economy way beyond their tax bills. One of the so-called super rich who buy super mansions for silly prices and inflate the house price bubble in other parts of London, rendering the UK's largest city unaffordable for the people who do an honest day's toil in the city.

Ecclestone bought and sold a pied a terre in Kensington Palace, never got round to living in it and passed it on to steel magnate Lakshmi Mittal for a rumoured £57 million.

Famously, there are now whole streets of similar ghost mansions in areas such as Belgravia, bought for investment. Given the level of housing need and homelessness in that same city, it takes breathtaking indifference to buy to let lie empty.

These are people rich beyond the dreams of even their own legendary avarice. And when they pay a fraction of fair taxation, how can we expect the rest of the country to desist from operating in the black market?

It is time to ask ourselves who are the biggest cheats. The working poor who, as George Osborne never tires of telling us, get out of bed to go to their place of employment every day, and who are getting royally screwed for their trouble?

Or the very rich, idle or otherwise, who use a small percentage of their outrageous rewards to employ people to make sure they pay as few of their dues as they can get away with?

There is no doubting who are the biggest cheats.

Contextual targeting label: 
Business

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

229677