If Ian Cameron wanted to hide the fact he lived in the UK why did he name the fund after his own UK home and then continue to live in and pay tax in the UK and made no attempt to cover up the fact he was managing a fund
You are being incredibly dense here. Nobody is saying he tried to hide the fact he lived in the UK. Nobody is saying he did not pay tax in the UK. They are simply saying he set up a company in such a way so that company did not become liable for UK tax (nothing to do with his personal tax liabilities), even though it was for all intents and purposes a UK company and therefore should have paid UK tax, by the simple expedient of stating that all directors were resident in the Bahamas. He did not need to 'cover up' the fact he actually lived in the UK because the lax rules rules on these matters meant he did not need to. For a lot of people this amounts to aggressive tax avoidance. For a lot of people, like yourself, it does not. You don't need to tie yourself up in knots trying prove your interpretation is the only correct one and everyone else is wrong. You have looked at the facts and come to one conclusion and others have looked at the same facts and come to a different conclusion.
If Ian Cameron wanted to hide the fact he lived in the UK why did he name the fund after his own UK home and then continue to live in and pay tax in the UK and made no attempt to cover up the fact he was managing a fund
You are been incredibly dense here. Nobody is saying he tried to hide the fact he lived in the UK. Nobody is saying he did not pay tax in the UK. They are simply saying he set up a company in such a way so that company did not become liable for UK tax (nothing to do with his personal tax liabilities) even though it was for all intents and purposes a UK company and therefore should have paid UK tax by the simple expedient of stating that all directors were resident in the Bahamas. He did not need to 'cover up' the fact he actually lived in the UK because the lax rules rules on these matters meant he did not need to. For a lot of people this amounts to aggressive tax avoidance. For a lot of people, like yourself, it does not. You don't need to tie yourself up in knots trying prove your interpretation is the only correct one and everyone else is wrong. You have looked at the facts and come to one conclusion and others have looked at the same facts and come to a different conclusion.
You are the one being dense here. You were the one accusing the directors of pretending to live in the Bahamas. You do realise that the residence of the governors bears little meaning to what country a company is located in? No company is defined by where the directors choose to reside.
It is not, for all intents and purpose, a U.K. company. Not as defined either officially, by experts or by the general public. Only you seem to have this weird obsession (weird possibly meaning unique) that if one of the directors is British then the whole company, regardless of its structure, location or trade, means it is a UK company. There are thousands of companies run like Blairmore that neither HMRC or the general public seem to think is classed as tax avoidance.
Boring witch hunt by anti Tories. DC has done nothing illegal and I see no reason why he should have his personal tax record investigated or opened up to the public. It really is nothing to do with us IMO. I would be pissed if people started demanding my personal tax details are released to the public too.
If Ian Cameron wanted to hide the fact he lived in the UK why did he name the fund after his own UK home and then continue to live in and pay tax in the UK and made no attempt to cover up the fact he was managing a fund
You are been incredibly dense here. Nobody is saying he tried to hide the fact he lived in the UK.
Umm, only one page back you posted a picture of a registered office of a company and said: "This is the street in the Bahamas which Ian Cameron claimed was his normal residential address."
So, that's at least one person who claimed this - you.
If Ian Cameron wanted to hide the fact he lived in the UK why did he name the fund after his own UK home and then continue to live in and pay tax in the UK and made no attempt to cover up the fact he was managing a fund
You are been incredibly dense here. Nobody is saying he tried to hide the fact he lived in the UK. Nobody is saying he did not pay tax in the UK. They are simply saying he set up a company in such a way so that company did not become liable for UK tax (nothing to do with his personal tax liabilities) even though it was for all intents and purposes a UK company and therefore should have paid UK tax by the simple expedient of stating that all directors were resident in the Bahamas. He did not need to 'cover up' the fact he actually lived in the UK because the lax rules rules on these matters meant he did not need to. For a lot of people this amounts to aggressive tax avoidance. For a lot of people, like yourself, it does not. You don't need to tie yourself up in knots trying prove your interpretation is the only correct one and everyone else is wrong. You have looked at the facts and come to one conclusion and others have looked at the same facts and come to a different conclusion.
You are the one being dense here. You were the one accusing the directors of pretending to live in the Bahamas. You do realise that the residence of the governors bears little meaning to what country a company is located in? No company is defined by where the directors choose to reside.
It is not, for all intents and purpose, a U.K. company. Not as defined either officially, by experts or by the general public. Only you seem to have this weird obsession (weird possibly meaning unique) that if one of the directors is British then the whole company, regardless of its structure, location or trade, means it is a UK company. There are thousands of companies run like Blairmore that neither HMRC or the general public seem to think is classed as tax avoidance.
Then why employ them if their country of residence has no bearing? As you have previously stated, it could well be a local condition of setting up the company there.
You also are being unfair, to a lot of people, it appears to be an artificial situation. In fact weren't the rules tightened around 2012 to stop the previous interpretation being abused?
After reading this thread with great fascination I conclude that on the whole the issue stinks.
Not illegal but set up within the legal framework to confuse, cover tracks, obscure and conceal the financial dealings of those with enough money and resources to do so. Impossible to know who owns what and designed to make life difficult for the revenue services.
That's how it comes accross to a non expert. There are millions of us out here that are justified in our concern.
This extract from today's Independent backs up the argument I have being making.
"Some have raised the issue of the fact that the mutual fund, incorporated in Panama but based in the Bahamas, did not pay UK corporation tax. That’s true. But this is a somewhat confused complaint because mutual funds generally don’t pay corporation tax in the normal way anyway – even when they are registered in the UK. They are not profit-making corporations but investment funds where all cash surpluses are rapidly distributed to investors (or re-invested in the fund). Those surpluses are, as discussed above, taxable under the law when they are received and realised by investors in their home countries.
One potential issue, however, may be that the management company that owned the Blairmore fund did not pay UK corporation tax while being effectively run from the UK (by David Cameron’s father and others) and was thus, really, a UK corporation.
But to prove that this was evasion, rather than legal avoidance, HMRC would need probably to demonstrate in court that the presentation of this management company as a Bahamas firm, rather than a UK firm, was a sham.
It would seem that Ian Cameron took care to avoid the possibility of such a charge by hiring Bahamas residents to fill roles such as treasurer and secretary and ensuring that a majority of the board was based outside Britain."
Strangely I find myself drawn to the arguments of dippenhall a uk pensions asset investor and fiiish an overseas settlement agent (whilst acknowledging his sometimes abrasive tone) rather than those who are just anti Tory or anti Cameron.
Funnily enough wouldn't that be two job roles where the less scrupulous would have a vested interest in supporting tax avoidance?
Boring witch hunt by anti Tories. DC has done nothing illegal and I see no reason why he should have his personal tax record investigated or opened up to the public. It really is nothing to do with us IMO. I would be pissed if people started demanding my personal tax details are released to the public too.
Don't take a job in Norway or Sweden then. Your tax return there will be on line for all the rest of us to inspect at our leisure. Absolutely fascinating and measured 30 minute programme examining the Norway experience of this on R4 last night (read the summary here, but I recommend the whole thing if you are seriously interested in the issue)
Strangely I find myself drawn to the arguments of dippenhall a uk pensions asset investor and fiiish an overseas settlement agent (whilst acknowledging his sometimes abrasive tone) rather than those who are just anti Tory or anti Cameron.
Funnily enough wouldn't that be two job roles where the less scrupulous would have a vested interest in supporting tax avoidance?
Except I had no control over the funds I was settling and the company I worked for refused to handle transactions involving dodgy or unregulated funds, so it was actually in my interest to ensure I complied with HMRC rules.
Likewise for Dippenhall, as a pension investor there is a whole mess of rules he would need to follow. I'm sure he could elaborate as to how he would not wish to engage in aggressive tax avoidance.
Strangely I find myself drawn to the arguments of dippenhall a uk pensions asset investor and fiiish an overseas settlement agent (whilst acknowledging his sometimes abrasive tone) rather than those who are just anti Tory or anti Cameron.
Funnily enough wouldn't that be two job roles where the less scrupulous would have a vested interest in supporting tax avoidance?
Surely that would make them jobs for the more scrupulous because it would not be in their interests to maximise UK tax income. But instead to maximise the returns to investors. That's a good thing.
BTW, going slightly off tack, one of the reasons that offshore is popular is because of the UK's imposition of stamp duty on UK equities bought in the UK. All those 0.5%s rounded up to the nearest fiver doesn't sound much but if you are buying frequently as a fund would, it soon impacts upon performance. It can make buying overseas rather than UK shares seem quite attractive.
Strangely I find myself drawn to the arguments of dippenhall a uk pensions asset investor and fiiish an overseas settlement agent (whilst acknowledging his sometimes abrasive tone) rather than those who are just anti Tory or anti Cameron.
Funnily enough wouldn't that be two job roles where the less scrupulous would have a vested interest in supporting tax avoidance?
Except I had no control over the funds I was settling and the company I worked for refused to handle transactions involving dodgy or unregulated funds, so it was actually in my interest to ensure I complied with HMRC rules.
Likewise for Dippenhall, as a pension investor there is a whole mess of rules he would need to follow. I'm sure he could elaborate as to how he would not wish to engage in aggressive tax avoidance.
Not that I want to defend anyone, or anything, but..
As a citizen/subject/taxpayer, we are all obliged to pay what the state requires of us. If the state allows legal methods of tax avoidance/efficiency, you could very well argue that we should all make use of them.
It is the obligation of the state to ensure that it polices the taxation system appropriately, and that it sets taxes at a level that will provide the greatest benefit. If there was something actually dodgy going on with the Cameron family involvement with the offshore fund I would have expected the authorities to take action.
I am firmly in the "tax more if you want the level of service that we say we want" camp. And I would have no difficulty with having steps being taken to limit the legal avoidance of tax, but it should be matched with taking stronger action to address tax evasion. The state, in this case HMRC, should be willing to take a stronger line with the multinationals than has been the case to date with Amazo, Google, et al.
However, fundamentally, Cameron is a victim of public perceptions of wrong doing. He is seen by some as being willing to use "dubious" methods of investment, and by others as being hypocritical. Whatever the truth of the matter (and I would suggest the position with the ex-PM of Iceland and President of Argentina are more serious), to a large degree, he has been convicted in the court of public opinion.
However, fundamentally, Cameron is a victim of public perceptions of wrong doing. He is seen by some as being willing to use "dubious" methods of investment, and by others as being hypocritical. Whatever the truth of the matter (and I would suggest the position with the ex-PM of Iceland and President of Argentina are more serious), to a large degree, he has been convicted in the court of public opinion.
Wouldn't quite say that, suspect this whole thing will blow over very quickly same as the pig allegations did.
However, fundamentally, Cameron is a victim of public perceptions of wrong doing. He is seen by some as being willing to use "dubious" methods of investment, and by others as being hypocritical. Whatever the truth of the matter (and I would suggest the position with the ex-PM of Iceland and President of Argentina are more serious), to a large degree, he has been convicted in the court of public opinion.
Wouldn't quite say that, suspect this whole thing will blow over very quickly same as the pig allegations did.
I don't mean to suggest generally (though not a fan myself), but I think on this issue there is little, if anything, he can do that will change the current popular view.
Strangely I find myself drawn to the arguments of dippenhall a uk pensions asset investor and fiiish an overseas settlement agent (whilst acknowledging his sometimes abrasive tone) rather than those who are just anti Tory or anti Cameron.
Funnily enough wouldn't that be two job roles where the less scrupulous would have a vested interest in supporting tax avoidance?
Except I had no control over the funds I was settling and the company I worked for refused to handle transactions involving dodgy or unregulated funds, so it was actually in my interest to ensure I complied with HMRC rules.
Likewise for Dippenhall, as a pension investor there is a whole mess of rules he would need to follow. I'm sure he could elaborate as to how he would not wish to engage in aggressive tax avoidance.
Not that I want to defend anyone, or anything, but..
As a citizen/subject/taxpayer, we are all obliged to pay what the state requires of us. If the state allows legal methods of tax avoidance/efficiency, you could very well argue that we should all make use of them.
It is the obligation of the state to ensure that it polices the taxation system appropriately, and that it sets taxes at a level that will provide the greatest benefit. If there was something actually dodgy going on with the Cameron family involvement with the offshore fund I would have expected the authorities to take action.
I am firmly in the "tax more if you want the level of service that we say we want" camp. And I would have no difficulty with having steps being taken to limit the legal avoidance of tax, but it should be matched with taking stronger action to address tax evasion. The state, in this case HMRC, should be willing to take a stronger line with the multinationals than has been the case to date with Amazo, Google, et al.
However, fundamentally, Cameron is a victim of public perceptions of wrong doing. He is seen by some as being willing to use "dubious" methods of investment, and by others as being hypocritical. Whatever the truth of the matter (and I would suggest the position with the ex-PM of Iceland and President of Argentina are more serious), to a large degree, he has been convicted in the court of public opinion.
I'm not sure why you quoted me but I guess I will respond...
The thing is tax avoidance is a much broader term than it was 10 year agos prior to the financial crisis. The line between evasion and avoidance was completely clear - evasion was illegal and involved the perpetrator surreptitiously hiding their funds or masking the nature of their transactions in order to get around declaring any liable tax to the taxman. In other words, their funds or transactions are liable to tax but they do not pay it and try to get away without paying it. Avoidance, on the other hand, involved taking steps out of the ordinary, such as exploiting tax loopholes that HMRC was not aware of, in order to reduce or eliminate any tax liability before tax is due. This is/was legal and was not generally frowned upon except in the most extreme of cases.
Post-crisis, tax avoidance is a term applied by many to be much broader, which is basically 'anything in between illegal evasion and paying the maximum amount you are liable for'. In their eyes, anyone who has made any steps, exploitative or not, to reduce their tax exposure or liability is a tax-avoider, even though generally speaking prior to the crisis 99% of this activity would not be classed as tax avoidance, and generally isn't today considered to be avoidance by experts and people who work either at HMRC or in the industry.
Similarly, 'offshore account' usually, pre-crisis, referred specifically to secret accounts outside of the purview of the taxman of the country you would ordinarily be taxed in. The term was as it is today seen as poor behaviour and depending on the jurisdiction of the account holder illegal, especially if they were being paid a taxable income directly into their offshore account without paying any dues to the taxman. Nowadays, it seems that any money sent to an account abroad is deemed offshore, which is ridiculous when you consider the millions of European citizens who hold money in more than one country, as well as globalisation and the ability to hold investments and run companies in several different countries. What is already a negative term is now being more widely applied to perfectly legitimate business and commerce. The term 'overseas investment' or 'overseas holdings' would be more appropriate, but now the term 'offshore' seems to be applied to everything. In the cases of the world leaders who have been caught funneling funds offshore by this Panama leak, the term 'offshore' is perfectly appropriate if you want to keep all the negative connotations. When it comes to Cameron Sr's company, this becomes more blurred. The structure and activities of the fund in the last 20 years seems to be in line with what a lot of overseas companies that are considered legitimate (even the use of residents as nominees, again a completely legitimate and standard structure of an overseas business). It is perfectly legitimate to set up a fund overseas for the use of British investors and run by British fund managers in order to benefit from lower tax exposure. What is not legitimate, and so far this does not appear to be the case for Blairmore but I suppose further investigation could change this, is whether British investors were buying these shares with money that had already been taxed (legitimate) or whether they were secretly sending income abroad to buy these shares without paying the correct tax (illegitimate). As far as I am aware, David and his wife bought these shares in 1997 using post-tax income and therefore their investment was just as legitimate as investing in any other legitimate domestic or overseas fund.
You say that the court of public opinion has convicted David Cameron of immoral tax avoidance, but his actions are not any different from any other UK investor who has invested overseas because they feel they will get better returns than investing in a UK fund. Basically, if David Cameron is acting immorally, then so is any British citizen investing overseas.
Sorry Fiiish, I'd hit quote more out of habit than anything else.
For what it's worth, I don't disagree with anything you've mentioned about the legality of the Cameron offshore investments, and I am more than half convinced that a significant part of the problem, at the moment, for the PM and others who appear to have invested in entirely legal schemes is that HMRC supervision of the tax regime has historically been weaker than it should have been.
The reaction to the news that he had invested in the Blairmore scheme is influenced by the history of compromise deals between HMRC and certain individuals/organisations over taxes.
As for the court of public opinion and the PM, a significant section of the media was delighted to put the boot in, and their narrative has led the development of the story. There is a terrible problem that people tend to believe that there is no smoke without fire.
I don't think that the PM has done anything illegal, or even immoral, as it seems he has not shirked any of his responsibilities as far as tax is concerned. I would not be surprised if a number of us have offshore investments, albeit closer to home, whether in the Channel Islands, Isle of Man or Ireland (after all, encouraging this trade is the reason why much of the Dublin docks were redeveloped over the last thirty years).
However, as an MP and as Prime Minister, David Cameron is a public person and his comments will be thrown back at him on a regular basis. His criticisms of, say, Jimmy Carr may have been spot on, and there is probably a world of difference between the two situations. But that's not what the media reports, and not, therefore, what the public comes to believe.
I think he should have repatriated his investments, paying the taxes as he did, at the latest, when he became Party leader - 2010, for me, was a bit late - and he probably should have made a statement then. I'm not saying that it I right or fair, but, as I have said before, it is the "Caesar's Wife" argument.
Singapore has a flat rate income tax of 20% and no tax on overseas income.
Why would anyone not choose to set their business up in Singapore as opposed to the UK? If you hide information to avoid tax due in other territories that is an entirely separate matter. If every country had a 20% tax rate they would all be tax havens and there would be no purpose in hiding ownership.
[...]
You can also register companies without citizenship, enjoy a system similar to Britain's and not have to worry about EU regulations and VAT.
I'll try and dig out an article I read on the topic a few weeks ago. Crux of it was that a tech not-for-profit could open up in Singapore without any changes to their structure as an online business, have similar protections to UK companies whilst also knocking VAT on the head - meaning that their customers got invoiced for cheaper amounts.
Having had time to catch up completely with this thread, I do have a couple of questions:
These are primarily aimed at those who are posting about Cameron's actions being dishonest.
- How would you view a contractor who has a one man Ltd Company (UK Based) which was utilised to cut down the taxes he incurred?
- How about a web application that was developed and maintained in London, but via a company registered in Singapore - avoiding EU VAT legislation so reducing prices and operating under a more favourable tax situation?
The owner of these two companies takes money out of them via Dividends and pays the appropriate personal tax to HMRC.
The first situation is incredibly common - and widespread from individual contractors working 9-5 to celebrities at the BBC. As long as they keep on top of the relevant requirements that ensure they dont find themselves classed as a permanent employee (IR35) they're good to go.
Whilst the second would most likely be a situation I would look at - if only for the ability to undercut competitors and operate with a more simplistic approach to finances.
Both of these situations are above board and require no secrecy. Both of them however require that the actual money that hits the individuals pocket is taxed correctly and HMRC take their share.
Now if I'm not mistaken, Cameron Snr's system would've had the same rule - any money that he profited out of the Panama setup would've still been taxed when it he got it in the UK - HMRC would see it as a personal income and take their share. Morally questionable maybe, but HMRC did take their percentage and it was above board.
Whereas Jimmy Carr - who has rather crassly reminded us of his situation and made a comparison - was doing something that HMRC were fighting and was designed so HMRC wouldn't see a penny via outright lies. He was drawing a very small (sub personal allowance - so £11k) salary from an offshore company, whilst taking a monthly salary in the form of a loan which would not be taxed. A tad different than taxed dividends.
Something is either right or wrong from a moral standpoint. If you have to write pages to explain why something that is wrong is right you sort of miss the whole point!
Those who cannot accept there is any excuse for legally minimising their tax affairs, and even the journalists adding innuendo, are confused by a common theme. They cannot believe or don't understand, you can separate the individuals from the body corporate.
If you put money into a company and you benefit from payments distributed by the company, the implication is that the company and the individual cannot be separated for tax assessment. All money has come from, and all monies go to, the individual.
However illogical, it is a matter of indisputable law, that a company is an entirely separate body in every respect to its shareholders. It can do anything a person can do through its directors and is a separate taxable entity.
For very good reasons a company is taxed under different rules to individuals. HMRC cannot tax a non UK company and the law makes it quite clear what constitutes a UK company.
It is not difficult to meet UK tax law and hold interests in foreign companies. Saying a person "really" is something else means nothing if the legal definition contradicts that assertion.
If you want to prevent UK taxpayers taking advantage of the legal system as currently in place you must: 1 Reinstate capital controls. in 1969 I was allowed to go to the US and restricted to buying £20 worth of $US. 2 Repeal the laws confirmed 200 years ago allowing shareholders to be different legal entities from the corporate body. This would halt entrepreneurs and banks putting money into start up businesses. 3 Not allow individuals to hand money to a third party to invest unless taxable in the hands of the investment manager. You would have to hold stocks and shares in your own name. 4 Not allow transactions between individuals and companies except by way of trading. You couldn't use your own money, only someone else's money to set up a business.
Obviously that can't happen so we have a mile high stack of tax laws trying to tread a line between preventing artificial tax arbitrage and not disrupting day to day commercial and personal financial management.
The main area of abuse involves entirely artificial transactions between connected parties which moves money from a taxable to non taxable status.
Moving already taxed money to a different tax regime, and a different entity, through a transparent transaction, cannot be taxed by HMRC just because it's tax efficient and only available if you are wealthy.
Something is either right or wrong from a moral standpoint. If you have to write pages to explain why something that is wrong is right you sort of miss the whole point!
No. Everyone has different standards. There are probably as many different moral standpoints as there are people.
Something is either right or wrong from a moral standpoint. If you have to write pages to explain why something that is wrong is right you sort of miss the whole point!
Well we are 9 pages in and no one has yet provided a good reason why having overseas investments is morally wrong yet?
Just as an aside, I see from the list of directors that Ian Cameron was working for Smith & Williamson, the accountancy firm.
Had the "pleasure" of being in the company of some of their leadership several years ago, when the topic of diversity came up. All the S&W leadership were, as a quote about the sector goes..."male, pale & stale". In complete seriousness, their boss stated that "...of course, we're doing our bit for diversity. We've just appointed a partner called Colin"!
Just as an aside, I see from the list of directors that Ian Cameron was working for Smith & Williamson, the accountancy firm.
Had the "pleasure" of being in the company of some of their leadership several years ago, when the topic of diversity came up. All the S&W leadership were, as a quote about the sector goes..."male, pale & stale". In complete seriousness, their boss stated that "...of course, we're doing our bit for diversity. We've just appointed a partner called Colin"!
I sometimes wonder where Colin ended up...
I'm sure S & W are loving all the free advertising. Their phone lines must be busy.
Just as an aside, I see from the list of directors that Ian Cameron was working for Smith & Williamson, the accountancy firm.
Had the "pleasure" of being in the company of some of their leadership several years ago, when the topic of diversity came up. All the S&W leadership were, as a quote about the sector goes..."male, pale & stale
Comments
It is not, for all intents and purpose, a U.K. company. Not as defined either officially, by experts or by the general public. Only you seem to have this weird obsession (weird possibly meaning unique) that if one of the directors is British then the whole company, regardless of its structure, location or trade, means it is a UK company. There are thousands of companies run like Blairmore that neither HMRC or the general public seem to think is classed as tax avoidance.
So, that's at least one person who claimed this - you.
You also are being unfair, to a lot of people, it appears to be an artificial situation. In fact weren't the rules tightened around 2012 to stop the previous interpretation being abused?
Not illegal but set up within the legal framework to confuse, cover tracks, obscure and conceal the financial dealings of those with enough money and resources to do so. Impossible to know who owns what and designed to make life difficult for the revenue services.
That's how it comes accross to a non expert. There are millions of us out here that are justified in our concern.
"Some have raised the issue of the fact that the mutual fund, incorporated in Panama but based in the Bahamas, did not pay UK corporation tax. That’s true. But this is a somewhat confused complaint because mutual funds generally don’t pay corporation tax in the normal way anyway – even when they are registered in the UK. They are not profit-making corporations but investment funds where all cash surpluses are rapidly distributed to investors (or re-invested in the fund). Those surpluses are, as discussed above, taxable under the law when they are received and realised by investors in their home countries.
One potential issue, however, may be that the management company that owned the Blairmore fund did not pay UK corporation tax while being effectively run from the UK (by David Cameron’s father and others) and was thus, really, a UK corporation.
But to prove that this was evasion, rather than legal avoidance, HMRC would need probably to demonstrate in court that the presentation of this management company as a Bahamas firm, rather than a UK firm, was a sham.
It would seem that Ian Cameron took care to avoid the possibility of such a charge by hiring Bahamas residents to fill roles such as treasurer and secretary and ensuring that a majority of the board was based outside Britain."
Likewise for Dippenhall, as a pension investor there is a whole mess of rules he would need to follow. I'm sure he could elaborate as to how he would not wish to engage in aggressive tax avoidance.
BTW, going slightly off tack, one of the reasons that offshore is popular is because of the UK's imposition of stamp duty on UK equities bought in the UK. All those 0.5%s rounded up to the nearest fiver doesn't sound much but if you are buying frequently as a fund would, it soon impacts upon performance. It can make buying overseas rather than UK shares seem quite attractive.
As a citizen/subject/taxpayer, we are all obliged to pay what the state requires of us. If the state allows legal methods of tax avoidance/efficiency, you could very well argue that we should all make use of them.
It is the obligation of the state to ensure that it polices the taxation system appropriately, and that it sets taxes at a level that will provide the greatest benefit. If there was something actually dodgy going on with the Cameron family involvement with the offshore fund I would have expected the authorities to take action.
I am firmly in the "tax more if you want the level of service that we say we want" camp. And I would have no difficulty with having steps being taken to limit the legal avoidance of tax, but it should be matched with taking stronger action to address tax evasion. The state, in this case HMRC, should be willing to take a stronger line with the multinationals than has been the case to date with Amazo, Google, et al.
However, fundamentally, Cameron is a victim of public perceptions of wrong doing. He is seen by some as being willing to use "dubious" methods of investment, and by others as being hypocritical. Whatever the truth of the matter (and I would suggest the position with the ex-PM of Iceland and President of Argentina are more serious), to a large degree, he has been convicted in the court of public opinion.
The thing is tax avoidance is a much broader term than it was 10 year agos prior to the financial crisis. The line between evasion and avoidance was completely clear - evasion was illegal and involved the perpetrator surreptitiously hiding their funds or masking the nature of their transactions in order to get around declaring any liable tax to the taxman. In other words, their funds or transactions are liable to tax but they do not pay it and try to get away without paying it. Avoidance, on the other hand, involved taking steps out of the ordinary, such as exploiting tax loopholes that HMRC was not aware of, in order to reduce or eliminate any tax liability before tax is due. This is/was legal and was not generally frowned upon except in the most extreme of cases.
Post-crisis, tax avoidance is a term applied by many to be much broader, which is basically 'anything in between illegal evasion and paying the maximum amount you are liable for'. In their eyes, anyone who has made any steps, exploitative or not, to reduce their tax exposure or liability is a tax-avoider, even though generally speaking prior to the crisis 99% of this activity would not be classed as tax avoidance, and generally isn't today considered to be avoidance by experts and people who work either at HMRC or in the industry.
Similarly, 'offshore account' usually, pre-crisis, referred specifically to secret accounts outside of the purview of the taxman of the country you would ordinarily be taxed in. The term was as it is today seen as poor behaviour and depending on the jurisdiction of the account holder illegal, especially if they were being paid a taxable income directly into their offshore account without paying any dues to the taxman. Nowadays, it seems that any money sent to an account abroad is deemed offshore, which is ridiculous when you consider the millions of European citizens who hold money in more than one country, as well as globalisation and the ability to hold investments and run companies in several different countries. What is already a negative term is now being more widely applied to perfectly legitimate business and commerce. The term 'overseas investment' or 'overseas holdings' would be more appropriate, but now the term 'offshore' seems to be applied to everything. In the cases of the world leaders who have been caught funneling funds offshore by this Panama leak, the term 'offshore' is perfectly appropriate if you want to keep all the negative connotations. When it comes to Cameron Sr's company, this becomes more blurred. The structure and activities of the fund in the last 20 years seems to be in line with what a lot of overseas companies that are considered legitimate (even the use of residents as nominees, again a completely legitimate and standard structure of an overseas business). It is perfectly legitimate to set up a fund overseas for the use of British investors and run by British fund managers in order to benefit from lower tax exposure. What is not legitimate, and so far this does not appear to be the case for Blairmore but I suppose further investigation could change this, is whether British investors were buying these shares with money that had already been taxed (legitimate) or whether they were secretly sending income abroad to buy these shares without paying the correct tax (illegitimate). As far as I am aware, David and his wife bought these shares in 1997 using post-tax income and therefore their investment was just as legitimate as investing in any other legitimate domestic or overseas fund.
You say that the court of public opinion has convicted David Cameron of immoral tax avoidance, but his actions are not any different from any other UK investor who has invested overseas because they feel they will get better returns than investing in a UK fund. Basically, if David Cameron is acting immorally, then so is any British citizen investing overseas.
For what it's worth, I don't disagree with anything you've mentioned about the legality of the Cameron offshore investments, and I am more than half convinced that a significant part of the problem, at the moment, for the PM and others who appear to have invested in entirely legal schemes is that HMRC supervision of the tax regime has historically been weaker than it should have been.
The reaction to the news that he had invested in the Blairmore scheme is influenced by the history of compromise deals between HMRC and certain individuals/organisations over taxes.
As for the court of public opinion and the PM, a significant section of the media was delighted to put the boot in, and their narrative has led the development of the story. There is a terrible problem that people tend to believe that there is no smoke without fire.
I don't think that the PM has done anything illegal, or even immoral, as it seems he has not shirked any of his responsibilities as far as tax is concerned. I would not be surprised if a number of us have offshore investments, albeit closer to home, whether in the Channel Islands, Isle of Man or Ireland (after all, encouraging this trade is the reason why much of the Dublin docks were redeveloped over the last thirty years).
However, as an MP and as Prime Minister, David Cameron is a public person and his comments will be thrown back at him on a regular basis. His criticisms of, say, Jimmy Carr may have been spot on, and there is probably a world of difference between the two situations. But that's not what the media reports, and not, therefore, what the public comes to believe.
I think he should have repatriated his investments, paying the taxes as he did, at the latest, when he became Party leader - 2010, for me, was a bit late - and he probably should have made a statement then. I'm not saying that it I right or fair, but, as I have said before, it is the "Caesar's Wife" argument.
I'll try and dig out an article I read on the topic a few weeks ago. Crux of it was that a tech not-for-profit could open up in Singapore without any changes to their structure as an online business, have similar protections to UK companies whilst also knocking VAT on the head - meaning that their customers got invoiced for cheaper amounts.
These are primarily aimed at those who are posting about Cameron's actions being dishonest.
- How would you view a contractor who has a one man Ltd Company (UK Based) which was utilised to cut down the taxes he incurred?
- How about a web application that was developed and maintained in London, but via a company registered in Singapore - avoiding EU VAT legislation so reducing prices and operating under a more favourable tax situation?
The owner of these two companies takes money out of them via Dividends and pays the appropriate personal tax to HMRC.
The first situation is incredibly common - and widespread from individual contractors working 9-5 to celebrities at the BBC. As long as they keep on top of the relevant requirements that ensure they dont find themselves classed as a permanent employee (IR35) they're good to go.
Whilst the second would most likely be a situation I would look at - if only for the ability to undercut competitors and operate with a more simplistic approach to finances.
Both of these situations are above board and require no secrecy. Both of them however require that the actual money that hits the individuals pocket is taxed correctly and HMRC take their share.
Now if I'm not mistaken, Cameron Snr's system would've had the same rule - any money that he profited out of the Panama setup would've still been taxed when it he got it in the UK - HMRC would see it as a personal income and take their share. Morally questionable maybe, but HMRC did take their percentage and it was above board.
Whereas Jimmy Carr - who has rather crassly reminded us of his situation and made a comparison - was doing something that HMRC were fighting and was designed so HMRC wouldn't see a penny via outright lies. He was drawing a very small (sub personal allowance - so £11k) salary from an offshore company, whilst taking a monthly salary in the form of a loan which would not be taxed. A tad different than taxed dividends.
If you put money into a company and you benefit from payments distributed by the company, the implication is that the company and the individual cannot be separated for tax assessment. All money has come from, and all monies go to, the individual.
However illogical, it is a matter of indisputable law, that a company is an entirely separate body in every respect to its shareholders. It can do anything a person can do through its directors and is a separate taxable entity.
For very good reasons a company is taxed under different rules to individuals. HMRC cannot tax a non UK company and the law makes it quite clear what constitutes a UK company.
It is not difficult to meet UK tax law and hold interests in foreign companies. Saying a person "really" is something else means nothing if the legal definition contradicts that assertion.
If you want to prevent UK taxpayers taking advantage of the legal system as currently in place you must:
1 Reinstate capital controls. in 1969 I was allowed to go to the US and restricted to buying £20 worth of $US.
2 Repeal the laws confirmed 200 years ago allowing shareholders to be different legal entities from the corporate body. This would halt entrepreneurs and banks putting money into start up businesses.
3 Not allow individuals to hand money to a third party to invest unless taxable in the hands of the investment manager. You would have to hold stocks and shares in your own name.
4 Not allow transactions between individuals and companies except by way of trading. You couldn't use your own money, only someone else's money to set up a business.
Obviously that can't happen so we have a mile high stack of tax laws trying to tread a line between preventing artificial tax arbitrage and not disrupting day to day commercial and personal financial management.
The main area of abuse involves entirely artificial transactions between connected parties which moves money from a taxable to non taxable status.
Moving already taxed money to a different tax regime, and a different entity, through a transparent transaction, cannot be taxed by HMRC just because it's tax efficient and only available if you are wealthy.
There are probably as many different moral standpoints as there are people. No.
Had the "pleasure" of being in the company of some of their leadership several years ago, when the topic of diversity came up. All the S&W leadership were, as a quote about the sector goes..."male, pale & stale". In complete seriousness, their boss stated that "...of course, we're doing our bit for diversity. We've just appointed a partner called Colin"!
I sometimes wonder where Colin ended up...