A commentator on this blog has said:
Secrecy has too many negative connotations. Most people regard salary and tax contributions as a private matter. As it has been established that these companies are essentially Blair himself, I think its fair to regard any financial information as a personal and therefore private matter.
I utterly reject this notion. I accept what Tony Blair or anyone else earns is private — if they earn it.
It is however very clear that this structure has been set up to secure limited liability and a tax advantage in the form of reduced tax rates limited companies enjoy. Both are at potential cost to society at large, as I note here. And as I also note in that blog (with slight edits made):
If we are to have limited liability then there is a special duty of care imposed on those who take advantage of it, which no one is obliged to do. That duty of care is to provide considerable information concerning the beneficial ownership, true nature of management and financial performance of each and every limited liability entity that exists — anywhere in the world and for whatever purpose it is used.
The argument is simply that without this information, including country-by-country reporting, those who engage with a limited liability entity are, without exception, the potential victim of moral hazard.
That is why a limited liability entity is very different from the people behind it. The two cannot be confused. One can enjoy privacy. The other seeks privileges from society,. In return for their grant they forego considerable privacy, to save us from the risk they expose us to.
Is there a counter-argument?
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Fair enough I guess.
I think where former public figures are involved, exceptions should be expected. Surely its fairly obvious why such privacy is necessary – if you need permanent security outside your home, bullet proof cars in transit etc…it would seem logical that information about your finances are given protection as well.
I’m not saying it’s right, but it’s understandable.
Richard
Have you ever advised a sole trader to incorporate his business into a limited company to save or defer tax? Have you ever advised a client to file abbreviated accounts?
Both of these are bread and butter accountancy practice. I don’t see the problem with either and I don’t have a problem with Tony Blair’s structure.
I also don’t accept your argument with regard to “the risk they expose us to”. I agree limited liability comes with responsibilities, that’s a matter for the directors. However, I don’t think Mr Blair is likely to find himself in financial difficulty anytime soon and I don’t see the risk in this case.
If he is paying his taxes and at the same time protecting his privacy, which he is entitled to do, what harm is he doing?
Bear in mind he is a high profile public figure. The tabloids would take great pleasure in broadcasting his personal income. Don’t you think he deserves the same privacy that you and I enjoy?
PJM
I have been righting about the constraints small companies place on small business for many years – certainly since the early 1990s – so no. I much prefer LLPs. The tax saving is never worth the hassle that the admin of a small limited company causes. Accountants who recommend small limited companies do not understand that the primary purpose of their advice is to help the client make profit, and tax is secondary. If the tax saving constrains profit making potential then they really don’t understand business – they’re just technicians. I’m not saying that means there is no role for companies – but tax saving is not one of them.
I have of course let clients file abbreviated accounts. I do not like them.
And Blair chose to be in the public eye and has made millions from being so. Why the right to privacy. Surely that requires increased accountability?
As for the fact that he’ll hide the fact that he’s making millions from private view by adopting such a structure – please be realistic – he advertises that fact by living in Connaught Square. The desire for privacy when making such ostentatious display is faux.
Richard
Richard
I accept your argument as to the limitations of limited companies and the hassle they come with however they do still serve a purpose although they are possibly “oversold”.
I don’t accept your argument that he chose to be in the public eye so he should rescind his rights to privacy.
You are in the public eye, TV, Newspapers, etc., I imagine you have a very nice house, possibly not as nice as Mr Blairs but nice nevertheless.
If we accept your argument re Mr Blair, then it would be hypocritical of you not to publish details of your annual income.
To the extent that they are protected by limited liability entities the data is on public record
Richard
Richard
Can you help us by explaining what you mean by “…the data is on public record.” Do you mean via the Companies’ House service for which we are required to pay? Also, this answer appears to be somewhat opaque
From a champion of transparency and accountability, I would have expected the accounts of Tax Research LLP to be published on your website. You call for greater transparency on reporting (eg: country by country tax reporting) yet you appear not to follow this principle – please correct me if I’m wrong here.
I am not asking for transparency on your priate income as an individual, only that which is on “the public record”
Kind regards
Richard
Richard
As I say – it is on public record
As it should be
Richard
@Richard
Many thanks for your clarification or should I say opacity? – it speaks volumes. You appear to be happy to analyse other people’s affairs to to pass judgement on them, yet you seem reluctant to have the same scrutiny applied to your own.
Richard
I am doing exactly what I ask others to do
You can see my accounts whenever you like
They are on public record
Richard
@ The Anon Richard
Since when does public record mean free? The (tiny) fees at Companies House are there to support the service they provide. The £1 fee for accounts is not an obstacle to transparency…..its the equivalent of buying a daily newspaper!