David Cameron said tonight:
I am proud of my dad and what he did, the business he established and all the rest of it.
I discussed what I thought he should say about that business in a recent blog. I said I hoped he would say:
He could have said that much as he respects his father, much as he loves him and much as he is grateful for what he did for him he has to disagree with him on the use of offshore. This is what mature, responsible, children sometimes have to do: they have to say that they disagree with their parents. But Cameron has not done this.
And now we know he won't. He does, apparently agree with his dad and thinks it was just fine to set up0 a business that was based in a tax haven.
I will be honest, I am disappointed.
But I'd also like to point out that David Cameron has form when it comes to me. This is from the official version of his speech to the Conservative Party conference last year:
There's an academic called Richard Murphy. He's the Labour Party's new economics guru, and the man behind their plan to print more money.
He gave an interview a few weeks ago. He was very frank. He admitted that Labour's plan would cause a “sterling crisis”, but to be fair…
…he did add, and I quote, that it “would pass very quickly”.
Well, that's alright then.
His book is actually called “The Joy of Tax”. I've read it. It's got 64 positions — and they're all wrong.
The actual version was more lurid.
But now we know that actually, he really does buy the Joy of Tax after all. In all the wrong ways.
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My father worked all his life. He was a trade unionist to begin with. When he lost his job as a toolmaker(because of asset stripping buy out from an American company) he tried selling insurance for a while but this did not last long as he was said by a colleague I knew to be ‘too honest, too ethical – a one off’ for that sort of thing.
So he bought himself an A-shaped ladder and started cleaning windows around the area we lived in just so he could keep the house he had just bought. He took on all sorts of jobs to keep his head above water in order to support his family.
He eventually ended up working nights as a charge hand for a city bus service and ended his days doing that.
He once said to me that his generation hadn’t done enough to ensure that my generation would have pensions, a health service etc., and that they had let us down.
He may be right. But I am nonetheless very proud of the fact that he did not give up – even when the capitalist system got him in the end.
Don’t forget this is the man who thought LOL meant ‘lots of love’ when he sent texts to Rebekah Brooks.
Or possibly the Lion of Libya?
Cameron as PM knew about the tax dodging organisation & thought that by selling his shares that would be OK… or…..”I knew about the bank job & had shares in it but sold them before I joined the police & thus I had nothing to do with the bank job”
I hope some Labour MPs are reading this, I hope they are seriously considering a motion of impeachment for Cameron – almost certainly it will not pass but it will send a message.
I’d also put forward the hypothesise that the rise in off-shore companies with roots in the Uk kicked off post 1979. Tax dodging is part of the Tories DNA, it’s as if the Kray brothers had been put in charge of the Metropolitan Police.
Tory minister last night on question time firrmly placed the Tories in the corner of the 1%. This fact really annoys me because nobody rebuffs it. The richest 1% pay 28% of all income tax, that’s just income, not all other forms of tax. It’s abhorrent that 1% pay so much tax, if we lived in a fairer society the rest of us would pay more tax because we would earn more. She, Anne Sudbury to me appears to be not wired up right
That is annoying
As this report shows
https://www.equalitytrust.org.uk/unfair-and-unclear-effects-and-perceptions-uk-tax-system
it is the poor that pay the largest percentage of their income in tax. The rich get off lightly!
In case you do not want to read the whole Equality Trust document that I linked to above, a key finding based on ONS data is that the bottom 10% pay 43% of their income in tax whereas the top 10% pay 35% (rounding to the nearest percentage). The data is presented in Fig. 3 on p.14.
It drives me up the wall when people come out with the usual the top 1% pay 28% of the tax as if they are doing everyone a favour. This is a number that politician should be ashamed about! Economic models suggest that the top 1% should absorb not more that 10% of income for an economy to operate at optimal capacity and maximise growth. By being greedy, the 1% are destroying the capitalist system. I wonder if Richard will mind if I add my favourite Henry Ford quote:
There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.
Entirely agree Charles
Great comment, you ought to have been on question time last night.
Thanks for this useful information. I’ve been searching for a pithy rejoinder to the claim that the richest are paying the most tax.
Perhaps if the 1% distributed their income more, the rest of us would contribute more!
Anna Soubry has a remarkable ability to repeat the Tory party PR mantra, without engaging her brain before she opens her mouth.
If we had a progressive tax system we would not see a society rapidly polarising into an obscenely rich handful of people who own the vast majority of wealth in this country and the same happening worldwide.
Throwing around a few irrelevant statistics while ignoring what is actually happening in the real world, is becoming the typical response of most MP’s who keep popping up in the media these days to answer the awkward questions on behalf of a government that does not want to admit the truth. Not surprising the public has lost all faith in almost all of them.
Hi Richard
You of all people should know why companies in the fund management industry base their investing companies in tax havens. There is no avoidance of tax only a wish to ensure investors only pay one level of tax on the underlying profits of the fund. Otherwise returns would be diminished massively by tax – the whole of the fund management industry does this – which invests our pensions. I’m assuming you do not suggest the fund management industry volunteers investors to pay tax twice on the same income?
Blairmore Holdings Inc and the investments is now run by Smith & Williamson wealth management and there’s no suggestion what they’re doing is wrong or are you suggesting this? Be interested in hearing some reasoned arguments to refute what I said other than personal remarks on someone’s dead father. I can but hope
This is not the same as pensions – stop[ lying – they are tax free anyway
It is tax avoidance
The funds management industry is dependent upon tax avoidance to create its ‘returns’
Tax avoidance is legal
It does not mean I have to condone it
I seem to remember that slavery and all the very lucrative trades which it spawned was entirely legal in this country until some brave people decided to stand up against it and spent many years suffering personal threats and abuse before the laws were changed.
All we need to see now is a suggestion that the tax avoiders should be compensated for their “lost earnings” to know that nothing really has changed at all in the warped minds of the few who benefit from such morally corrupt (but legal) practices – past, present and no doubt in future too!
It will happen
The slavery contrast is apt
I am sure you are going to be very busy over the coming days and that you will know better than most what needs to be said publicly in response to emerging news, but, as I listened this morning (around 7.10) to a very aggressive James Quarmby, ‘a specialist in tax planning and wealth structuring at Stephenson Harwood’ telling a slightly bemused John Humphrys that there was nothing unusual or untoward about Cameron’s participation in his father’s company, that ‘many millions of people’ do essentially the same thing, that the intention (whose not exactly specified) was not to avoid tax and that a fund such as his father’s was set up in a tax haven just because the regulation was ‘business friendly’ (what exactly does that mean?)- two things struck me.
Firstly that this seems to be gaining momentum in the political agenda because people are getting angry just as they did with MPs’ expenses. In a general sense that things are very wrong and society very divided no-one ends up being over-scrupulous in gauging proprtionality or strict factual accuracy in their accusations. There is a sense of ‘taking no prisoners.
Second, that whilst that public anger is necessary for changing the political scene, unless, at the same time, someone like you spells out the facts and the important underlying issues that need specifically to be addressed, after a while the sound and fury dies down but nothing essentially gets changed. In fact because society is soured on both sides of the divide, cynicism increases, appeals to public interest and good government besome more vain and we end up in some sense worse off: the release of pressure becomes more likely to be effected, ultimately, by some Trump-like figure who will lead people into prejudice and bigotry whilst failing to bring about a better society.
So I hope you will find time to spell out clearly (even though you may feel you have done much the same countless times before) exactly what is wrong with the Cameron arrangements, father and son.
I thought I had done so?
I have reread carefully your ‘Fisking Robert Peston’ and his own blog post.
It seems completely clear to me that RP does maintain that Blairmore itself was a tax avoiding enterprise: ‘legally dodging taxes’, ‘the Blairmore furore shines a light on the extraordinarily high incidence of the use of offshore arrangements by businesses to avoid tax’, ‘given David Cameron’s public stand against such tax avoidance, it is embarrassing for him that his late dad employed such techniques at the investment fund he founded’.
RP also makes it clear that most would regard that as ‘scandalous’ and ‘noxious’ and that he is not arguing that ‘we should approve of the likes of Blairmore legally dodging taxes’.
So RP clearly agrees with you that Ian Cameron, in as far as he was paid out of Blairmore profits or owned the company, was directly benefiting from tax avoidance. (I am not qualified to know whether or not he could have got such gains back to the UK without later paying tax.)
RP does say that those who invested in Blairmore (including one supposes the PM and his wife and maybe other Cameron family members) would not have been avoiding tax on dividends received from their investments in Blairmore or on the realisation on those investments if and when sold:
‘Blairmore’s 2006 prospectus is explicit that … Its British investors were and are liable to income tax on the dividends they receive and capital gains tax on whatever profits they earn when they sell their Blairmore shares …
So any Cameron who received income or capital from Blairmore should have paid tax on it.’
RP does indulge in some sophistry about it being somehow to the UK’s advantage that Blairmore should have avoided tax in Panama so that it could pay out more to investors who would have to pay UK tax – blatantly ignoring what would have been the situation if Blairmore had made itself completely liable for UK tax. But that does not really negate the points in RP’s argument as set out above.
The remaining point, as far as I can see, but RP nowhere refers to this, is that investors in Blairmore were enjoying an advantage bestowed on them by Blairmore’s tax avoidance in that Blairmore had greater profits that it could distribute on them than if it had itself been paying UK tax – although of course the uninitiated cannot know that the owners of Blairmore were not just pocketing the advantage for themselves.
Is that (failing evidence of any further complications in individual cases) the nature and full extent of the tax avoidance of individual investors in Blairmore?
I am not in anyway sympathetic to such a situation but I suppose the question has to arise, if a genuine native of Panama (i.e. not Ian Cameron) had set up such a fund would we disapprove of UK residents investing in it (assuming that they were paying UK income and capital gains tax)? And, if we object to the bahaviour of individual Blairmore investors on the grounds above, do we also object, more or less, to people owning shares in any of the endless large mainstream companies which themselves avoid tax – or to people who purchase their products and services? Which in part seems to be the point RP is making.
As far as I can see, there is not a large difference between you and RP on the facts of the case, though there may be a large difference in what you think ought to be done about it.
See my blog on finance industry trolls
I answer all your points
Didn’t you run a business based in Ireland due to tax efficiency? Doth you employ your wife as a director to avoid tax? I guess your kids aren’t proud of you then.
I have never hidden the fact that I was involved in a company in Ireland for a relatively short period in the 1980s. The lure was grants and not tax, but in the process I saw how pernicious tax haven advice provided by the Big 8 (as then was) really was and decided to do something about it. First, I then ran a firm that refused to do anything we thought artificial and would not take clients offshore. Second, I have campaigned to change things radically. So I turned my experience as a young accountant at a time when no one was talking tax havens to positive use. I am not ashamed of that. How do you think the process of change hap[pens but for things like this?
As for my wife, she is a working partner. We have already discussed a management issue this morning. She is engaged daily with what I do. The only real concern is that with 1% of profit she is underpaid. For the last three years paying her more would have saved us tax. I have not done that. Before then she was a working GP and often earned more than I did: diverting income to her would have saved no tax. But I have not changed the situation and nor has she in either scenario. There is no tax planning: just a reflection of a commercial reality.
wow sounds just like David Cameron with that explanation. It’s only tax avoidance when other people do it.
EDITOR NOTE: this does not seem to be the Mike Parr who usually posts on this blog. It may be a decidely false name
Actually, I had not suggested Cameron had avoided
I suggested his dad did
I gave you a full reply
I could not be clearer
Just spoke to Mike, Richard – it certainly WASN’T him posting the above-so one of the trolls has indulged in identity theft-rather sad that people are willing to do this.
I did realise
Apologies to Mike Parr
I will be more vigilant in future
Even moderating is becoming a minefield now
The price of success
Oh really – look, I can’t let this stand…………
David Cameron is a father too Mike and his kids have nothing to be proud of in my view. NOTHING. As the most powerful man in the Country his Government has:
(1)Caused untold misery in its quest to ‘reform welfare’ – people have died because of policies his government have implemented and peoples housing costs have thus increased.
If you know of anyone in the finance industry or working offshore who has committed suicide as a result of Richard Murphy’s campaigning please let us know. I’m all ears.
(2) Caused the economy to contract because they have cut investment, talked down the economy in order to create panic to manufacture consent for more austerity when infact it is not needed. In other words they have curbed their own ability to pay down the ‘debt’ by lowering tax receipts because they are effectively killing the economy.
(3) Under funded the NHS deliberately by using sophistry – promising not to cut the budget but effectively cutting it by not keeping up their funding with inflation taken into account. They have also implemented a new contract with junior doctors and have gone out of their way to cause trouble with this group and it will be the NHS and its patients that ulimately suffer.
(4) They have sold the Royal Mail off to the private sector at a derisory price and continue to attempt to sell off other public departments (such as the Land Registry) to investors so that they can become income streams for the rentier class leaving everyone else to pay more for services that were once public.
(5) They have effectively stopped funding the development of affordable housing and instead Government money is to be poured into the private property market which is already a bubble and in doing so will end up helping less people access a house of their own because house prices are still rising. They are effectively pouring petrol onto a fire.
I could go on and on – about for example how many decent hard working public sector workers I’ve seen lose their jobs, have their working conditions illgally changed and their wages cut for no reason other than the Tories biggest lie in recent times – that New Labour had bankrupted the nation and we could not afford to employ people anymore – when infact it was the private Banks and the American financial institutions in particular who created the crash in 2008.
David Cameron’s children have nothing to be proud of Mike – I can’t think of any current Tory minister whose kids have cause to be proud.
And your comment – so low I might add – is nothing to be proud of either for that matter.
https://www.politicshome.com/news/uk/economy/financial-sector/opinion/73541/top-lawyer-ian-camerons-investment-fund-was-not-tax
I know Graham
And with all due respect to him, I would not consider his judgement to be sound on this issue
I know Graham too, and he is probably the top tax barrister in the country. His explanation is quite straightforward, and given Cameron’s statement that he has declared his dividends on his tax return, this is little different from any other share investment, except that the ultimate investments are outside the UK.
You completely ignore what I have written: read Fisking Robert Peston
But he’s a tax QC, and you’re a man who thinks that pensions are not taxed.
I said pension funds are not taxed
And Graham does, I think hold me in mutual regard, even if he will not always agree with me
I have read your article on Fisking Peston which completely misses the poi9nt that an investment trust based in a tax haven is simply a conduit allowing investors in several countries to invest through a fund in one or more third countries without the inconvenience of having to incorporate in each of those countries or to suffer the costs of UK corporation tax. A UK investor could derive exactly the same treatment by investing directly into the US, but by doing so through an offshore vehicle, he/she can do so alongside investors from the rest of the 6,000 million on the planet rather than just the 60 million in the UK.
So why use offshore?
And why the bearer shares?
And anyway, you have missed the fact that I suggested the avoidance was in creating the structure not, by and large, in using it
So I am sorry – it is you who is wasting my time
If you start trolling you know what happenbs
It involves a conspiracy of several people to arrange.
It is carried out in utmost secrecy.
Ownership is further obscured through the use of bearer certioficates.
It is situated in offshore islands.
A Panamaniam intermediary is instrumental in its creation.
It reduces the tax inflow anticipated by parliament.
But it’s legal. Thats all right then.
I’m not an authority on tax and can’t add any more to the Cameron issue. It will take on a momentum of its own and will either disappear from the MSM (dead cat tactic) or develop into a bigger issue of Tory / national leadership. However, in the broader context, I would refer you to this post from John Quiggin which I think makes a much more important point about the global finacial industry and its negative effect upon national economies. Cameron and his ilk are (knowing) parts of the mosaic – http://crookedtimber.org/2016/04/06/gaps-and-holes.
I agree with that
Richard please explain how you consider investing in a Bahamas or Irish domicile Reporting fund by a uk Res/Dom investor to be tax avoidance? Investor pays income tax on annual reported income whether distributed or not and CGT on the gains. End of. Unless they don’t declare them which is illegal evasion.
I have already
Whilst you’re at it, would you explain why bearer shares are a good idea?
And why you’d go offshore if you were not intending to avoid tax?
No you haven’t.
>would you explain why bearer shares are a good idea? –
Bearer shares are not a good idea. As you know, Cameron’s govt outlawed them recently.
>why you’d go offshore if you were not intending to avoid tax?
As you know fine well, Ireland, Luxembourg, Bahamas and other jurisdictions are attractive for fund managers to locate in as
1) they can invest in a broader range of instruments that may be disallowed in UK
2) they want to market the fund internationally, and many international clients may not want to invest in a UK fund and acquire a UK situs asset
3) cheaper, quicker, easier to set up.
4) some jurisdictions may not allow the tax relief for corporation tax charged within a UK OEIC that UK resdoms benefit from – so locating in a low tax venue makes double taxation less likely.
You know perfectly well that this is the case, and there are over 11,000 HMRC registered distributing funds, which UK resdoms are liable for income tax and CGT on
Of course all sorts of nefarious activities go on in every financial jurisdicion, and it is easier in some than others, but merely owning a fund that is based outside of the UK is perfectly legit.
– so why do you insinuate there is something sinister in owning an Irish, Bahamanian or other collective investment vehicle?
You know full well that you are deliberately missing the point
I have not suggested David Cameron was avoiding tax using this fund, although there are other serious questions to answer
It is indisputable that his father was making sure the fund was not in the UK for tax- and I consider that to be avoidance
So all you have written is wholly irrelevant
It seems to me that Graham Aaronson is describing the well established workings of Investment Trusts and Unit Trusts, usually offered by insurance companies and specialised trust companies.
Funds directly managed by offshore specialists using discretionary trusts are of course using a different structure but these could invest in Investment and/or Unit Trusts,but why would an investor choose to incur all these exra complications and management costs? A rhetorical question, Richard?
Rhetorical indeed
The revelations in Panama relate in the main to the 1%. It appears that the 0.1% have moved on to Reno.
http://www.trunews.com/panama-leak-driving-elite-to-rothschild-reno-offshoring-racket/
You’ve stated in the past that the UK is a tax haven. Where does that leave your argument?
That there is need for substantial reform
I gave clearly outlined what is required
Great tweet from Ann Pettifor:
“Ian Cameron, a stockbroker from a long line of financiers, had his prospects transformed when Margaret Thatcher relaxed capital controls in 1979, allowing individuals and companies to move their money out of Britain. He specialised in helping clients to transfer nest eggs into funds he ran offshore. He chaired an investment fund in Jersey, held shares in Blairmore Asset Management in Geneva and set up Blairmore Holdings in Panama.”
You can look back to 1979 and consider how the British economy then developed as the FIRE sector gradually drained the real wealth creating sector.
I’ve long suspected that the Thatcherite Tories in particular merely hijacked the legislative process in order just to make it easier for them to make money out of money.
The fact that our Prime Minister seems to have benefited from the process – parachuted in to protect offshore interests that he himself he now benefited from – strikes of an ongoing cunning plan to me.
To the question: Would you be proud of your dad if he’d run a business based in a tax haven? I think I’d have to reply that I’d be intrigued if he was as capable of running one at home. For Cameron’s father among others the answer appears to be yes, but it would make a lot less profit. Really it appears to be making its profit at the expense of the home taxpayer.
In this respect it is much more like smuggling than theft. I could for example more than double the profit on a container of wine if I avoided duty. Effectively offshore funds seem to be avoiding duty. Both financial and moral.
Today I heard Radio 4 quoting some wally from the EU saying that because the rich pay so much tax, it reduces everyone elses tax bills!! I nearly choked on my lunch when I heard that.
Yes – I heard today. Looking at discussions on this blog about the reality of the tax take between the rich and everyone else I can’t believe how such wishful thinking can go unchallenged in the media.
Staggering, isn’t it
Entirely ignores how they got their income wealth
And the resulting massive inequality
And that overall they actually pay less than most
What seems to have got lost in some people’s minds (i.e. deliberately avoided as an inconvenient truth by those desperately trying to protect their industry or their party) is that the well trodden statements of Cameron/Osborne and the Tory elite that “we are all in it together” has been yet again smashed on the rocks in front of the public gaze by the same “simple sword of truth and the trusty shield of British fair play” that Jonathan Aitken had dearly hoped would come to his rescue when he was caught telling porky pies.
You can’t trust a Tory to tell the truth, you never could trust a Tory to tell the truth and you never will be able to trust a Tory to tell the truth – because perpetual self interest lies at the heart of their perverted and twisted logic.
We’re not all in it together (as is becoming increasingly obvious even to the most loyal but non-wealthy Tory supporter) – that’s the truth and Cameron should come out and state this if he wants to regain some credibility, but he can’t because he has to stick to the party political agenda to further divide the nation into the haves and the have nots.
All most people will probably know and feel angry about is this; that Cameron and his father were using laws which nobody but those able to take advantage of them had any say in making, and were benefiting from those laws financially. In other words, there is yet another pile of democratic deficit rearing its head. Today, I found this article from ‘The Belfast Telegraph’ by Ed Howker, who apparently first uncovered the story in 2012; many of us were aware that Cameron had benefited from his father’s tax dealings years ago, we just didn’t know the details. This is an interesting bit: “Blairmore Holdings moved registration from the Bahamas to the Republic of Ireland in 2012, the same year David Cameron became PM. It has assets of £35 million and is now regulated under EU law.
Tax doesn’t have to be taxing
Both the Bahamas and the Republic have territorial tax systems meaning that a company which is registered there but has no trade in the country could have no tax liability at all in the country. The Republic also has a corporation tax rate of 12.5% compared to 20% in the UK. Northern Ireland’s rate will be cut to 12.5% in 2018.” So if the trust was not set up for, shall we say ‘beneficial tax purposes’, and was just set up to buy ‘dollar demoninated shares’ why bother moving it to The Republic of Ireland where the tax rate is so much lower than the UK? Why not move it to the UK to ‘avoid scrutiny’, if that’s why it was moved? And isn’t ‘avoiding scrutiny’ and removing transparency part of what makes this tax avoidance? http://www.belfasttelegraph.co.uk/news/panama-papers/panama-papers-the-truth-about-ian-camerons-blairmore-fund-by-the-man-who-exposed-it-34604769.html
Ireland is also territorial – and so tax free
This is not chance
I covered Ian Cameron at the time of his death as well