It would seem that Michael Gove and Boris Johnson are lending their names to attacks on HM Revenue & Customs being orchestrated by papers such as the Telegraph and Daily Mail. The background, according to the Telegraph, is that:
Donors who bankrolled the successful Brexit campaign have accused HM Revenue and Customs of a "political attack" after they were hit with six or seven-figure tax demands on their contributions, The Telegraph can disclose.
Among those targeted are Lord Edmiston, the Midlands entrepreneur, who donated £1million to Brexit campaigns; Peter Cruddas, the City mogul; and Arron Banks, who made millions from his insurance businesses. Letters which could lead to them paying out up to £2m have been issued to them by HMRC in the past fortnight.
The Telegraph then claims that:
Donations made to political parties, charities and other bodies are usually deemed exempt from the rules, but HMRC has ruled that payments from individuals to referendum campaigns are taxable.
This is blatant misinformation by the Telegraph. The reality is that inheritance tax is not a tax on inheritance at all: it is a tax on gifts. Any gift is chargeable to inheritance tax straightaway unless it meets certain conditions.
The first is that it is exempt. Charities are exempt and so are political parties that have at least one MP and 150,000 general election votes. Other exempt gifts are those made out of income e.g. for birthdays, weddings and so on, up to set limits.
Then there are potentially exempt gifts. These are gifts made to individuals and some trusts (subject to very specific rules) made within the seven years before death. They only become subject to the tax if you die within that seven year period.
And then there are all other gifts, and these are subject to tax when made at the rate of 20%, which is what the gifts to the Brexit campaign were. They were not to a political company or charity. They were to organisations set up for other purposes.
In fairness such inheritance tax charges are rare. That's because very few people choose to give money to companies and non-charitable organisations. But if you do, then tax is payable.
This is not something HMRC can rule on. This is what the law says. So if the donors in question did not know they would owe tax that's their problem: they are wealthy enough to have asked, but obviously chose not to do so. And the Telegraph is utterly wrong to suggest HMRC are acting politically here: they are not.
And this is no threat to democracy: rather, this is the law at work just as a democratically elected parliament intended. That's how democracy is.
In which case this is not anyone seeking retribution.
Nor is it the establishment ganging up on Brexit.
All we have are three wealthy people who got their tax planning wrong who now want to use their influence in the media to overturn the tax that they rightly owe.
As an example of their vision for post-Brexit Britain that's pretty worrying.
And Gove and Johnson need to make very clear they have nothing to do with this. A society that waives tax charges for the wealthy is one no one should want to live in, and they should make very clear where they stand on that.
In a post-Brexit Britain I would hope the rule of law will apply. The actions of the Brexit newspapers who are claiming an injustice here is deeply worrying. It shows that they think otherwise. And their vision is not one that I think most would want to share.
Gove and Johnson need to smell the coffee and get their own messaging out quickly or they are going to be seriously tainted by this.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
What I dont understand is that the IM Group gave money, yet they were charged tax. Yet the JP Morgan wasnt charged tax, are the banks above the law.
IHT would not apply to a corporate donation from a non-close company
Tax releif need not be given though
I am writing both suggestion from recollection
If you were my client I’d go and re-read the legisaltion. But it is Christmas Eve
Oh for an effective opposition.
Labour is the only viable opposition, like it or not. Don’t like the way Labour is heading? Then join and vote democratically within the party. If the party and supporters were more united then we would be doing far better in the polls and closer to removing the Tories. Say what you like about Labour right now, on their worst day they are better for the country than the Tories on their best day…
Already a member. And Labour Councillor.
Agree any Lab Gov better than any Tory or other Gov. Just wish our current leadership had a clue about politics. If they did we would be 20pts ahead in the polls and the May administration would be near or actually collapsing. As it is, we get no leadership or direction on Brexit or most other things.
Protest at any Trump visit is the latest inanity. Aye right.
I think we rather think we know where Messrs. Gove and Johnson stand on this.
I certainly have grave suspicions. I wouldn’t trust either of them to return their granny’s purse if they saw her drop it.
Am I judging them too harshly at this time of peace and goodwill to all men. ?
I only speak based on the way the facts present themselves to me.
The answer to your question is that Gove and Johnson’s ‘politics’ is about the usual modern Tory stuff such as using their parliamentary power to enrich themselves and their friends through increased privatisations and arguing for their mates to be let off paying taxes that are due. That’s what they have got into power for.
I see nothing else that they have done recently that is of any good to this country. Their politics is one of entitlement Richard and always will be.
And on that note, Merry Christmas.
And to you PSR
I think we know exactly where Gove and Johnson stand – and the rest of those behind Brexit. This provides a good example of just what their agenda includes. Avoiding tax obligations wherever they can
‘Gove and Johnson need to smell the coffee and get their own messaging out quickly or they are going to be seriously tainted by this.’
I think Johnson and Gove smell power and money and are far beyond being tainted.
Gove&Johnson…sounds like a bleaching product for a laundry firm.
Seriously though, those two cannot be either tainted or bleached, they’re made from another material all together.
No amount of tax advice would have made any difference to their extra-ordinary greed for power & wealth.
There is something about the sheer horror, as they see it, of tax that makes Right wingers lose all deductive faculties.
I remember a businessman writing about setting up a subsidiary in Singapore. He related how the tax inspector arrived,looked around, smilingly agreed that they were a good business for Singapore & suggested they pay a specially low rate of Corporation Tax. How refreshingly different, he said, from dealing with HMRC.
Now, if that person thought about it, at all, he’d presumably understand that all Companies paying a standard rate of Corporation Tax set by parliament must be preferable to their being able to negotiate individual rates with their friendly local inspector.
He might also, if he’d thought at all forensically, have wondered how much of the tax his firm ended up paying actually went to the Singaporean Exchequer & how much ended up in the hands of the local inspector or his superiors.
In the same way, you’d assume the Daily Telegraph’s editors must be able to understand that if important politicians can call up HMRC & advise them to cease pursuing tax that is legally due on their wealthy friends, then we live in a scarily horrible country that teeters on no longer being a pluralist democracy at all.
Surely they wouldn’t really want this to be a cold, rain-swept Zimbabwe ?
If you don’t know the answer, ask a tax expert.
Richard,
I am worried about the implications of this “inheritance tax” rule.
1) Are donations to petition-generating organisations like 38 degrees or SumOfUs non-exempt gifts that need to be declared for tax?
2) Are donations to non-registered charitable groups taxable? e.g. an informal project to help the homeless in Brighton?
3) What about campaign projects organised via JustGiving? Crowdfunder? Crowdjustice?
4) What about donations to Remain groups?
5) What about Momentum?
Schadenfreude is one of the remaining pleasures of old age, but these are genuine questions, I just don’t know the law in this area.
Michael
In principle such gifts are taxable in life – as they would be if made from an estate on death
But there is a reason why they may not be. That is that HMRC have to believe you have used up your lifetimate gift allowance before making the charge. And they have to believe they are not made out of income. So usual routine gifts for most people, such as subs or sums you can obviously routinely afford to pay, will never create a problem. But gifts of hundreds of thousands might.
If the latter is anything like what you’re planning, take advice. And do keep records.
Richard