HMRC msut be fuming that Harry Redknapp is not guilty.
But shame ion them too. The ‘gift’ defence on the capital going into this account must have been known to them in advance and if both sides agree is hard to beat. They did agree. So they’re innocent.
But surely some undeclared income must have arisen on the account? It would be amazing if it had not. If they wanted a case why didn’t they prosecute on that? Now they’ve lost their chance. Harry is innocent. So be it.
I’m grateful for having had an article in the Jersey & Guernsey Law Review from 2010 drawn to my attention. By Filippo Noseda, it discusses The Foundations (Jersey) Law 2009 under the title ‘A Civilian Perspective: Not so plain vanilla and possibly a tad wacky’.
It’s not exactly complimentary about the law but perhaps the most damning paragraph is this:
From a civilian perspective, the policy statement that a [Jersey] foundation may accord more control to the creator of the structure than a trust appears quite bewildering, given the amount of powers that a settlor of an ordinary Jersey trust may retain for himself under art 9A of the Trusts (Jersey) Law 1984 (2007 revision) without turning it into a sham or nomineeship—
“Powers reserved by settlor
9A.(1) The reservation or grant by a settlor of a trust of … any of the powers mentioned in paragraph (2), shall not affect the validity of the trust nor delay the trust taking effect.
(2) The powers are—
· to revoke, vary or amend the terms of a trust or any trusts or powers arising wholly or partly under it;
· to advance, appoint, pay or apply income or capital of the trust property or to give directions for the making of such advancement, appointment, payment or application;
· to act as, or give binding directions as to the appointment or removal of, a director or officer of any corporation wholly or partly owned by the trust;
· to give binding directions to the trustee in connection with the purchase, retention, sale, management, lending, pledging or charging of the trust property or the exercise of any powers or rights arising from such property;
· to appoint or remove any trustee, enforcer, protector or beneficiary;
· to appoint or remove an investment manager or investment adviser;
· to change the proper law of the trust;
· to restrict the exercise of any powers or discretions of a trustee by requiring that they shall only be exercisable with the consent of the settlor or any other person specified in the terms of the trust.”
Even without any prior knowledge of foundation law principles, it is difficult to imagine a wealth management structure under which the founder may retain more powers than those described under art 9A TJL without exposing such a structure to an attack based on sham.
I have argued since 2006 that the powers referred to were deliberately designed to create sham trusts. It’s good to see a lawyer agreeing that sich a possibility seems to be the case and the law helps it.
So much for the ‘well regulated’ offshore location that does not want anything to do with dubious activity.
I was pleased to see this in the Guardian today:
The first Liberal Democrat group openly opposed to the coalition is to be launched at the party’s spring conference in Gateshead next month with a warning that the coalition has been a political disaster for the party, as well as a denial of its radical roots.
Launching a website on Wednesday, the group Liberal Left said it hoped to become a rallying point for members opposed to the coalition and those who see the party as a centre-left organisation seeking common cause with Labour, Greens and others on the centre left.
Has the fight back against the Orange Book begun? I hope so.
I will be at the Gateshead Conference, speaking on Friday evening.
It looks like it may all be ove very soon fro the German – Swiss tax deal that broadly replicates the appalling UK – Swiss one. As Tax-News reports:
Social Democrat (SPD) controlled states throughout Germany reportedly plan to block the bilateral tax agreement between Switzerland and Germany in the German Bundesrat, or upper house of parliament, during a crucial vote on February 10.
According to Baden-Württemberg’s Finance Minister Nils Schmid (SPD), German Finance Minister Wolfgang Schäuble will no longer be able to prevent a defeat in the upper house. Schmid warned that it is “highly unlikely” that the agreement will receive the country’s support, arguing that the proposed level of taxation of undeclared German assets held in the Confederation is “simply too small”.
I have shamelessly lifted the following from Owen Tudor on the TUC’s Touchstone blog:
A new report, launched in Brussels on Monday by the Socialists and Democrats in the European Parliament, shows that – contrary to what the finance sector’s paid lobbyists have been insisting – a European financial transaction tax (FTT) would boost growth in Europe by at least 0.25%, raise the revenue to combat poverty and climate change at home and abroad, and help re-balance the economy by making long-term investment more worthwhile than short-term, high frequency trading. This new report by noted economists Prof Avinash Persaud and Prof Stephany Griffith-Jones comes on top of revised estimates from the European Commission who originally produced some of the data that fat cat financiers pounced upon. The Commission’s original impact assessment was based on a flawed model which shows all taxes as harming growth, whatever the revenues are used for, but misunderstandings of what the impact assessment showed were used to create concern among progressive politicians and abused by people opposed to the tax all along to justify their position (even though the same people shed few tears over the impact on growth of measures they support like increased VAT or cuts in public services.)
Welcoming the new report, Socialist MEP Anni Podimata, who will draft the European Parliament’s report on the Commission’s proposed FTT, said:
“This study confirms what we have been saying all along. The financial markets have to make a fair contribution to the crisis they provoked. An FTT will reduce the fragmentation of the internal market. Put together with other tools, it will act as a disincentive to high frequency trading and other practices which increase risk without ensuring liquidity. This would contribute to a better financing of the real economy, encourage investment and job creation in the EU. The S&D Group is against putting the entire burden on ordinary taxpayers, and calls for measures to boost growth. In this sense, an FTT is an integral part of this approach.”
The Commission’s new approach was set out last week in a combative article in several national newspapers around Europe by EU Tax Commissioner Semeta - only a year ago an FTT-sceptic – who wrote:
The more the financial transaction tax approaches implementation, the shriller – hardly by chance – the rhetoric of its opponents. They twist the Commission’s official data and thereby invent apocalyptic scenarios concerning the impacts of the tax on growth, employment and competitiveness.
The FTT will neither damage growth and competitiveness nor lead to more unemployment. From an isolated perspective every tax causes economic costs. However, the costs of the FTT are small and, absolutely legitimate, given the enormous support the financial sector has been granted in the recent years. Furthermore, the costs have to be offset against the positive effects from the use of the revenues of the FTT.
The Griffth-Jones/Persuad paper also disproves the suggestion that an FTT would hit pension funds or pensions, and urges the European Commission to use the model of the UK stamp duty to prevent evasion by forum-hopping, rather than the Commission’s current proposal of a ‘residence principle’.
I loved this in Bloomberg this morning:
Switzerland’s government will unveil a new “clean money” strategy at the end of this month, SonntagsZeitung reported, citing unidentified people.
Proposed regulations, to be put forward by Finance Minster Eveline Widmer-Schlumpf, will require banks to demand a declaration from non-Swiss clients that all their assets are properly taxed, the Swiss newspaper reported.
Let’s be clear about what this means.
The Swiss know they are harbouring tax evaded funds, or they would not be doing this.
And those who are tax evading will already have signed false statements to their tax authorities as part of that process of tax evasion. The Swiss will know that.
But now, to let themselves off the hook of having to investigate tax evasion they are saying they will take at face value a statement that people are not tax evading without any supporting evidence to validate the claim.
That’s absurd!
Get people to show Swiss banks their tax returns to support the claim or this is nonsense, I say. Without that then any banker has to have suspicion that their client is tax evading if they ask for information not to be disclosed to their domestic tax authority (as will be the case in Switzerland) – and have a duty to report them under money laundering rules as a result. But of course, that’s precisely what the Swiss do not want to do.
I’m speaking at:
Portcullis House is, of course, part of the Houses of Parliament.
The speakers are:
Katy Clark MP
Owen Jones, author of Chavs
Anna Bird, Fawcett Society
Richard Murphy, author of The Courageous State
Prof George Irvin, economist
Ellie Mae O’Hagan, writer and UK Uncut activist
Chaired by Cat Smith, Next Generation Labour
*Space is limited so please RSVP to info@nextgenerationlabour.org if you wish to attend.
* You can help publicise by inviting your friends to the facebook event.
It’s been revealed that H M Revenue & Customs’ bad debt in 2009-10 was £10.9 billion.
According to HMRC’s accounts the provision was £10 billion in 2010-11 and £11.5 billion in 2009-10. They did not, as far as I can see (and I’ve searched) disclose a write off figure.
In earlier years write offs of about £4 billion a year were considered normal.
So why the increase? Well that’s easy to explain. If you sack your debt collectors your bad debt goes up, and that’s exactly what HMRC under the direction of Dave Hartnett has been doing. In 2005 HMRC had 100,000 staff. By 2015 it will be 50,000. Many of these were debt collectors.
Total HMRC staff costs in 2010-11 were just over £2.2 billion. Seeking to reduce that has cost many, many times that sum.
No wonder the tax profession, HMRC staff unions and anyone trying to deal with HMRC agree that HMRC is understaffed. Now we know the cost.
When will sanity prevail and more spending on staff at HMRC be sanctioned? It’s the only way to solve the tax gap.
It’s been revealed that the UK’s national accounts for 2009-10 include tax bad debt of £10.9 billion.
I found this interesting. That’s because, as regular readers will know, I’ve been writing about the ‘tax gap’ since 2006, and pretty much forced this issue onto HMRC’s agenda in 2008, as government papers at the time showed. The tax gap is made up of three parts. The first is tax avoidance (£25 billion in my estimate), the second tax evasion (£70 billion in my estimate) and the third tax paid late (£25 million according to HMRC of which they have said about £4 billion a year has been written off on average in previous years. This definition of the gap is not mine by the way: HMRC agree with it, except they ignore tax paid late and recovered in their numeric calculations despite including it in their definitions.
But if they do include bad debt of £10.9 billion then their latest estimates of the tax gap – supposedly for the same year, 2009-10 are even more wildly inaccurate than we thought, because they claim that in total the tax gap is just £35 billion that year. That would mean there was just £24 billion of tax avoided and evaded, and yet as I have shown using World Bank figures for the UK shadow economy, it’s implausible that we have a tax evasion gap of less than £70 billion (which so happens to agree with my estimate of the same gap based largely on VAT data). If the HMRC claim on the total tax gap were right tax evasion would be little more than £20 billion – and that’s just 3.6% of total overall tax revenues.
No country on earth has a tax evasion rate as low as that. Switzerland is supposedly the cleanest domestic economy on earth and has a shadow economy of 8.5%.
So what this data says is that not only do the national accounts have some surprises in them, but HMRC are lying about the scale of the tax gap. Sorry to use such language, but on this occasion it seems appropriate (and they can always sue me if they wish). But I don’t think they will. What this data reveals is that not only have they not previously told the truth on the scale of bad debts HMRC has been suffering, they’ve also been disguising that data in the figures on the tax gap they have been producing. As I’ve said all along.
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