I was asked by three national newspapers to look at David Cameron's tax disclosures. I declined. I was in very real need of a day off to achieve things for my family. And to be honest, I felt it was going to be a non-story.
Jolyon Maugham did give up some family time to the task: his blog on the subject is better comment than I have read in the press and contains the details. Since I presume the media asked him to do it I am surprised that I cannot see him referred to in any paper this morning.
Let me add some observations though. Given I am speaking to an audience at 10 in Cambridge this morning I thought I should have something to say.
First, and to state the glaringly obvious, this may be full disclosure. The accountants acting for Cameron say it is, but as Jolyon Maugham points out, they only know what they are told and we have no way of knowing if there are discretionary trusts for Cameron or his family of which they, and maybe even he, is unaware. But, and I stress, this may be the whole truth. Providing the whole tax return would have been much more convincing though, by a long way. Yet again David Cameron has missed a trick.
Second, we now know that because he is Prime Minister David Cameron can make £90,000 a year from letting his London home on top of his salary, a sum way in excess of an MP's salary, and more than three times that of most people in the country.
Third, whilst at the same time he has chosen to pay tax on the expenses payment to which he is entitled as prime minister he still lives at Downing Street and Chequers tax free and has other benefits. He remains in a very favourable tax environment.
Fourth, I am very surprised that it is said that the disclosure is complete because the special form required of MPs is not detailed. In that case this information is definitely an extract from the returns.
Fifth, I am also hoping that is true with regard to Gift Aid, because no use of this releif is mentioned. We either have an exceptionally parsimonious prime minister who gives no money to charity or one who does not know that when doing so gift aid benefits the charity, but does require declaration on the your tax return as a result. There is no mention of gifts at all in the information supplied. This is either very odd, or says something deeply significant about the man or shows that, again, we are getting the version of events that someone wants to tell us that is less than the whole story.
Finally with regard to the return, we are led to believe that Cameron sold about £140,000 worth of investments in 2009-10 but all the gain was on Blairmore. That's possible, of course. But I am not convinced. His overall gains were below the CGT level. But what of that on Blairmore? Were they really the entire gain? I don't know, of course. But I think there could be more to that issue than has so far been said because to be true it seems to demand that the remaining £110,000 of assets were all sold at almost no gain or loss overall. That seems to be very unlikely, although possible.
In summary, we have a story. I am still not convinced it is the full story. The tax returns would have helped address that. There are, then, questions left unanswered. But there is nothing more to mention with regard to offshore, at least from this angle.
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Apparently John McDonnell doesn’t bother with Gift Aid either
See https://drive.google.com/file/d/0B9Ada-5cDpinOHRfOFdBRzRZd1E/view?pref=2&pli=1
OK
Noted
Oddly, it also appears that John McDonnell doesn’t put any of his money in interest-bearing current or savings accounts.
…apart from ISAs.
ISAs are not tax avoidance: the law specifically encourages their use, rightly or wrongly
Tax avoidance is using the law in unintended ways
He may not have any
I wasn’t suggesting that McDonnell was avoiding tax. I was just expressing puzzlement that he didn’t have any interest income to declare, and then it occurred to me that all of his savings might be in ISAs. But what would remain odd is the lack of any declarable interest from a current account.
I have not had any interest on my current account for a long time
I assume Chequers is exempt from benefit in kind liability? Assume it counts as a workplace or something? Even so HMRC should determine what percent is used for official entertaining.
It is exempt
I am pointing out how this favours him though
Gift Aid payments advantage the charity but disadvantage the State. They also make the tax system less progressive than if it didn’t exist. Are you now endorsing free market philanthropy over funds for schools/hospitals/prisons etc?
My position on gift aid is very clear
Google it
I did ( thanks for the google promo btw – other search tools are available ). Your proposition increases funds to charities, while reducing the public funds available to the Exchequer.
You clearly have not read what I have written
I think your time here is over
The suspicion that you are trolling is very high
Don’t understand your point here. If the government didn’t provide this benefit this way it would only do so in another form. I find that gift aid is on the whole worth while and progressive.
This seems a ruse to give the press some ‘it seems like there is not much wrong’ ammo,along with suggestion that those who still call for tax return publication to ‘have agenda’. Such ruse could still happen if accountant info is accurate, as entrapment that leads reasoned questioning voices to subsequently be ‘shown’ to have had ‘motive’ and shift perspective back at least somewhat towards Cameron. Balance of probability of course does seem tax returns may hide damaging info while not published.
It will be interesting how strongly media will turn this contrived chance to defuse anti-Cameron emotion, particularly when for many they have the dilemma of wanting to dilute the whole offshore issue on behalf of the elite yet wanting Cameron to take a hit to assist Brexit ambition.
I would like focus intensified on two areas, Osborne’s 2011 Swiss Tax Deal and Cameron’s 2013 EU intervention to stop a central register of offshore interests. Those events I think provide scope for sustained tax justice pressure if they are pushed.
Both are being pushed, hard
If the minimum investment in Blairmore Holdings was $100,000, how come that on disposal the Camerons received about £30,000 including gains of about £20,000?
Because his dad waived the rules?
Interesting question though…
Statements of assets might clarify the picture.
Three times the FT has chosen not to publish my comment that Mr Cameron might publish statements of assets. This was standard procedure in HMRC investigations in days of yore.
Because the gain on £30k disposal was below (just) the CGT annual exemption. From the outset I thought that was somewhat convenient.
Isn’t it likely that Cameron (and his siblings) school and educational fees were paid for by a trust (offshore?). Many fees for education at Eton (and other schools) are paid for in this way.
We do not know
He says not for his children
Depending on the distributor/non-distributor status of Blairmore, it’s possible that any gains from selling that investment would have been treated as “income gains” rather than “capital gains”, so subject to income tax rather than CGT.
Gifts paid under gift aid must be covered by tax due that year – so the charity does not recover more from HMRC at the basic rate than is paid by the taxpayer – but there is no need to declare gifts to charity in a tax return if the taxpayer doesn’t want to claim relief at higher rates.
Possibly some of the assets sold in 2009-10 were exempt from capital gains tax (qualifying EIS shares, for example) but we really need more detail to say for sure.
He said in 2012 that he would publish his tax returns. This funny document does not meet that commitment, and one has to wonder why he has gone to the effort of putting together this summary (for clarity, it is said) and not just published the returns, or published the returns alongside the summary.
Or there were just no gifts
And that’s the point: we are left in the dark, again
I look forward to the continuation of the MP’s Taxation Scandal, as the worthy successor to the as yet not quite forgotten MP’s Expenses Scandal.
It would seem very appropriate that if you choose to enter public life as an MP, with responsibility amongst other things for the taxation and spending of the public’s money (and its laws), it is only quite right that as a matter of principle (and law) that we have a right to full and transparent disclosure (not an abbreviated version) of every MP’s records for taxation, expenditure (and breaches of the law).
Cameron’s half hearted (and perhaps half truthful) tax disclosure just goes to show yet again that self-regulation never works!
And it’s not unreasonable to extend openness to wealth status not just yearly income and expenditure – this Cameron issue itself provides a strong sense of scrutiny being directed to yearly income and away from the potential of fund-stashes that would give the game away. Of course full openness plus closure of offshore is desired outcome.
And let’s not forget about the 2nd Lord of the Treasury who seems to be keeping a very low profile lately, no doubt to try to avoid scrutiny of his own notorious tax avoiding family business and financial interests.
With his fingers firmly curled around the country’s purse strings, it only seems right and democratic to know where his personal interests may conflict with the public interest.
http://www.theguardian.com/news/2016/apr/10/jeremy-corbyn-suggests-all-mps-should-publish-tax-returns
See boy George freely give avoidance advice in 2003 on the BBC http://www.huffingtonpost.co.uk/2015/02/16/george-osborne-how-to-avoid-tax_n_6691256.html?1424090838
What are we to make, though, of a PM who professes to be against dodging taxes but who seems absolutely hellbent on not divulging all about his tax affairs? It hardly inspires confidence, to say the least. The less he says, the more we’re told, effectively, and what we’re being told is indicative of sheer hypocrisy. Should he be in office? Apparently not.
The other angle is why it only matters that he sold shares shortly after becoming ‘PM’ or what his tax affairs have been since becoming ‘PM; since much of this was happening whilst he was leader of ‘Her Majesty’s Official Opposition’ promoting the removal of incomes from the poorest, adding to the debt of most people and barely mentioning a word about ending tax avoidance in any manifesto or policy.
Richard, good analysis.
There seem to be a number of other questions still:
1. What about the Jersey Trust, PMG Eagle, that Channel 4 News says they have found?
2. How much money did Ian Cameron leave when he died, other than his UK assets (eg in Jersey)? And what happened to those assets? Did the £300,000 that David Cameron inherited come out of that off-shore source? And did off-shore sources provide the £200,000 that his mother paid across to David Cameron?
3. Did David Cameron receive money from his father’s non-UK assets before 2010?
4. Who were/are the Cameron family’s tax advisers? And who administered the Cameron trusts in Jersey and any other places?
None of this would be necessary if Cameron had told the truth and the whole truth initially. Or at any time since. The fact that he still isn’t, tells us a lot about him.
I don’t yet see that he broke any laws or has done anything different than most other UK citizens in a similar situation would have done. So far, his biggest crimes are that he has opened himself to a charge of hypocrisy by taking the moral high-ground with the likes of Jimmy Carr, and has failed to be honest.
The last para is the main point
It seems many unacceptable absurdities are possible or more likely intended. One that springs to mind is eg. owning 100 UK houses via offshore with prices contrived sky high by government that short-supplies affordable housing, and receiving rents+housing benefits to build a huge tax haven fund that does not appear on returns but over years brings an enormous yield.
Not sure my raw logic stands up to reality but (if I remember correctly) I thought it had been mentioned in the past that much of housing benefit converted into corporate welfare goes abroad. I am aware that there was some relaxing of tax help in general to landlords last year, but am curious to know the extent a contrived housing situation is tied to contrived offshore provision.
In fairness, moves are being taken to tackle this
But in general housing benefit does end up as private gain
Personally I loathe the fact that MP’s have stacked the tax rules in their favour and receive many tax free expenses that simply don’t apply to everybody else, but living in Downing Street tax free isn’t a special tax regime. Accommodation is exempt from tax if it’s necessary or usually provided for the job (eg vicar/pub landlord), or if it’s needed for security. I think the prime minister could easily argue that he lives at Downing Street in the interests of his own safety and heads of government the world over are expected to live in a particular location.
Chequers is of course a completely different issue.
He could be prime minister from Notting Hill
Although it may annoy the neighbours
What about those Downing Street Dinners for party donors?
Do we know who are the beneficiaries of the funds that were built up offshore ? Also, do we know if the value of these funds was subject to IHT on Ian Cameron’s death or should have been ?
No
And no
I read the following explanation given for the £200k gift from his mother: “Mr Cameron received two payments of £100,000 from his mother in 2011 to balance out legacy left between PM and his siblings”
Balancing a legacy strongy implies the funds were from his father’s estate. Whilst I’m not sure how even £500k ‘balances’ a legacy with a sibling who was given a property valued at £2.7m, surely this is evidence that his mother sought to alter the effective distribution of his father’s estate and by doing so increased David Cameron’s inheritance to £500k with the commensurate inheritance tax liability? Surely failure to declare this to HMRC is tax avoidance?
Good question
I’m no expert on IHT, but surely the fact that David was the only sibling to receive a cash inheritance, just under the IHT threshold was quite clearly IHT tax planning. The older son could not have been left the £2.7m property in the will because it must have been part of the estate. The balance would have gone to the widow with no tax liability. She then gifts as much as possible as early as possible from the estate which is known about in the hope that she lives a long life. There may have been further gifts to grandchildren. More gifts may be possible down the years to further ‘even up’ the children’s inheritance.
The increase in the threshold to £1m might not still be enough for the Camerons to avoid IHT altogether. Roll on that Corbyn/McDonnell government when Inheritance Tax will be reformed to tax the beneficiary, not the estate, as unearned income.
According to the Daily Mail the £2.5m house (now valued at £3.7m) was gifted in 2006, so it would have been a PET and subject to IHT because the father didn’t live 7 years. This gift would also have eliminated the whole of the nil rate band.
A further point is that the Blairemore prospectus specified a minimum investment of $100k. I wonder if that condition was required by a regulator to ensure that only experienced or high net worth individuals participated. It seems that either David Cameron’s father held the discretionary power to ignore this stipulation or the beneficial owner (David) seperated tranches and the further shares are owned by nominees to make up, at least, the full minimum requirement.
Whichever explanation, the ethicacy of the fund is in serious doubt and there may well be an issue for the regulator.
It does seem very convenient that the gain on the £30k disposal was just below the CGT annual exemption allowance.
The Guardian reports today that the current head of HMRC was a partner in Simmonds and Simmonds, the law firm that advised Cameron’s father on his Panama set up. That is the tin hat for me and shows why HMRC are not putting resources into tackling company residence issues. It’s quite possible Blairmore was evading tax because Ian Cameron was controlling it from the UK while pretending to control it overseas by having directors meetings outside UK. Nobody knows because nobody has checked this point independently, most of all HMRC. HMRC are subject to complete regulatory capture and are unwilling to enforce UK tax law and have been deprived of the resources to enforce it. This rot set in under Gordon Brown so much of our political class share the blame. But the ones currently caught in the headlights, Cameron and Osborne are the ones who should resign.
Could you explain the difference between the Cameron family minimising inheritance tax through potentially exempt transfers and the Miliband family minimising inheritance tax through a deed of variation? Are both tax avoidance or legitimate tax planning?
Both were likely to be avoidance
But one was documented
The other was post the will and questions have been raised about it
So they are not quite the same
But I am not saying the Milibands were not trying to avoid tax
I saw a headline this morning about how terrible Inheritance Tax is in taxing already taxed income. I think it was the Hate Mail but it could have been any one of the rags owned by the tax dodging billionaires who have a lot to leave (but make sure it’s all parked offshore): http://www.dailymail.co.uk/debate/article-3533114/DAILY-MAIL-COMMENT-politics-envy-s-inheritance-tax-s-immoral.html.