Lord Ashcroft has confirmed he is not domiciled in the UK. His status has been in dispute since he became a life peer in 200.
Since that time he makes clear he has been UK tax resident, but as a non-domiciled person this means that he would have only been obliged to pay tax in the UK on his UK source income and gains and his overseas income and gains remitted here.
He seeks to deflect attention from the issue by noting that at least one Labour peer has been in the same position. The difference is that the peer in question admitted it.
The issue for the Tories is threefold. First, there remains an open enquiry into the legitimacy of contributions made to the Tories by companies widely reported to be Under Lord Ashcroft’s control. The matter is unresolved: there is little more to say on it.
Second, there is the question of the obfuscation that other Tories have undertaken on this issue. Questions about their judgement in doing so have to be raised.
Third, questions must now be asked about whether when, as Lord Ashcroft and I presume Lord Paul, become domiciled in the UK after the next election those offshore tax avoidance structures they may have set up before becoming domiciled will be allowed to stand, affording them continued favour when compared with UK people who have been domiciled throughout their lives. I can see no way in which a level playing field is created unless such arrangements, if they exist, are laid aside. Only full disclosure can ensure that this happens. We have a long way to go before I can imagine that happening.
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Point one is even more important given the recent Independent report re his money in key marginal constituencies
http://www.independent.co.uk/news/uk/politics/ashcrofts-election-warchest-targets-marginals-1912407.html
“First, there remains an open enquiry into the legitimacy of contributions made to the Tories by companies widely reported to be Under Lord Ashcroft’s control. The matter is unresolved: there is little more to say on it. ”
This should be an open and shut case. Either the Ashcroft companies are “in business” (trading or managing investments) in the UK, in which case the donations or acceptable, or they are just a conduit for donations from Lord Ashcroft, a UK resident (not that that is relevant under PPERA 2000) and a registered voter (which is).
@Alex
Odd that the Electoral Commission has been on the case for so long then.
Accurate, informed comment about tax is hard to come by and what you do through your blog is very worthwhile and a valued contribution to what we mere mortals know and can understand about taxation.
Two things about your “philosophy” puzzle me. One is your personalization of things; does it really matter what one person does (and I am referring to your persecution of Ashcroft)? and secondly your lack of reverence for the law.
Your non-stop tirade against the tory peer has got nothing to do with maintaining any measured forum about tax and everything to do with left-right politics. The energy and screen inches you devote to his pursuit is totally disproportionate.
Tax avoidance is legal and for as long as it is, you are entitled to campaign to change it but you are wrong to pillory people who practice it. Pension contributions, ISAs, charitable donations are all forms of tax avoidance but, I assume, OK by you.
Where is the logic in arguing that people who make money in other parts of the world must send it to the one place in the world where they will pay the most tax on it (any other action being tax avoidance)? Can you honestly say that you would consider anyone who did that, rational?
I long for a politically neutral, personality free tax forum.
@Richard Murphy
They were on the case of Michael Brown and 5th Avenue Partners from 2005 to 2009, so it is not particularly odd. The Electoral Commission is a very timid beast and has been easily cowed by MPs.
@Brian Smith
I think Lord Ashcroft’s tax affairs are a question of legitimate political interest and rather beyond just a personal issue: I’d certainly completely deny any personal interest in this issue beyond the politics. So I reject your assertion: he is not, I think you must agree, the ‘normal man in the street’. I’d venture to suggest tomorrow’s newspapers might reflect that fact.
Second, there is a massive difference between tax compliance and tax avoidance. Tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.
ISAs, personal allowances and pensions are all tax compliant
Offshore, by definition, is not
This is a wholly rational position
Richard
@Brian Smith
It might not matter very much if the one person were not
1) Actually occupying a place in the legislature
2) Massively funding one political party
“Lack of reverence for the law”! I’m sorry but, on reflection, don’t you think that sounds a little bit pompous and goody-two-shoes? The law is made by people. We should reserve reverence for God or if we don’t believe in him (I’m ambivalent), for “truth” or something like that.
@Richard Murphy
“I think Lord Ashcroft’s tax affairs are a question of legitimate political interest and rather beyond just a personal issue:”
There is a long standing convention that parliamentarians do not comment on the tax affairs of any particular individual, merely on the ststus of the law, its application and its effectiveness. If Ashcroft had committed a crime, it would be fair comment, but in view of the fact that his situation far from unique, I don’t think his tax affairs are a matter for public debate.
I would also add that as a registered voter, he is perfectly entitled to be engaged in British politics. If we were to prevent people from engaging in politics, standing for election or voting simply because they didn’t pay any tax in the UK (apparently not the case for Lord Ashcroft), the profile of the electorate would be very different.
Richard
Tax avoidance is tax compliant. “offshore” is also tax compliant for as long as tax law says it is. You can’t have it both ways/make up your own laws.
My point about rationality is simply this. According to your lights, if I recognise income in any tax regime other than the most dunning then I have avoided tax somewhere. As you say, by definition.
Re pompous. I have to hold my hand up there. Poor chice of word. What I was trying to say is that we all live and die by the law. You can’t have just the bits that suit your book/philosophy.
For as long as tax avoidance is legal – as it is – then all of it is legal.
My point about politics etc is that your website loses all authority when you make purely political points or descend into personality attacks.
You must know that the whole party funding issue is a complete can of worms – with examples of corrupt practice, veniality and purchase to be found on all sides – and the non-dom situation could probably also do with looking at.
But for as long as the law is as it is then tax avoidance is perfectly respectable; and rational.
I repeat we desperately need a txation forum that is politically agnostic or, at best, disinterested.
@Brian Smith
I am sorry, there is no logic to what you say.
Note how I defined tax compliance. By definition the economic substance of transactions does not take place offshore.
This is inevitable. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction. They do in addition create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
In that case your logic falls apart.
Let’s also be clear, taxation is politics. Let’s not pretend otherwise. Those who do are always neo-liberals, and their claim is that their politics is neutral – but that’s just a joke.
Richard
“questions must now be asked about whether when, as Lord Ashcroft and I presume Lord Paul, become domiciled in the UK after the next election those offshore tax avoidance structures they may have set up before becoming domiciled will be allowed to stand, affording them continued favour when compared with UK people who have been domiciled throughout their lives”
Ashcroft isn’t domiciled here. That means any income earned ‘offshore’ is taxed there and not here until he remits it to the UK. So in what way, other than in your opinion, are his current tax affairs any of ‘wrong amount’, ‘wrong place’ or ‘wrong time’?
Once he becomes UK domiciled then he will be taxed on a worldwide basis, remittance or not. Are you accusing him of tax evasion? On what basis?
FCA
No I’m not accusing him of evasion. Of course not.
The issue with regards to Lords Paul and Ashcroft is that as legislators they should be domiciled
Nick Robinson quite adequately explains the issue http://www.bbc.co.uk/blogs/nickrobinson/2010/03/why_lord_ashcro.html
Of course he’s not acted illegally. But that’s not the point
Richard
I
If Michael Ashcroft did make an unequivocal assurance in March 2000 that he would take up “permanent residence” in the UK, then he ceased in fact and in law to be non-domiciled at that point. HMRC guidance makes this quite clear; for example in HMRC6: “By deciding to stay in the UK permanently or indefinitely you have established a domicile of choice in the UK.” That being the case, it would seem that he should have been paying UK tax on his worldwide income for the past 10 years.
@Another Richard
Read the statement he issued
He says this was renegotiated. Under the renegotiation he simply agreed to be long term resident. That did not imply he became domiciled.
The issue is not whether he complied with the law: he did, I am sure. The issue, if there is one, is why he was allowed to renegotiate that. It is the confusion that this renegotiation caused that gave rise to this issue as I see it.
That’s a purely political issue
Richard
Richard
It’s not open to you to define tax avoidance as in certian parts illegal and in others – like pensions, ISAs etc – legal. You’re not the red queen making words mean only and just what you want them to mean.
Tax avoidance is legal and entirely rational.
If you feel like it, please try and address my point about choice of tax regime. Are we truly obliged to recognise our various bits of income in the highest taxing jurisdiction. If we don’t do this are we guilty of “illegal” or “bad” tax avoidance?
This notion simply doesn’t add up.
@Richard Murphy
“Nick Robinson quite adequately explains the issue http://www.bbc.co.uk/blogs/nickrobinson/2010/03/why_lord_ashcro.html
Of course he’s not acted illegally. But that’s not the point”
The point being what exactly? There were no objections when David Steel stood for election to the EU on an Italian list. I don’t recall any objections to Gisela Stuart (a German) becoming a UK MP. I have voted in elections in other countries because I was entitled to do so. So what is the problem?
@Alex
Alex
I think you need to read today’s papers
This is not a story I generated
And I think it’s fair to say I’m not alone in being concerned
In fact, it might even be fair to say your lack of comprehension puts you in a very, very small group
Richard
@Brian Smith
Of course it’s my right to define avoidance however I like. That’s free speech
The fact HMRC seem to agree is a happy coincidence
And re jurisdictions – no – you’re just exonerating evasion. Remember it’s only the thickness of a prison wall away from avoidance
Richard
As a member of the public exercising as you say, your right to free speech, you can say what you like. As the owner of a tax forum that considers itself of sufficient standing that it feels able to make credible representations to the UN, for example, and who expects to be listened to because he has intelectual standing, then clearly you cannot.
Your claim that avoidance is only a prison wall’s thickness from evasion is a nonsense. Are you saying that a surgeon is only that far away from assault? That a dispensing chemist is only semantically different from a street corner dealer?
You still haven’t answered my question about where one should recognise one’s income given a choice of tax juristictions. Obfuscating, as you do, won’t alter the fact that Ashcroft is obliged to recognise all his UK arising income in the UK and declare it for tax here. That is the law and that is what we have to assume, unless you know otherwise, he is doing.
Incomes arising elsewhere in the world are declared for tax as required and will only become liable for UK tax – less any tax already paid should the remitting country have a tax treaty with us – if and when they are remitted to a UK tax juristiction. That, again, is the law.
Whether Ashcroft, given his declared circumstances, is a suitable person to be deputy chairman of a major political party, is entirely another matter and one completely outwith, I would offer, the scope of an expert tax forum.
@Brian Smith
Don’t you realise I am asked to such places precisely because I do challenge conventional opinion? And that they want to hear that opinion challenged?
As for the claim about a prison wall – the phrase is Dennis Healey’s – you obviously missed the point.
As you do on choosing where to declare income. The UK has residence based taxation. Aren’t you aware that what you say as a result is illegal for most people in the UK? The question then is why an exception is made for some.
And I reiterate- all tax is political. Your claim to the contrary is simply wrong. It cannot be anything else.
At which point I declare, as editor, this debate over.
Richard
“No I’m not accusing him of evasion. Of course not. ”
Please can you explain precisely what you mean by ‘structures’ that non-Doms can set up that survive their becoming domiciled and that Doms can’t set up, but which do not rely upon secrecy to ‘work’.
“The issue with regards to Lords Paul and Ashcroft is that as legislators they should be domiciled”
That’s a different point – it’s a view I have some sympathy with, actually. It would, presumably, be easy enough to have ruled that for members of the legislature, the ‘remittance’ option shall not be available. Or that only UK-domiciled people may participate in the legislature. I’m sure the party who has been in power for the last thirteen years can explain why it’s taken until now to get to grips with it.
Brian — “You’re not the red queen making words mean only and just what you want them to mean”
As a matter of literary record, that was Humpty Dumpty, not the Red Queen.
FCA
If you were really an FCA you’d know there are rules preventing a UK domiciled person transferring assets abroad to secure a tax advantage. Many trusts are ruled out for them as a consequence and the ownership of offshore companies is also hard to achieve legally. A person becoming domiciled may have such structures created before they became resident and can continue to use them thereafter. That is an unlevel playing field. It also creates unfair competitive advantage that distorts trade in the UK.
Richard
If you mean this statement, I have now read it carefully, and there may be less to it than meets the eye. It doesn’t contain the word “renegotiated”, but only says that in “subsequent” [when exactly?] “dialogue with the Government, it was officially confirmed” [by whom? perhaps only by Ashcroft himself?] that “permanent” was to be interpreted as “long term”. It says “I agreed to this” but doesn’t actually say that the Government, William Hague, or anyone else agreed to this rather startling reversal of the normal meaning of “permanent”.
So was the “clear and unequivocal”, “solemn and binding” undertaking later renegotiated? Jack Straw appears to think not.
@Another Richard
Sky thinks otherwise:
http://blogs.news.sky.com/boultonandco/Post:54428789-0e24-4781-b31e-70f8f5ccecc0
@Richard Murphy
Sorry, where’s the “otherwise” in the Sky reference? I can’t see anything there that contradicts the hypothesis that Michael Ashcroft formed the intention in 2000 of making his UK residency permanent, thus (by HMRC rules) assuming a UK domicile of choice from that instant.
Sorry my mistake
I think they’re agreeing, not disagreeing with you
Or at least Mandelson may be
I see that your declaration that this debate was over was also permanent in the Ashcroft sense!
I think the best take on this is from the Daily Mash
http://www.thedailymash.co.uk/politics/politics-headlines/angry-taxpayers-demand-tutorial-from-lord-ashcroft-201003022518/
@James from Durham
I only meant with Brian
He sent a message I deleted in response
Things like the following make one proud to be British
http://news.bbc.co.uk/1/hi/uk_politics/8544547.stm
Thought this was a good letter in today’s Independent:
Another question you might have asked about Ashcroft (“The unanswered questions that Ashcroft has yet to address”, 2 March) is “What’s in it for most people in Belize?” I bet they don’t see much in the way of tax either. There are only 11 doctors and nurses per 10,000 people, and the level of availability of hospital beds is 72nd in the world. Less than half of Belizians have access to adequate sanitation and only 61 per cent of boys are in secondary education.
It is a lovely country to visit with stunning wildlife, hospitable people and lovely seas. I had a memorable visit, but as a member of the Lords was anxious not to be associated with someone over whom so many questions hang.
Sue Miller
(Baroness Miller of Chilthorne Domer), House of Lords