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Tony Blair

Tony Blair

I am a humble beancounter

I have read the articles about his earnings

The profit of his company has been reduced by apparently allocating admin expenses of £10M

Presumably wherever this amount ends up it will be taxed?

Am I missing something?

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09th Jan 2012 17:27

Stories like this annoy me ....

someone has clearly got a copy of the statutory short-form P & L where all of the expenses are probably termed 'admin' and could feasibly be a fully taxed salary for Blair. It hits the news and people say oooh admin ... that's a lot of paper clips etc etc etc. Surely someone in the media understands something about accountancy?!?!

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By ruben
Tornado
09th Jan 2012 17:44

Tony Blair

Thanks Steve

I wish I could share your optimism re "fully taxed"!

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By mumpin
09th Jan 2012 20:00

hang on...

and could feasibly be a fully taxed salary for Blair. It hits the news and people say oooh admin ... that's a lot of paper clips etc etc etc. Surely someone in the media understands something about accountancy?!?!

 

Wouldn't there be an obligation to disclose Directors' Salaries?

I would guess at a ridiculous "Management Charge" from another company with a different (helpful) year-end or an LLP even...

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By DMGbus
09th Jan 2012 23:23

Just another rich businessman doing nothing legally wrong

I am no fan of Tony Blair, so if i thought he'd done something wrong I wouldn't be writing this.

From what I've seen he has a profitable enterprise / series of businesses and has used legitmate means to mitigate the tax liability and, according to one report, legitimately not have some of the earnings / profits in the public domain.

Surely this what all business people seek and their accountants advise them on (presumably we all file Abbreviated Accounts at Companies House rather than full accounts where legally possible?) (I can name two Chartered Acciountants firms in the West Midlands who seem to NOT file Abbreviated Accoiuntants though for qualifying accountants however, don't what they're about though!).

Difference here is that we have a "political" element - a high profile (former) politician, so we have some people suggesting that something untoward is going on.   On the basis that we're all equal under the tax and public disclosure law, why can't a high profile person use the laws to his advantage?  Now, if laws were NOT being complied with then that is another matter.  As, it also would be different if said former politician criticised others in his position in the past doing what he is now reported to be doing himself (I have no knowledge of this, if others have then please bring this to our attention, hypocracy by politicians seems to be an occupational hazard).

Reminds me of politicians in the West Midlands in the  late 1970's (or maybe early 1980's).  The publicly owned monopoly bus company sought to mitigate it's tax liabilities by leasing buses rather than buying them via loan finance.   Some local politicians suggested that this legitimate tax planning was morally wrong!  What a load of political garbage!   Inference was that legitimate tax avoidance was morally wrong - now isn't what this current Tony Blair story is all about?

The fact remains millionaire business people have the means to afford advisors who can sell them complex schemes and there's no reason why any class of society should be excluded from this advice.  Maybe there's some moral argument that much more modest earners can't use these schemes or complex structures as they can't afford the high fees involved.

 

 

 

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By dstickl
10th Jan 2012 04:56

IR35 & the alleged Tony Blair "brand" &/4 "personal service....?

Hi conveen1, You asked "Am I missing something?" at the start of this thread, hinting that you'd like to have an answer.

Steve Holloway then asked "Surely someone in the media understands something about accountancy?", possibly as a rhetorical question because s/he then adds "!?!".

mumpin then - in my opinion - hinted at the possible transfer of a "Management Charge" from another company with a different (helpful) year-end or an LLP even.

DMGbus asked "Inference was that legitimate tax avoidance was morally wrong - now isn't what this current Tony Blair story is all about?"

FACT: Mr Tony Blair was a Labour "political party" MP.

FACT: Some Labour MPs occasionally speak in Parliament against tax avoidance.

FACT: Tony Blair was Prime Minister when IR35 and CA2006 legislations went through Parliament.

In view of the foregoing, in my opinion, I have to ask you the following questions, which are also suggestions of my personal opinion:

* Has Tony Blair been selling the "personal service" of "Tony Blair"?

* Is there an IR35 aspect to Tony Blair's actions?

* Has an IR35 aspect been fully accounted and/or taxed and/or NI'd for, or has it been circumvented through the "Ltds/ LLPs /LPs" apparent structures?

* Do HMRC recognise that such "Ltds/ LLPs /LPs" apparent structures are legitimate devices for the avoidance of IR35 and its so-called "hypothetical contract(s)" for relevant workers?

* Isn't IR35 a "fiscal horror" that may be constraining UK GDP growth?

* Shouldn't IR35's implementing SI 2000/727 Section 7(1) Step One be amended to have some sensible "cost allowances" to encourage some additional workers to start or continue work to add to UK GDP?

* Aren't there wide economic arguments to amend the application of IR35, as well as - or rather than - "some moral argument that much more modest earners can't use these schemes or complex structures as they can't afford the high fees involved" DMGbus?

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10th Jan 2012 11:31

How much

Wouldn't it be nice if some kind HMRC whistleblower (via a hacked phone) actually told us how much tax he pays. The story would change from "Tony the tax dodger" to "Tony's tax saves the NHS"

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By dstickl
10th Jan 2012 17:28

IR35 and "Tony's tax saves the NHS"?

Wouldn't it be nice if some kind HMRC whistleblower fully investigated Tony Blair for (in my opinion) apparent alleged transgressions - if any - regarding IR35, and released details of all the so-called "hypothetical contracts" - if any - and the concomitant tax/NI to be collected, if any.

And I agree with you, Chambers Accounting: Wouldn't it be nice if "Tony's tax saves the NHS" but, remembering the 75p per week pension increase under Labour: Wouldn't it be nicer if "Tony's tax increases State Pensions".

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10th Jan 2012 19:22

@dsticki

What exactly is your background?  I assume not as an accountant?

The purpose of IR35 is to catch people providing dependent personal services through a company, that is - they should really be an employee of another business. It is not meant to catch individuals providing an independent personal service, i.e. somebody who works for himself such as a plumber.

Tony Blair clearly provides independent personal services, providing consultancy services to multiple clients including several overseas governments, JP Morgan, Zurich International and numerous other clients through his speaking appointments. He quite clearly doesn't fall under IR35 through such activities.

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By dstickl
10th Jan 2012 23:25

BA, MA, BA, ACMA, MIRM

RE "thisistibl" Q1, my answer is: BA, MA, BA, ACMA, MIRM; so your assumption in Q2 is apparently wrong, as I regret - in my opinion - is your assertion of "clearly" in your final paragraph.

If you really want clarity "thisistibl", then may I politely suggest that your press for a change in the law so that there is a legal obligation to have a central register of LPs (Limited Partnerships) with a concomitant legal obligation for each LP to publish reports and accounts? Please confirm.

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Francois Badenhorst
11th Jan 2012 10:45

@Dstickl

Are any of those qualifications accounting qualifications?  I don't recognise them as such.  So you haven't made it clear what was wrong with my assertion.  Anyway, I am not trying to be confrontational, I was just curious as to the background of the query, since it is unusual for this website.

You ask me to clarify a question on LPs, but you have deviated from the IR35 question, which is what I actually sought to clarify.  Does that mean you now agree that it's unlikely Tony Blair is in breach of IR35?  I suspect (from your many posts on the matter) that you will not easily concede on this point, but it would be interesting to hear your reasons for pursing.

You ask why LPs don't have to publish reports and accounts in the same way as a limited company.  I would suggest turning that question around: why should LPs publish these details?  Presumably you agree that sole traders, e.g. plumbers and carpenters, don't need to publish such documents.  By extension, it seems to make sense that partnerships shouldn't have to publish those documents either - a partnership is simply a collection of sole traders working together.  So the question seems to be whether the fact that an LP has a form of limited liability, means they should be obliged to publish accounts.  My opinion is no, because a LP structure does not offer truly limited liability.  The general partners of the LP remain liable for all debts and obligations of the partnership, and therefore there are no grounds for fiscal transparency on this basis.  In summary, I see no reason why LPs in particular should publish financial documents, perhaps you can give some?

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By dstickl
11th Jan 2012 13:28

Four Answers and a Question

As this morning's post by "thisistibl" has 4 sentences ending in a question mark, here are my Answers:

A1: YES. ACMA is granted by CIMA. 

A2: NO, because on the basis of information currently available to me, I do not agree "that it's unlikely that Tony Blair is in breach of IR35". In part, this is because yesterday you used the phrases of  "people providing dependent personal services through a company" and of  "individuals providing an independent personal service" and I regret that I do not yet see the underlined words of either of those phrases in HMRC published guidance such as: 

QUOTE

Intermediaries Legislation (IR35) - Working through an intermediary, such as a Personal Service Company

The circumstances in which the legislation applies

If you provide your services to a client (the end-user) via an intermediary, typically a service company or partnership, and the intermediary does not meet the definition of a Managed Service Company, then the IR35 legislation may apply to engagements with that client.

Broadly, it applies to those engagements where –

you personally perform services for another person (the client);the services are provided not directly with the client but under arrangements involving an intermediary; andthe circumstances are such that, if you had provided the services directly to the client under a contract between you and the client, you would have been regarded for income tax purposes as an employee of the client and/or, for NICs purposes, as employed in employed earner’s employment by the client.

In addition you must receive or have rights entitling you to receive a payment or benefit that is not employment income.

The intermediary must also satisfy certain conditions.

It is therefore necessary under the legislation to construct a hypothetical contract between the worker and the client based on all the circumstances including the terms and conditions of relevant contracts and the actual substance of the arrangements between the parties. Subject to meeting the other conditions, if that hypothetical contract would be one of service then the engagement is within the legislation.

The existing employment status tests are used to decide whether the hypothetical contract between the worker and the client would be a contract of service/employment. The courts lay down the criteria used to decide who is an employee.

ENDQUOTE.

QUESTION for "thisistibl": Does any other HMRC IR35 guidance, or any of UK IR35 legislation, contain your phrases of either "dependent personal service(s)" and/or of  "independent personal service(s)" and, if so, which specifically, please?

A3: Efficient markets require relevant information, so opaqueness may lead to anomalies.

A4: Efficient markets require relevant information, so opaqueness may lead to anomalies.

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11th Jan 2012 14:29

What?

The terms dependent and independent personal services were my own wording, they aren't taken from HMRC guidance or the tax legislation.  But the guidance you pasted is the same -

"the circumstances are such that, if you had provided the services directly to the client under a contract between you and the client, you would have been regarded for income tax purposes as an employee of the client".

i.e. the circumstances in which IR35 is intended to operate are those circumstances where the relationship is of employer/employee, not those of advisor/client.  The business Tony Blair operates is no different to an accounting firm working for it's clients.  That doesn't mean that the accountant should be an employee of his clients!

As for "Efficient markets require relevant information, so opaqueness may lead to anomalies".... that is surely a joke?  Which markets are you talking about exactly? You can't buy shares in Tony Blair's company. What anomalies are created by Tony Blair not publishing his full financial details?  Your statement seems to imply that every business operated by every sole trader, partnership and company should be published.  And I'm sorry but that is a little naive.

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By dstickl
11th Jan 2012 14:46

Thank you for confirming that ...

Thank you for confirming that: "The terms dependent and independent personal services were [thisistibl's] own wording, they aren't taken from HMRC guidance or the tax legislation."

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11th Jan 2012 14:49

They say...

..that a little knowledge is a dangerous thing!

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By dstickl
11th Jan 2012 15:12

They say that IR35 is a "fiscal horror".

They say that IR35 is a "fiscal horror".

So let's amend it, please; my suggestion is to amend SI 2000/727 Section 7(1) Step One, as described elsewhere on AWEB.

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rememberscarborough
11th Jan 2012 15:46

Don't agree

Who says IR35 is a fiscal horror?

Why should Step 1 include an exemption for evading tax in cases where "a worker who did not work for a period of at least 3 (three) calendar months after the date his or her previous actual contract for service if any ended"? There is no reason whatsoever! A contract which should rightly be a contract of employment, but is routed through an intermediary to avoid tax, should be caught by IR35 regardless of any previous contracts or timing.

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By dstickl
11th Jan 2012 18:59

IR35 and as this general area is titled "Any Answers" ....

In my opinion, the answers "thisistibl" seeks are:

A1: As I understand it - rightly or wrongly - CIOT, for instance, and possibly the PCG; if U don't know what CIOT or PCG stands 4, please just ask!  Again, if you must!

A2: For dealing explicitly with the alleged "Friday to Monday" alleged justification of IR35, which is significantly less than a three month period, and which is countered by the following "device", an interesting word that was hinted at by Mr John Whiting to deal with the IR35 issues, as reported elsewhere on AWEB: here's my easy way to clear up the worst of IR35's "secondary legislation": The IR35 enabling SI 2000/727 section 7(1) Step One currently reads:
 QUOTE 
7 Worker's attributable earnings—calculation
 (1) For the purposes of regulation 6(3)(a) the amount of the worker's attributable earnings for a tax year is calculated as follows:
 Step One
 Find the total amount of all payments and benefits received by the intermediary in that year under the arrangements, and reduce that amount by 5 per cent 
ENDQUOTE and its currently bad economic effects could be "simplified" by replacing the words of "by 5 per cent" with "by a monetary amount that is the greater of either (a) the VAT registration threshold for a worker who did not work for a period of at least 3 (three) calendar months after the date his or her previous actual contract for service if any ended or (b) 5 (five) per cent for all other workers".

 

BTW: I'm delighted that "thisistibl" at last seems to me to be persuaded that there is - in my opinion - an apparent case for the investigation of a possible IR35 aspect of Tony Blair [who is the original title of this thread] and Tony Blair's affairs, because "thisistibl" has this afternoon written "A contract which should rightly be a contract of employment, but is routed through an intermediary to avoid tax, should be caught by IR35 regardless of any previous contracts or timing." 

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11th Jan 2012 18:59

Eh??? dstickl, you are not comparing like for like

While I sympathise with anyone caught under IR35, if they were forced by their employer to go freelance rather than be employed, but it is in no way comparable to Tony Blair's circumstances.

Do you really believe that the work Tony Blair does can be compared to an employee? I can just picture him being told what to do, where to do it, and how to do it! 

Most of the time I imagine he is just 'engaged' for PR purposes to show that the companies and institutions involved have 'friends' in (previously) high places, or  they can afford to buy people in high places!.

Some IT freelancers, actors, newsreaders, and other media people are the ones meant to be caught by IR35, as they are under the control of the engaging contractor, and it isn't intended for consultants (which I am sure is how he describes himself!).

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By dstickl
11th Jan 2012 19:18

In my opinion, Tony Blair's engaged because he's Tony Blair and his personal service is paid for, in a series of contracts etc, each contract etc of which seems to me - again in my opinion - to be subject to IR35. 

Based on my memories of George W Bush, Gordon Brown, etc, I too "can just picture him being told what to do, where to do it, and how to do it".

BTW: It's not yet been made clear to me that Tony Blair can send a "Substitute" for his several personal appearances, etc, under contract. To re-iterate HMRC guidance, one of the legs of IR35 is to "personally perform services for another person (the client)".

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11th Jan 2012 19:26

So ... using your logic

Every author, every athlete, etc. who speaks at a conference or advises at some sports facility is in reality a personal service company who should be considered 'caught' under IR35???

They get these fees because of who they are, and no substitution would be acceptable, but that doesn't automatically result in IR35 being applicable.

 

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By dstickl
11th Jan 2012 19:43

YES, If thru an int, that's why I view IR35 as a "fiscal horror"

YES, If it's through an intermediary as defined by HMRC, that's what the words of the IR35 legislation seem to me - in my opinion - to say, and that's why I view IR35 as a "fiscal horror".

Hence my suggestion that the secondary legislation of iR35 (i.e. SI 2000/727) should be amended asap.

I set out the tedious detail at about 18:59pm today in this thread, ready to go, for a civil servant to enact!

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11th Jan 2012 19:51

Your view of IR35 differs to mine ......

... but I can agree to disagree.

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12th Jan 2012 08:17

Lack of understanding

dsticki, you are very insistent but I don't think you are listening to the comments of experienced accountants such as me or Shirley.  I doubt there is much I can say as you are not willing to enter into a logical discussion on the matter, but you don't fully understand the mechanism of IR35 and it would not apply in the way you describe.  Furthermore the change you are proposing is not necessary and I strongly doubt it would be supported by accountants or professional institutes, including the CIOT (of which I am a member).

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By dstickl
12th Jan 2012 09:42

Sounds like "NIH" to "preserve our anomalies" to me ...

Hi "thisistibl"!

In my opinion - Your post today sounds to me like "NIH" to "preserve our tax and/or other anomalies"  where, and I'm anticipating another question from you, where "NIH" is an abbreviation of those words of "Not invented here" that has sadly been so negative to making progressive change in this country, e.g. the reception apparently given early on by the RAF to Frank Whittles jet engine ...

I do hope that you won't quibble about a fine distinction between NI & tax ...

Nevertheless, you do assert in your post that your are a member of the CIOT, which naturally leads me to this polite request: Can you please - as a member of the CIOT - arrange:

(1) To kindly research please with CIOT staff (including their library etc) if it is correct that CIOT/its publication(s)/its member(s) have described IR35 as a "fiscal horror",

(2) To advise us of same or otherwise in this thread, please, to counter the "lack of understanding" that you wrote about earlier.

 

I look forward to hearing from you!

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bernard michael
12th Jan 2012 10:03

@stickl

I will happily perform some research for you, if you pay my usual charge rates.

Perhaps you could enlighten us why you have such an axe to grind with IR35... it seems like you have some kind of personal grudge to me?

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By dstickl
12th Jan 2012 11:02

Sorry, no, I will not pay the "usual charge rates" of thisistibl

Because I feel restrained by the (to me at least) apparent "fiscal horror" of IR35 from further remunerative work, it is with deep regret that - for the avoidance of doubt - I have to decline thisistibl's offer, if any, and I am also - for the avoidance of doubt - saying "Sorry, no, I will not pay the "usual charge rates" of thisistibl".

 

As thisistibl's last para ends in a question mark, & as this is an "Any Answers" area of AWEB: I hope that the above expression of restraint will give thisistibl some of the enlightenment that thisistibl is apparently seeking.

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