Pandora Papers uncover secret dealings of the super richby
The International Consortium of Investigative Journalists has released another batch of papers exposing money laundering, tax evasion and other nefarious activities by the rich and powerful.
Most readers will recall revelations a few years back under the slinky titles of The Panama Papers and The Paradise Papers. These caused severe embarrassment to a number of powerful individuals and, more relevantly for our purposes, some accountants. They might even have generated productive activity at HMRC and its peers overseas, though that is less clear.
The International Consortium of Investigative Journalists has now received a leak of close to 12m files of financial documents, which expose allegations of more dirty deeds by the rich and the powerful. In the UK, the Consortium has shared its goodies with the BBC and the Guardian, both of whom are making hay.
The BBC restricted its coverage to two half-hour Panorama broadcasts, both of which are available on catch up for the next year.
Even if you have no great interest in the topic, it is worth having a quick look to get a better understanding of money laundering and tax avoidance techniques used by the ultra-wealthy.
What is in the Pandora Papers?
Even though this time around accountants seem to be less prevalent in the coverage, it is inevitable that some of our cohorts will have been involved in facilitating many of the transactions under consideration, along with lawyers and other upstanding professionals.
Once again, hidden assets lie at the heart of this story, especially those of wealthy politicians and their “cronies” from the Middle East, Eastern Europe and even our own Sceptred Isle.
Many might wonder whether there is any real political will to attack and close down the shell companies involved and restrict the use of tax havens. As last month’s tax gap column observed, these loopholes cost a significant proportion of the taxes we pay each year.
The other area picked up by UK media is the alleged connection between donors to political parties and corruption. Indeed, a journalist observed that “the gravest threat at the moment is the purchase of our political system by the super rich”. Pretty heady stuff.
The Conservatives were at the centre of this aspect of the BBC investigation, which might explain an unkind and somewhat farcical attack on the Corporation on the same day by our brand-new minister for culture? It will not have come as good news to those currently swanning around her party’s conference in Manchester to discover that a high-profile donor to its cause “has been involved in one of the biggest corruption scandals that we have seen in Sweden in modern times”.
A few accountants might be getting hot under the collar too but for the most part though, we can sit back and enjoy the ruckus comfortable in the knowledge that it does not impact our own businesses or those of our clients.
Blairs avoid stamp duty
It wasn’t just the Conservatives that were in the spotlight. Margaret Hodge was highly critical of an arrangement she accepted was wholly legal but where the morality was questionable. This involved her former party leader Tony Blair and his wife, who purchased a London property for close to £6.5m. The vendor had placed the building in a company and, as a result, no stamp duty was due, costing the Exchequer over £300,000.
Very few readers will doubt the veracity of the claims by the Blairs that they did nothing wrong but there has to be a solution to this ridiculous anomaly.
One option would be for HMRC to set up its equivalent to an honesty box, asking all those who unintentionally avoid taxes and feel guilty about it to make donations.
While many of us might be happy to hand over 50p for a cup of tea at the local church fête, anyone who feels bad about paying stamp duty on a major property transaction might feel even worse about parting with a six or seven figure sum to replenish the country’s coffers.
There is a much simpler solution. That is to change the law in order to ensure that stamp duty applies to far more of these transactions. Someone is bound to point out that there are technical difficulties but few can doubt that had this taken place, we as a nation would be considerably richer.
Instead, it seems far more likely that the storm will remain firmly within its teacup and the very rich as well as criminal types can sit back in their luxurious homes, comfortable in the knowledge that nobody will rock the yacht again until the International Consortium of Investigative Journalists decides to release another batch of paperwork in a few years’ time.