Pandora Papers uncover secret dealings of the super rich
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.
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Why is this a ridiculous anomaly? If you own any UK property in a company you are potentially exposed to a double (sometimes multiple) layer of CGT. Why isn't that a ridiculous anomaly? Ignoring that, it only looks ridiculous if you believe the BBC's biased and ill-informed reporting, as they are comparing apples with pears and in practice the sale of SPV property companies is uncommon if the underlying property is worth less than £10m*, as it's usually too risky and messy to acquire the company's history. Also, for commercial property, you'd be a fool not to use an offshore SPV re IHT (assuming non-UK dom investors). There's also ATED for residential properties as the price for enveloping them etc.
*Ultra rich people on average tend to buy >£10m properties, so there is no news here per se, as it would be remiss for an adviser not to at least mention the SPV option if it's available re IHT etc.
Agreed. Biased reporting at its worst.
One point that I would make is that if the sale of SPV property companies involving <£10m properties is uncommon then that does lead to the question as to why it was done in this case.
But unless the Blairs were instrumental in dictating arrangements to the vendor, I note that it was the vendor (who else could do it?) that put the property into the company.
I'm also intrigued by the fact that although SDLT may have been avoided no Stamp Duty was paid? (They do of course mean SDLT when lazily referring to SD, but surely they did pay some SD?)
And as you say, the 'anomaly' has been dealt with in part at least by the ATED regime.
And without wanting to get involved in discussions about fiscal policy:
I buy a commerical property for £1m and pay £x SDLT for the privilege. A year later I sell the property for £1m and the buyer pays a further £x in SDLT. Why is that not an anomaly? Taxes are generally levied on profits and gains. In this case, no-one has made any money yet the Exchequer gets to eat their cake twice.
It is, of course, an easy way to raise funds for the coffers and I understand of course that it was never designed to be a tax on gains but a tax on transactions. Nevertheless, it strikes me as being no less anomalous than the issue referred to above.
I note para 309(55) here confirms this point re IHT and ToAA motive defence at least: https://assets.publishing.service.gov.uk/media/615b196c8fa8f52979b6c8fd/...
Minimising your taxes legally is completely rational and moral and supported by case law. No-one has the obligation to make some kind of morality payment for feeling guilty about depriving the public purse. When will people realise that if the government needs cash it prints it. It has nothing to do with taxation.
On corruption in political parties, it is simple; political parties should be funded by the state, and not allowed to take donations from unions, or companies or anyone. This was recommended years ago but Cameron funked it, like he funked boundary change.
On a less salubrious note, am I the only person to think that the photo of A. Blair increasingly looks like the main component of a pirate flag?
So the newspapers and some news channels froth at the mouth calling it (illegal) tax evasion when its (legal) normal tax avoidance. I cannot recall which judge who said there is no reason why you should allow the taxman to take a shovel to your money (probably got the wording wrong).
However it does show that despite the wishful thinking of the left its not the rich who will pay the tax (and level the country up using the latest buzzword) but us poor middle income sods and worse the very poor. Lets hike up the NI a bit more.
“No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.” Lord Clyde
Ayrshire Pullman Motor Services and Ritchie v. IRC (1929) 14 TC 754
or from the USA
"Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."
The wonderfully named Judge Learned Hand
Commissioner v. Newman, (1947)
"Pandora Papers uncover secret dealings of the super rich"
Given the virtue-signalling moralistic caterwauling about this is it any wonder wealthy people keep their personal affairs secret?
What should they be expected to do? Take out a full page advert in The Times every time they buy or sell anything or invest in anything?
Unless they are keeping their dealings a secret from the taxman (and there is precious little evidence that they have done) what's the problem?
All the Pandora Papers have done is give some people a platform to make snide innuendoes and chuck vague accusations at people.
Yes. Once more we have a thorough piece of investigative journalism. And it is confirming some things we already knew or suspected. My nephew who is a tax accountant left his last job in London partly because of ethical considerations in what his firm was doing. Clue: some of the top executives were "investment bankers".
All this makes a mockery of the requirement by us as accountants to check out clients to make sure they are money launderers. I ask my clients to their face "are you a money launderer" and we have a good laugh because none of us has enough money to launder.
Things will not change because elections and therefore politicians are bought and sold by powerful monied interests and he who pays the piper calls the tune. It is as true here in Blighty - in many ways the money laundering capital of Europe - as more tradional centres of corruption.
I have a saying often quoted to clients - "render unto Caesar that which is Caesar's but don't render too much". I have no objection to paying taxes, but what I do object to is rich parasites who could well pay their dues but squirm out of it by abusing the rules.