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Sunak’s tax statement leaves questions unanswered | accountingweb
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Questions left unanswered by Sunak’s tax statement

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Despite promising to release his tax returns “in full”, Rishi Sunak has belatedly provided heavily abbreviated information that raises some serious questions.

30th Mar 2023
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Last October, when he became the third prime minister in as many months, Rishi Sunak promised that “this government will have integrity, professionalism and accountability at every level.” This was wholly commendable but a high bar to reach.

Whether he made this promise purely as a reaction to the lack of all three of those character traits demonstrated by his predecessor-but-one or as a matter of personal pride we will never know. His statement will once again be put under the microscope following developments last week.

In mid-November 2022, Sunak promised that he would publish his tax return and hope to do so by Christmas.

Not only did his conversations with reporters at the G20 summit in Bali contain that pledge but the promise was a little more detailed. According to press reports, when asked whether he would publish the tax returns “in full” he said “of course” and went on to declare: “That is the established precedent and I’d be very happy to follow the precedent.”

March of time

What went wrong? Even if Sunak had intended to imply that his returns would be made available by someone else’s Christmas, such as Russian Orthodox, that would only have given him until early January.

In fact, the much-trumpeted and long-awaited release finally took place last week, in the second half of March. The media seemed unconvinced that returns appeared as a matter of coincidence on one of the busiest news days of the year so far. Not only was Boris Johnson telling “the truth, the whole truth and nothing but the truth” to a Partygate parliamentary committee deciding his future, but the House of Commons was debating the latest proposal to overcome Johnson’s Northern Irish debacle.

Those of us working in the tax industry might also have been confused by the nature of the tax declaration. It was delivered by Sunak’s tax advisers and their heavily abbreviated summary would not be what most of us would understand by tax returns published “in full”. Effectively they delivered the equivalent to those meaningless abbreviated financial statements at Companies House rather than the full, audited version.

The following day, Sir Keir Starmer as leader of the opposition followed suit, also disappointingly publishing only a brief summary of his own tax returns for the past two years, though apart from a family capital gain, since becoming Labour leader he has received nothing beyond remuneration and under £15 per annum of interest.

No legal obligation

Many readers will just have been grateful that the prime minister has shown a degree of openness and delivered something. He had no legal obligation to publish tax return information, though failure to do so would have induced scathing press criticism, especially in the light of his commitment to “integrity, professionalism and accountability at every level”.

Why does this matter? Any prime minister or other influential Cabinet member – the most obvious being Chancellor of the Exchequer (Sunak’s former role) – has the ability to enrich himself or herself through their taxing decisions.

This has been a fact of life for centuries and will never change. However, particularly in today’s prurient society where “influencers” and scurrilous journalists seem able to change the behaviour of influential politicians, it helps to have full information.

Before even considering Rishi Sunak’s tax returns, to the extent that information has been provided, one should also note that he is what in the past might have been referred to (arguably inaccurately) as “a kept man”, since most of the family wealth lies with his wife, a lady richer than King Charles as we are so often reminded by news stories.

To understand the vested interests involved in some of the more significant budgetary decisions we would need to see full tax returns for the prime minister, Chancellor of the Exchequer and their spouses.

Even the limited information released by the prime minister and leader of the opposition provides enough ammunition to make readers ponder how those involved might be reluctant to make decisions that would be good for the country but not its leaders.

Rebecca Cave has published as detailed an analysis of the Sunak release as the information allows, noting like many other commentators an effective tax rate of 22%. The primary reason was the prevalence of millions of pounds in capital gains over income.

Healthy debate

The problem may be insuperable, but at a time when we are all suffering from a cost-of-living crisis that seems set to last for many more years and taxes are stealthily going up for those close to the bottom of the economic pile, there is a rising demand for a healthy debate about a number of other measures that could help to finance proper pay for doctors and nurses, defence spending during a war in Ukraine and support for the poorest in society.

In that light, a number of proposals floating around at the moment could be considered.

Some are suggesting that it is time to equalise capital gains tax and income tax, perhaps even adding national insurance contributions to the calculations, rejig inheritance tax and introduce some kind of tax on wealth. That is without even entering into the debate about non-doms.

When Rishi Sunak made his integrity, professionalism and accountability commitment, many of us were delighted and believed every word. If he is serious, perhaps it is time to set aside the cost to himself and his wife (not to mention friends and colleagues) and look to introduce some or all of these measures in the next Autumn Statement or, to maximise his chances of staying in office, the Budget ahead of the next general election.

Replies (5)

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By Hugo Fair
30th Mar 2023 14:30

Title = "Questions left unanswered by Sunak’s tax statement"

Actual article = "measures (that the author would like to see) in the next Autumn Statement"

Can't see the correlation there - which is pretty much the definition of click-bait isn't it?

Thanks (5)
Chris M
By mr. mischief
30th Mar 2023 16:39

Nigel Lawson, in my view rightly, equalised the rates of capital gains and income taxes. With Sunak on a 22% tax rate, I forsee zero likelihood of this happening under the current Conservative administration.

Thanks (1)
Replying to mr. mischief:
Ray McCann
By Ray McCann
31st Mar 2023 10:02

The problem was however that whilst Lawson equalised rates specific provision was made for inflation that by 2003 had almost wiped out the CGT yield. It was classic smoke and mirrors and did nothing to increase revenues or reduce avoidance. In fact much of today’s avoidance can be laid at his door.

Thanks (1)
Morph
By kevinringer
31st Mar 2023 10:51

There seems to be an expectation in recent years for world leaders to publish details of their personal income. This has been followed by an expectation that leaders of the opposition should also publish. Why? It's their personal information. Will we next require them to publish their personal expenditure? The author says:

"Any prime minister or other influential Cabinet member – the most obvious being Chancellor of the Exchequer (Sunak’s former role) – has the ability to enrich himself or herself through their taxing decisions."

Therefore, are we now expecting the Chancellor to publish their income details too? What about the Shadow Chancellor? There will be others in a position to influence for personal gain, should they publish too? Collectively, MPs have influence. Should they all publish? Where do we draw the line?

What is the purpose of publishing? Do we really learn anything that matters? The only matter we should be concerned about is that our elected MPs have declared the income and gains accurately and paid the tax that is due. To this end, perhaps what should be recorded is who is under HMRC enquiry, and if they have made a settlement. I am astonished that Kwasi Kwarteng was appointed Chancellor when under enquiry. This should never have happened.

I wonder quite how much public interest there is in the personal income details of those of influence. Is it more of a case that it is the media that is interested?

Thanks (2)
Danny Kent
By Viciuno
31st Mar 2023 11:26

Although mildly interesting (I'm nosey at heart!) the whole releasing your tax return exercise seems utterly pointless. What would be far more interesting (and actually in the public interest) would be disclosure of the sources of their wealth, and where it is held.

For example, Rishi's investment bank holds how many shares in Moderna (a reported £710m, a third of all it's holdings, for those that don't know)? The same Moderna that secured vast lucrative contracts with UK Gov over the last few years...

Or how about information on government appointed jobs - like his previous business partner who was hired to "consult" about Covid policies.

Thanks (2)