Panorama exposes dodgy company agents
John Stokdyk reviews the latest episode in a concerted drive by the BBC to focus on tax evasion techniques. This time, "sham" company directors and look-the-other-way providers of complex shelter structures were given the hidden camera treatment.
Over the past 10 years, Richard Murphy at Tax Research UK, Richard Brook at Private Eye, The Guardian/Observer and The BBC’s Panorama have pushed detailed analysis of tax avoidance into the media mainstream.
This campaign’s impact on the political and professional landscape has not always been comfortable for tax practitioners of all types, but the output has always been of interest for specialists to see how well the media grasp the topics in hand, and what new things they can show us.
Many AccountingWEB members will have tuned in like me to Monday’s latest Panorama expose, Undercover: How to dodge tax to see what it could add to current knowledge.
Because tax is such a visually dull topic, the temptation for TV directors is to ladle on spurious graphics to sex up the subject, which is a pity. If you’re covering a big tax story, just following the money can be quite a compelling approach. The focus of the documentary this time was on the companies that sell tax structures designed to help people conceal assets offshore in jurisdictions where their anonymity will be preserved. The “undercover” tag meant we would be treated to some grainy footage of dodgy characters, operating from top secret lairs in places like Dubai, Mauritius and York. There were lots of jerky jump cuts and a bit of satellite tracking imagery that thanks to recent usage called Eddie Stobart to mind more than Jason Bourne. But the visual magic dust was used sparingly so that the two on-screen investigative reporters could carry the story forward with few frills and little fuss.
It was not a pretty picture. The “Sark Lark” that was supposedly closed down in the late 1990s merely picked up its laptop and relocated to all manner of alternative destinations. Like everything else, the internet has given tax evaders a degree of in-built redundancy and self-correction.
York was the first port of call for a reporter posing as a man with £6m in an untaxed Swiss account who wants to escape the effect of the Swiss tax agreement to remit payments to HMRC. He visited Turner Little. For £26,000 they were willing to offer him an arrangement based on a foundation operating in Belize. The nominees won’t know the name of his company, where it was formed, or anything else. “they’ve never heard of you. They don’t know which co you bank in. They just get paid,” director James Turner told the reporter. Their signatures were stored as stamps in his safe.
Next up was Dubai, where Atlas Corporate Services was willing to set up an offshore structure for another reporter, posing as the representative for a members of the Indian government who wanted somewhere to keep their bribes - with the source of the funds made very clear to the service provider. No problems for Atlas: it would be £10,000 to get things rolling, there would be no need for anyone to travel: “We can do it all remotely on emails.” Again the nominees will not know anything about the companies of which they are directors, and any connections to the reporters’ clients will be invisible to the tax authorities.
Final destination was Mauritius, where the reporter travelled to meet Atlas founder Jesse Hester, a long-time company nominee specialist. A smooth, self-satisfied operator, he was initially suspicious of the reporter, but still opened to offer some eyebrow-raising nuggets. He suggested a Panamanian foundation to the Swiss bank account holder, because the rules there were particularly difficult for interntional tax authorities to penetrate. “Tax authorities don’t have the resources to chase everybody down. They reckon it’s the same rough odds as winning the lottery,” said Hester. From a list provided by his company, Panorama found 19 directors who had held a total of directorships in more than 10,000 companies around the world.
They also visited a freelance nominee operating in Guernsey, Ready Made Companies Worldwide, based in Bushey Heath, and the somewhat better known Stanley Davis Group.
All of the organisations rumbled by these stings issued statements indicating that they would not facilitate money laundering or tax evasion. HMRC, meanwhile, which is responsible for supervising corporate service providers under the Money Laundering Regulations, confirmed that it has not prosecuted any such company for non-compliance.
It’s not a surprise that such operations are still thriving, but Panorama did a good job at documenting some prime examples and even elicited an official response from business minister Vince Cable. “He will carefully consider evidence and will review the trade in and abuse of nominee directors.” he told the BBC. Paul Scholes opened up the critical opinion booth on AccountingWEB earlier today and noted “an industry still fit and well providing nominee directors and offshore companies to help people hide dirty money”. Few other members were startled by the revelations and sad to say
The Panorama show contained few surprises, but for once was factually solid and illustrated the way that tax evasion is getting more complex, which raises the risks for participants in any such venture. One of the most effective bits of anti-evasion TV I ever saw was a documentary about INXS singer Michael Hutchence, which went into some detail about the ways Hutchence was advised to protect his income, but by the time he and Paula Yates died, no one connected to them had any idea where the money had gone and how to get their hands on it.
When even Sark Lark veteran Jesse Hester advises, “If you want to sleep at night without any issues whatsoever, pay the 40%”, maybe the curtain is beginning to fall on the offshore ethos.
The campaigners have been extremely successful at making evasion and those, like accountants, who make it possible socially unacceptable. If this puts practitioners in a difficult position where they have to defend their tax planning strategies on a moral basis, tough luck. You’re just going to have to get used to it.
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