Guardian - day five: poacher and gamekeeper
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The top gamekeeper
Feb 6 (Guardian) - Gordon Brown as chancellor boasted to the CBI of applying "not just a light touch, but a limited touch" to financial regulation. He added: "The new model of regulation can be applied ... to the administration of tax." Now taxman Dave Hartnett has just 600 staff handling 700 groups of companies. Asked if Britain's tax collectors are outgunned by massed ranks of corporate accountants on the other side, he denies it. Her Majesty’s Revenue and Customs (HMRC) is in the process of making 25,000 job cuts. The impression of a lack of grip was exacerbated by the sale of the Revenue's own offices to a Bermuda-registered company, Mapeley.
Video: Dave Hartnett
An interview with Dave Hartnett of HMRC. How big is the problem? “the hardest schemes to unravel have been in the financial sector. We saw one . . that could have wiped out the whole UK tax base in the UK for the financial sector. The most signifiant progress made in recent years was the introduction of the disclosure regime for tax avoidance schemes in 2004 . . we now learn of tax schemes . . . much much faster, years faster . . . it has leveled the playing field between the tax planners and tax admiistration, the government can consider counter-measures within days.
The top poacher
Feb 6 (Guardian) - Roger Jenkins is said to earn more than £40m heading the tax team at Barclays, said by some insiders to be Britain's most active legal tax avoider. Deals with corporate clients exploit mismatches in different countries' tax laws - so-called "tax arbitrage". Another banker said: “It's not a level playing-field when Barclays can price in tax avoidance on their products.” With a short list of high-risk and low-risk companies.
The tax gap debate: more reaction, this time from KPMG
In a memo seen by the Guardian tax team, she notes that "the reporting and analysis is reasonably factually accurate" (hurrah!) and asks KPMG people to "avoid making any public comment yourself on the debate without referring back to the tax leadership team". In answer to the "premise" that "tax avoidance is unacceptable", she responds: "Tax is a business cost to be managed like any other. The striking thing about this defence is that it comes nowhere near to renouncing tax avoidance. On one, issue KPMG seems to feel particularly vulnerable. "We are expecting, at some stage, a reference to our Greenbox personal tax planning from seven or eight years ago". Really? Follow the series and find out.
The tax gap debate: how ethical can banks really be?
Co-operative Bank policy states: "We will not finance organisations that take an irresponsible approach to the payment of tax in the least developed countries. . . . One of the most effective ways that businesses can contribute to poverty reduction is to pay income tax in developing countries. The exploitation of tax havens by multinational corporations operating in the least developed countries is particularly harmful. But no bank, however ethical, could promise investment only in companies that don't avoid tax in ALL countries (not just developing countries) without disqualifying itself from lending to larger companies, so prevalent is tax avoidance.
Hedge funds: Offshore and off the radar?
Feb6 (Guardian) - Figures show that Man Group plc has paid just 14% of its pre-tax profits in corporation tax over the latest four years. Not the most patriotic contribution, you might think, by a company whose chief executive until 2007, Stanley Fink, has just become the co-treasurer of the Conservative party.
Letters
Feb 6 (Guardian) – Some letters. Following your revelations regarding their tax avoidance, I hope that the executives of these companies are conspicuous by their absence from the next honours list. Hutton Barton, Alnwick -- If only British governments treated tax evasion as seriously as they do "benefit fraud". Perhaps they could provide a "rich tax cheats hotline" we could phone? Dr Pete Dorey, Cardiff University
What the finance industry plans for Jersey and Guernsey
Feb 5 (Tax Research) - I suggested Jersey and Guernsey would go bust. A commenter replied, suggesting they could make this up by raising GST to 10%. So there we have it: the insider’s confirmation of what some of us have been saying for a long time: that the GST in Jersey was never intended to stay at 3%.
Tome I - L'Argent invisible
Feb 5 (Dargaud) – A book by the journalist Denis Robert who wrote about the Clearstream scandal, and had his career (and life) ruined by libel suits. In French.
Switzerland suggests proposal to fight tax evasion
Feb 5 (IHT) - Switzerland would like to see withholding taxes on savings extended to other financial centers and possibly also to developing countries as a way to combat tax evasion, according to Foreign Minister Micheline Calmy-Rey. "We have always maintained that a withholding tax system is more effective in fighting tax evasion than the exchange of information." (TJN would beg to differ.) She also said Switzerland supported EU attempts to close loopholes in the current rules, which can be circumvented if savers put their money in financial vehicles like foundations or trusts.
The top gamekeeper
Feb 6 (Guardian) - Gordon Brown as chancellor boasted to the CBI of applying "not just a light touch, but a limited touch" to financial regulation. He added: "The new model of regulation can be applied ... to the administration of tax." Now taxman Dave Hartnett has just 600 staff handling 700 groups of companies. Asked if Britain's tax collectors are outgunned by massed ranks of corporate accountants on the other side, he denies it. Her Majesty’s Revenue and Customs (HMRC) is in the process of making 25,000 job cuts. The impression of a lack of grip was exacerbated by the sale of the Revenue's own offices to a Bermuda-registered company, Mapeley.
Video: Dave Hartnett
An interview with Dave Hartnett of HMRC. How big is the problem? “the hardest schemes to unravel have been in the financial sector. We saw one . . that could have wiped out the whole UK tax base in the UK for the financial sector. The most signifiant progress made in recent years was the introduction of the disclosure regime for tax avoidance schemes in 2004 . . we now learn of tax schemes . . . much much faster, years faster . . . it has leveled the playing field between the tax planners and tax admiistration, the government can consider counter-measures within days.
The top poacher
Feb 6 (Guardian) - Roger Jenkins is said to earn more than £40m heading the tax team at Barclays, said by some insiders to be Britain's most active legal tax avoider. Deals with corporate clients exploit mismatches in different countries' tax laws - so-called "tax arbitrage". Another banker said: “It's not a level playing-field when Barclays can price in tax avoidance on their products.” With a short list of high-risk and low-risk companies.
The tax gap debate: more reaction, this time from KPMG
In a memo seen by the Guardian tax team, she notes that "the reporting and analysis is reasonably factually accurate" (hurrah!) and asks KPMG people to "avoid making any public comment yourself on the debate without referring back to the tax leadership team". In answer to the "premise" that "tax avoidance is unacceptable", she responds: "Tax is a business cost to be managed like any other. The striking thing about this defence is that it comes nowhere near to renouncing tax avoidance. On one, issue KPMG seems to feel particularly vulnerable. "We are expecting, at some stage, a reference to our Greenbox personal tax planning from seven or eight years ago". Really? Follow the series and find out.
The tax gap debate: how ethical can banks really be?
Co-operative Bank policy states: "We will not finance organisations that take an irresponsible approach to the payment of tax in the least developed countries. . . . One of the most effective ways that businesses can contribute to poverty reduction is to pay income tax in developing countries. The exploitation of tax havens by multinational corporations operating in the least developed countries is particularly harmful. But no bank, however ethical, could promise investment only in companies that don't avoid tax in ALL countries (not just developing countries) without disqualifying itself from lending to larger companies, so prevalent is tax avoidance.
Hedge funds: Offshore and off the radar?
Feb6 (Guardian) - Figures show that Man Group plc has paid just 14% of its pre-tax profits in corporation tax over the latest four years. Not the most patriotic contribution, you might think, by a company whose chief executive until 2007, Stanley Fink, has just become the co-treasurer of the Conservative party.
Letters
Feb 6 (Guardian) – Some letters. Following your revelations regarding their tax avoidance, I hope that the executives of these companies are conspicuous by their absence from the next honours list. Hutton Barton, Alnwick -- If only British governments treated tax evasion as seriously as they do "benefit fraud". Perhaps they could provide a "rich tax cheats hotline" we could phone? Dr Pete Dorey, Cardiff University
What the finance industry plans for Jersey and Guernsey
Feb 5 (Tax Research) - I suggested Jersey and Guernsey would go bust. A commenter replied, suggesting they could make this up by raising GST to 10%. So there we have it: the insider’s confirmation of what some of us have been saying for a long time: that the GST in Jersey was never intended to stay at 3%.
Tome I - L'Argent invisible
Feb 5 (Dargaud) – A book by the journalist Denis Robert who wrote about the Clearstream scandal, and had his career (and life) ruined by libel suits. In French.
Switzerland suggests proposal to fight tax evasion
Feb 5 (IHT) - Switzerland would like to see withholding taxes on savings extended to other financial centers and possibly also to developing countries as a way to combat tax evasion, according to Foreign Minister Micheline Calmy-Rey. "We have always maintained that a withholding tax system is more effective in fighting tax evasion than the exchange of information." (TJN would beg to differ.) She also said Switzerland supported EU attempts to close loopholes in the current rules, which can be circumvented if savers put their money in financial vehicles like foundations or trusts.
posted by TJN at 12:09 am
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