Paradise Papers

[Conquistador]

The hypocrisy of Bono, the odious worm, can't be a surprise to any of us but some news articles are painting a picture of the Queen sitting with her calculator working out where she can save a few per cent here and there which is ridiculous, of course she hasn't had personal involvement in this. In fact I think I'm right in saying that the Duchy of Lancaster is not subject to tax anyway but has voluntarily paid capital gains tax and since the early 90s, although sometimes a pitiful amount.

As for Lewis' jet, his company (registered in BVI) bought it for just under $27m in 2012. Thanks to the leak, we know that Appleby formed a VAT-registered leasing business on the Isle of Man for Lewis. That company leased the jet from the BVI-registered company and imported it to the Isle of Man. It was then leased again to a UK jet management company that provided Lewis with a crew - and which leased it back to Lewis and his Guernsey company, BRV Limited. All these transactions are seen as 'commercial' so they are eligable for a 100% VAT refund when the jet lands in the Isle of Man. The VAT bill in this case was £3.3m, paid on Lewis' behalf by an Isle of Man accountancy firm. So when the aircraft landed, the customs official simply skipped out the terminal and stamped a VAT-paid form to be kept on board the plane. This grants the plane “full and free circulation” throughout the EU. As soon as the VAT form is stamped, the plane can fly out.

Leasing documents in the leak show that Lewis' Guernsey company, BRV Limited, expected to use the plane two-thirds of the time, with him signed up personally to use the other third. EU and UK VAT rules state that refunds should not be granted in relation to private use of aircraft – but Lewis got a full refund because of the above web of companies and transactions. Companies that simply use planes for business are entitled to a VAT refund, but private individuals are not.

Morally wrong to most of us but all legitimate. As soon as one loophole closes, a decent tax planner will find another mysterious loophole to make the most of. You have to ask yourself, if you were an ultra high earner with £millions of assets, would you do the same? I know I would.

[mattylondon]

Originally Posted by Lee S

and therein lies the rub !!!

The rub won't be solved until every country agrees to the same rules. So in reality it's never going to stop and there will be undercutting until it's a race to the bottom. It's unsustainable and a country costs X to maintain all the services. Or do we want a country with no state services or benefits, no safety net for the ill, unemployed, no maternity leave, where it's dog eat dog and everything is PAYG. Personally I feel that makes for a poorer society with such inequalities.

[Audidothat]

Originally Posted by mattylondon

Or do we want a country with no state services or benefits, no safety net for the ill, unemployed, no maternity leave, where it's dog eat dog and everything is PAYG. Personally I feel that makes for a poorer society with such inequalities.

Having lived there, I think that place is called the USA.....

[tintin]

Originally Posted by mattylondon

The rub won't be solved until every country agrees to the same rules. So in reality it's never going to stop and there will be undercutting until it's a race to the bottom. It's unsustainable and a country costs X to maintain all the services. Or do we want a country with no state services or benefits, no safety net for the ill, unemployed, no maternity leave, where it's dog eat dog and everything is PAYG. Personally I feel that makes for a poorer society with such inequalities.

Quote from Mel Stride (Conservative Treasury Minister) on C4 news this evening: "Tax should be due where the economic activity takes place" - a pretty simple principle: it's just a pity that the UK and US governments don't apply this principle seriously, due to the influence and lobbying by businesses that stops this.

[27litres]

Originally Posted by mattylondon

Or do we want a country with no state services or benefits, no safety net for the ill, unemployed, no maternity leave, where it's dog eat dog and everything is PAYG. Personally I feel that makes for a poorer society with such inequalities.

That's the country we all came from pre 19th century.
Crazy capitalism, and you'll all be brainwashed to believe it's in your best interests!
Yet people continue to "Union Bash"... Ironic!

Back to topic:
There's no news here, just what wealthy people have been doing for decades. I remember similar news about Nigel Mansel 20 years ago.
Many of the loopholes they use have been created either by small countries to attract wealthy people and business (Monaco, Isle Of Man, Canary Islands) or by larger countries for the exploitation of those who created them and their mates.

My mate who is a financial planner and did a minor in accountancy has told me about tax rules that only exist for those above certain wealth thresholds. You have to ask why they have done that...

[HPsauce]

The thing is, above a certain threshold people are mostly very mobile so don't actually live, or earn, in any one country.

Thinking about Lewis Hamilton for example, he genuinely works all over the world and hasn't been a UK resident for many years. I would hope (and expect) that he pays his fair share of tax on income earned here (and in other countries he works in), but if he has a plane "registered" in the IOM so what, he's not a UK resident.

People/companies that are wholly or mainly based/trade in one jurisdiction are another matter entirely.

[Dezzy]

Originally Posted by The_Laird

And that's what will divide this debate. Even on my (now ceased) relatively insignificant income, I paid my taxes through PAYE and donated and raised significant sums for many charities. If I were exceptionally wealthy, of course I would look after my family first, but this level of wealth and greed, IMHO, is a moral disgrace. So, no, I would not behave in a similar manner. Why would you want to cheat less fortunate people from basic health, education and a very basic standard of living in order to maximise a level of wealth that is very difficult to imagine (and difficult to spend!).

Originally Posted by The_Laird

A whole load of things used to be legal: slavery; raping your wife; burning so called witches; apartheid. Leagality is no guide to morality. These super-rich people are bleeding our civilisation and the rape of the working classes will, ultimately, lead to its decline.

you're better with words than I am Jim

Originally Posted by HPsauce

The thing is, above a certain threshold people are mostly very mobile so don't actually live, or earn, in any one country.

Thinking about Lewis Hamilton for example, he genuinely works all over the world and hasn't been a UK resident for many years. I would hope (and expect) that he pays his fair share of tax on income earned here (and in other countries he works in), but if he has a plane "registered" in the IOM so what, he's not a UK resident.

People/companies that are wholly or mainly based/trade in one jurisdiction are another matter entirely.

It's not the TAX that's an issue I'm sure he pays a lot of it. But it's the 100% of the VAT claimed back through the legal loophole even though he was planning to use it a 3rd of the time. That's wrong. No different that using a company car for private use and then making out it was all business use.

[HPsauce]

Originally Posted by Dezzy

It's not the TAX that's an issue I'm sure he pays a lot of it. But it's the 100% of the VAT claimed back through the legal loophole even though he was planning to use it a 3rd of the time. That's wrong. No different that using a company car for private use and then making out it was all business use.

Who knows, where he lives/works are the rules the all same? (we know they are not) Maybe he pays tax in some jurisdictions where private/business use of others assets isn't distinguished? If he was a full-time UK resident then it would probably be seen as "dodgy" but in an international context it's not so easy.

[pete-p]

Originally Posted by Dezzy

It's not the TAX that's an issue I'm sure he pays a lot of it. But it's the 100% of the VAT claimed back through the legal loophole even though he was planning to use it a 3rd of the time. That's wrong. No different that using a company car for private use and then making out it was all business use.

It's the VAT on the purchase of the plane which was refunded, so presumably (I've not seen enough to know) VAT is paid by Lewis or other users on the usage when leasing it.

Wealthy individuals and businesses will always look for the most tax efficient way to manage finances. It's nothing new and is often reported, it may not be morally right and that's where businesses should have a good code of conduct/ethics, customers can always vote with their money. As for individuals, we are probably talking about the 0.01%, I'm not all that interested in how they conduct their private affairs to be honest and quite often they do a lot of charity work and help raise awareness of other issues anyway.

[tonupkid]

Imagine a world where all the nations got together and agreed a uniform and universally applied set of taxes.
Sounds great, sounds fair, sounds morally correct.

If this ever happened we'd be screwed, with taxes shooting up and up. An explosion of bureaucrats consuming ever more, while the dwindling number of productive people are taxed into oblivion.

Of course there are differences between national tax systems. And these differences are an opportunity used by those of wealth, to minimise the taxes they pay. Morally questionable I agree. But they and their schemes are the price we pay for some kind of tax competitiveness that keeps our respective governments in check.

If you don't believe how voracious government is, just look at the national debts. What they can't get in taxes they happily borrow at the expense of generations to come. Now that is what I call immoral.