Tag Archives: tax avoidance

New Ofsted chair ‘restructured £200m business via tax haven’

Cayman Islands Ofsted

With David Hoare taken on as the new chair of Ofsted, it wasn’t for his involvement with a successful group of schools (the academy chain he works for is one of 14 banned from expanding).

Apparently it’s for his ‘business experience’. New education secretary Nicky Morgan states:

“He is a proven business leader who has the expertise in leadership and governance crucial to helping Ofsted through a significant period of change and reform.”

It certainly looks as he knows a thing or two about offshore company structures. Here is the shareholding of parcel company DX Group Ltd from April this year, two months after the overall business was floated on the stock exchange — giving the then chairman David Hoare and other management a stake now worth around £8 million.

DX Group shareholding

Under the leadership of the new Ofsted boss, the shareholding of the UK-based group was restructured such that it is now owned via a company based in the Cayman Islands, which has no corporation, wealth, capital gains or estate tax. At this point, Hoare resigned as a director of the UK company to take up a role with DX Group Holdings (Cayman) No 1 Ltd.

While accounts for June 2011 claim that the Cayman vehicle was nevertheless “resident in the UK for tax purposes”, Scrapbook is intrigued to discover whether this is still the case.

Prince Charles gets £20m from Duchy estate and still comes back for more

Prince Charles

The Sovereign Grant accounts dropped today — cue predictable spin that keeping the Windsor family in the style to which they are accustomed costs us each “a mere 56p per year”.

According to the latest figures, Prince Charles receives £19.5m from the Duchy of Cornwall, which is described as:

“a private estate established in 1337 which funds the public, charitable and private activities of the Prince of Wales and his family”

But it isn’t a private estate — because HMRC considers it a Crown Body. Today’s report claims:

“The Prince of Wales also meets the official expenditure of The Duke and Duchess of Cambridge and Prince Henry of Wales out of this income”

Except he doesn’t because he still comes back to the taxpayer for more money. His travel and other costs are paid for from the Sovereign Grant and government departments — not the Duchy. This comes to another £2.1 million.

At least he “voluntarily” pays income tax on the Duchy cash, though. Such income …

“… is taxed to the extent it is not used to meet official expenditure.”

Can you guess who decides what counts as “official expenditure”?

Prince Charles does — and apparently he needs 124 staff to do his job.

David Cameron claims he wants Gary Barlow’s tax ‘Back for Good’

In contrast with Jimmy Carr, however, Cameron has fallen way short of describing Barlow’s actions as “morally wrong”.

Former Conservative Party treasurer in ‘male stripper video’

Michael Spencer stripping (Cameron inset)

Former Tory treasurer and top donor Michael Spencer has appeared in a cringe worthy ‘spoof’ video in which he unbuttons his shirt to the waist while singing a song about being a stripper.

The film, which was produced for a fundraiser for the Young Vic, is based on the premise of bankers agreeing to fund the theatre provided they produce a version of the Full Monty — but about globe-trotting bankers rather than unemployed Sheffield steel workers.

Spencer runs a broking firm which was recently fined £54m for manipulating the inter-bank lending rate — while one of their main shareholders features on Scrapbook’s list of Tory donors linked to tax havens.

Rather than prancing around in a fundraising video, perhaps Spencer should ensure his companies pay their fair share of tax. Problem solved.

Nearly three quarters of top Tory donors linked to tax havens

David Cameron offshore

At least 14 of the Tories’ top 20 donors can be linked to companies based in tax havensPolitical Scrapbook can reveal. After spilling the beans on the Bermuda-based hedge funds run by their top funder Michael Farmer yesterday, we’ve trawled records filed with regulators to build up a broader picture of Tory offshore links.

But will David Cameron — who has been on the offensive over tax  – ask his donors whether these arrangements are used for avoidance? The figures given below show the total donated in the past 12 months:

#1 Michael Farmer (£818,000) — See our story from yesterday. And bring sunscreen.

#2 Michael Davis (£509,000) – “Mick the miner” trousered £75m when his Xstrata mining company was sold this year. While the company’s registered office is in London, it is headquartered in the Swiss tax haven of Zug. The business which bought out Xstrata, Glencore, is not only based in Zug but also faces allegations of using suspect insurance practices to avoid tax.

#4 David Rowland (£438,000) — A former Conservative Party treasurer, David moved from the tax haven of Guernsey to the UK specifically so he could donate to the Tories.

#6 James Lupton (£255,000) — The current Tory co-treasurer works for Greenhill, through which he is a partner in Greenhill & Co. International LLP alongside the company’s vehicle based in the Cayman Islands. Lupton also holds a stake in Vestra Wealth, which offers its clients advice on “tax-planning vehicles”.

#7 Andrew Law (£247,000) — The chairman and CEO of one of the world’s largest hedge funds, Caxton Associates. One of its main investment vehicles is Caxton International, headquartered in Hamilton, Bermuda.

#8 Stanley Fink (£228,000) – The “godfather of the UK hedge fund industry”, whose Man Group has two principal subsidiaries in Switzerland. The majority of its subsidiaries operate from tax havens.

#9 JCB Research (£187,500) – JCB is owned by digger magnate Anthony Bamford (who had a peerage blocked in 2010 after the taxman raised apparent concerns). This most British of manufacturers is actually controlled by a holding company based in the HagueTransmissions & Engineering Services Netherlands Bv.

#11 Flowidea Ltd (£144,950) — Controlled by Henry Angest, a critic of the UK’s “punitive tax system”, which may have something to do with the fact that its parent companies seem to be based in Jersey and the Bahamas.

#12 Lycamobile UK (£119,000) — Funded by T-Mobile subsidiaries in the Netherlands.

#13 IPGL (£105,000) — Private equity company which structures investments in British firms via intermediaries (such as Incap Finance and Incap Gaming) in the Netherlands.

#14 Adrian Beecroft (£101,000) — Private equity boss boss known for his involvement with Dawn Capital and Apax Partners, the latter of which advised the Guardian to use an offshore vehicle based in the Caymans for the purchase of magazine titles.

#16 Chris Rokos (£99,000) — Co-founder of Europe’s second largest hedge fund, Brevan Howard, whose subsidiaries include Brevan Howard Offshore, based in the Caymans.

#19 Mark Samworth (£90,000) — This support from the boss of food firm Ginster’s follows on from previous hand-outs, notably the £100,000 donated after Osborne hit his rivals with a “pasty tax” on their hot pasties. Despite Ginsters burgeoning their Cornish credentials, the parent company of the operation is based not in Cornwall but the, errr, low-tax jurisdiction of Jersey.

#20 GR Software and Research (£87,000) — With directors including the husband of Tory MP Andrea Leadsom, this company is owned by the mysterious PANS (UK) Holdings Ltd, which is not a company registered in the UK.

Scrapbook is looking forward to hearing more from Cameron on tax havens and avoidance.

Tax avoidance? Tories’ #1 donor running hedge funds from Bermuda

  • Tories claim to be on the offensive over tax avoidance
  • But #1 donor running secretive Bermuda hedge funds
  • Territory snubbed David Cameron over tax deal last week

Hamilton, Bermuda

In the wake of the G8 summit (and a controversial donation to the Labour Party in company shares) the Tories have become complacently smug when it comes to tax avoidance.

Indeed, Tory whips are even handing out lame patsy questions for PMQs:

Mr Marcus Jones: I welcome the prime minister’s leadership on getting the G8 to agree a deal on tackling aggressive corporate tax avoidance. Will my right honourable friend confirm that we won’t be offering a corporate tax avoidance service as does the party opposite?

In the spirit of leadership so admired by obliging backbenchers, perhaps the prime minister can ask Michael Farmer, the Tories #1 donor, former party co-treasurer and now board member, why he is linked to at least six hedge funds operating out of Pembroke?

That’s not Pembroke, West Wales but Pembroke, Bermuda – a country which snubbed David Cameron’s entreaties over tax avoidance just last week.

When not giving the Tories £4.9 million or paying for his son to join the Bullingdon Club, “Mr Copper” runs the extractive commodities-focused hedge fund RK Capital Management.

While ostensibly being managed from New York and London, filings with US regulators indicate that portions of the company’s leading offering, the Red Kite hedge funds, are operating out of the tax haven (click links below for SEC filings):

With his new found enthusiasm for stamping out tax avoidance, doubtless David Cameron will be enquiring as to the purpose of these arrangements shortly.

Beaker: I’ll name and shame supermarkets (but not tax cheats)

Just when you thought the Lib Dem’s priorities couldn’t get any more skewed, Danny Alexander has told his constituents he backs naming and shaming of supermarkets who give dairy farmers a bad deal — whilst telling the country he won’t do the same for companies who avoid millions in tax.

In a local press release, Beaker backed the introduction of a watchdog with the power to name and shame supermarkets who pass on unexpected risk and costs to dairy farmers. Unveiling the plans, Alexander boasted:

“Farmers, in the Highlands and across the country, will now be able to enter into contracts with confidence, knowing they will get a fair deal from retailers. I am extremely proud that we are delivering on this in Government.”

But faced with seething public outrage that companies such as Starbucks and Google have paid less than 3.2% tax, he told this morning’s Today programme there would be no naming and shaming of the corporate giants:

Ironically evading the question, Danny told Radio 4:

“I’m not sure that naming and shaming is a good idea by the tax authorities. I think taxpayer confidentiality is a very important part of our tax system”

It looks like large corporations are exempt from more than just tax.

Tax avoidance: Starbucks caught out by shareholder briefings

Historic claims made by Starbucks executives in little-scrutinised briefings to analysts and shareholders laid the way for the company to be slammed in a report by MPs today. The multinational is accused by the Public Accounts Committee of conniving to avoid corporation tax by pretending to be unprofitable in the UK – ‘exporting’ the real profits to jurisdictions with lower tax rates:

“Starbucks told us that it has made a loss for 14 of the 15 years it has been operating in the UK, but in 2006 it made a small profit.”

Starbucks claimed to the committee that “it has been difficult for us to make a profit in the UK”. Indeed, 2007 was ninth year in ten that the company filed losses in the UK. Strange, then, given that annual reports singled out the UK as one of the company’s cash cows:

“In particular, our Canada, Japan, UK, and China MBUs account for a significant portion of the net revenue and earnings” — Annual Report 2011

“Revenues from countries other than the US consist primarily of revenues from Canada and the UK, which together account for approximately 66% of net revenues” — Annual report 2009

But it was phonecall briefings to analysts from this period in which Starbucks really screwed themselves over:

  • On the release of quarterly earnings figures in 2007, then Chief Operating Officer Martin Coles told analysts that the profits from the UK were being used to pay for expansion in foreign markets
  • CEO Howard Schultz claimed that Starbucks’ UK arm was so successful that he would adapt lessons learned here for the American market
  • Again in 2007, then-Chief Financial Officer Peter Bocian claimed Starbucks UK had pulled in profits margins of nearly 15 percent — almost £50m

Despite that impressive roster of duplicitous statements, it would take something to top claims made in respect of 2011, where Starbucks’ accounts department would have us believe the UK business made losses of £33m. At the time, executive John Culver told investors:

“We are very pleased with the performance in the UK.”

But CFO Troy Alstead told the select committee:

“We are not at all pleased about our financial performance [in the UK].”

Errr … so which is it?

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