Labour ‘hypocrisy’ over offshore trusts
Corbyn demands apology from the Queen but then it emerges payments for party’s HQ go to Jersey
Labour was accused of hypocrisy after Jeremy Corbyn called on the Queen to apologise for an investment by her private estate in offshore funds revealed by the so-called Paradise Papers. It emerged that the party rents its London headquarters from a trust based in Jersey.
Hayley Dixon, Christopher Hope
Callum Adams
JEREMY CORBYN was last night accused of hypocrisy after he called on the Queen to apologise for an investment by her private estate in offshore funds revealed by the so-called Paradise Papers.
While claiming the Royal household should be investigated for sinking £5.7 million into a Cayman Islands fund, it emerged that the Labour Party led by Mr Corbyn pays rent of £1million a year for its London HQ to a trust based in Jersey.
Condemning royalty for what John Mcdonnell, the shadow chancellor, described as “massive tax avoidance”, Labour failed to apologise for its own arrangements.
Meanwhile, the BBC, one of the organisations that took receipt of leaked data through its partnership with the International Consortium of Investigative Journalists, was drawn into controversy when it emerged that corporation money was being funnelled into offshore trusts.
Mr Corbyn and Mr Mcdonnell both called for increased transparency as a second day of revelations emerged from files hacked from offshore law firm Appleby.
When asked if his proposed review should include the Queen, Mr Corbyn replied: “Everybody. The Royal household are subject to taxation.”
When asked by The Daily Telegraph whether the Queen should “apologise for her private estate making offshore investments”, Mr Corbyn replied: “Anyone that is putting money into tax havens in order to avoid taxation in Britain, and obviously investigations have to take place, should do two things – not just apologise for it but also recognise what it does to our society.
“If a very wealthy person wants to avoid taxation in Britain, and therefore puts money into a tax haven somewhere, who loses? Schools, hospitals, housing, all those public services lose and the rest of the population has to pay to cover up the deficit”. His spokesman later said Mr Corbyn had not called for the Queen to apologise.
Mr Mcdonnell said that he would introduce a “withholding tax” to stop companies taking money offshore. He said: “There are a lot of these companies that have contracts with our Government so we are paying them money and that money is then going into tax havens. I would like to end those companies who are engaged in tax avoidance having public contracts.”
It later emerged that the lease on Labour’s headquarters is paid to The West End of London Property Trust, a fund registered in Jersey. Schroders, the Jersey-based company that manages the trust, said tax is paid on the rent before it is put into trust and when investors take
‘They are in the awful position of being both hypocritical and not very bright’
profits they have to pay tax. It has previously been revealed that Mr Mcdonnell received an income of £14,421 from his Westminster city council pension, which is invested in a Guernsey trust.
Jacob Rees-mogg, the Conservative MP and formerly a fund manager, said that Labour fundamentally misunderstood offshore trusts, in which he invests, as tax on the income is paid when the money is brought back into the UK.
“They are in the awful position of being both hypocritical and not very bright,” he said. “It is classic socialism, a case of do as I say and not as I do.”
A Labour Party spokesman said it received “no benefit as a result of the financial arrangements of the building owner”, adding: “We remain committed to changing the current tax environment and to tackling tax avoidance.”
Mrs Brown’s Boys actors Patrick Houlihan and Martin and Fiona Delany were also implicated in offshore schemes as it emerged that they put their fees from a production company owned by Brendan O’carroll, the show’s creator and star and Mrs Delany’s father, into companies they controlled in Mauritius which then repaid them in loans.
The actors were introduced to the scheme by English accountant Roy Lyness, who first drew headlines in 2012 for running a scheme that helped comedian Jimmy Carr avoid paying more than £3million on his earnings.
The three could not be contacted for comments but Mr Houlihan, who plays Dermot, had seemed confused over the scheme and told the Irish Times that he had not intended to avoid tax but simply control it. He said he was contacted by the BBC’S Panorama about the
scheme, adding: “I was surprised and I hung up. Afterwards I had to Google tax avoidance to see what it meant.”
Appleby has said in a statement: “There is no evidence of wrongdoing either on the part of ourselves or our clients.”
Lord Gadhia, a leading investment banker last night said that to suggest offshore investments were avoiding tax is “fake and false news” and millions of UK savers and pensioners had benefited from them.
A BBC spokesman said: “The tax affairs of self-employed actors are a matter for those individuals.”
When the Paradise Papers story broke on Sunday, I watched the BBC News channel engage in some flagrant editorialising. The Queen’s private estate invested a sum of money offshore in 2005, which prompted a chorus of “it doesn’t look good”. “Oh no, not good”. “Not good at all”. Well, as the nudist said to the dog walker, if you don’t like what you see, don’t look!
Before we get onto the question of tax privacy, let’s shoot down this absurd idea that Her Majesty is guilty of something. First, offshore investments are legal. Second, Her Majesty pays tax on all her income. Third, the cash that generates said income is managed not by her but by the Duchy of Lancaster, which is technically run by a member of the Cabinet known as the Chancellor of the Duchy of Lancaster.
In 2005, that would’ve been a Labour Party appointee. So, while the Left is thrilled at the prospect that Her Majesty is the pirate queen of high finance, blame lies not with the monarch but with politicians and speculators. If blame is the right word because, as I said, none of this was actually illegal.
Is it any of our business? In the case of the Queen, maybe, as she is a figure of considerable public interest. But, on the whole, no. This desire to know what people do with their money is unhealthy and it has just one motivation: to squeeze them for every penny they’ve got.
When I was a young socialist I’d have said that was a jolly good idea. We all benefit from public spending, and the more you’ve got the more you should contribute. But as an older, greyer cynic I take the view that the rich shouldn’t have to pay unfairly for the mistakes made by the state.
The state has grown and grown, with no obvious improvement in competence, and the tax share of the wealthy has trebled since the Seventies. This is unsustainable and, in acknowledgement of that reality, moderate governments have long tolerated certain generous tax arrangements to stop the golden goose from migrating permanently abroad.
If a radical Labour government came in and closed the loopholes, investors would relocate altogether. In a roundabout way, tax havens keep pressure on politicians not to raise rates to unreasonable levels and, were the world to eradicate them, the burden here at home would probably go sky high. If we must suffer the tax haven, why not go for full transparency? Because what’s good for the goose is good for the gander, and if the super-rich have to fling open their accounts to the rest of the world, you and I will have to do the same, too.
All that will fly out of mine, I hasten to add, is a couple of moths. The only tax haven a poor man like me is ever likely to use is the spot under my mattress. But that’s not the point: privacy is a principle that’s worth losing a bit of tax income to protect.
That’s not a very politically correct thing to write in an age of populism, but I stand by it. We are led to believe that the rich have too much power and influence, but they cannot compete with a state that increasingly has both the technology and the will to examine and regulate every aspect of our lives.
Take driving a car. To earn the right to crawl along the M25 behind a horsebox, you have to pay for and pass both a theory and practical test, purchase insurance, get an MOT, and cough up for vehicle and fuel tax. The Government not only tells you what speed to drive at but regulates it punitively with cameras – which adds insult to injury given that many of our roads are about as well maintained as the surface of the moon.
We’ve all become so used to paying Big Brother to tell us what to do that we’ve ceased to notice it. And yet the nerve of the state is breathtaking. It is the state that distributes the Queen’s taxes, a branch of the state that arguably deserves responsibility for how it managed her income and now it is the state, via the BBC, that investigates and exposes it.
A line must be drawn. It’s the historic mission of the Conservative Party to draw it. They are supposed to be the people who resist wars against business and wealth, defend due process and protect the rights of the individual. In recent years, however, they’ve endorsed raw emotionalism, terrified by the belief that what Labour says about tax, justice or the welfare system is what the voters believe, too. Well, they need to stop reading Twitter and talk to some of their more rational constituents.
Yes, every time the Tories take a stand against tax populism, they get horrid headlines in The Guardian, but they have won elections over and over again because the voters understand the facts of life better than Labour and the many agents of the state do.
For decades we have seen the expanding power of the police, teachers, civil servants, social workers and tax collectors, all protected by deference thought due to public servants and the claim that they are acting in the public interest. Who will act in the individual’s interest? The Tories must do so fast, before we’re all forced to go and live in, oh let’s say, Bermuda – drinking piña coladas beneath a tax-free sun. FOLLOW Tim Stanley on Twitter @timothy_stanley; READ MORE at telegraph.co.uk/opinion