Jeremy Hunt's Tax Arrangements

What was it Cameron was saying the other day about not associating himself with anyone who carried out “aggressive tax avoidance”?

Jeremy can you remember what he said?

No?

Oh well I guess that's because you're too busy trying to sort out your tax affairs:

"The Culture Secretary was paid a dividend by the company he founded in the form of half its office building. The offices were then immediately leased back to the same company. 

Accountants said that the deal allowed Mr Hunt to legally reduce his potential tax bill by more than £100,000 because it was completed just days before an announced 10 per cent rise in the tax on dividends in April 2010. 

The Culture Secretary and his business partner, Mike Elms, transferred ownership of their company’s office building in Hammersmith into their own names in April 2010, just before the tax rate for the transaction rose to 42.5 per cent. They then leased the property back to Hotcourses, their jointly owned education company, for 10 years. 

By paying themselves the building as a dividend before the change in tax rules, the two men saved themselves an income tax bill of £202,000 on the £1.8 million deal, by paying tax on it at the rate of 32.5 per cent. The company now pays them £60,750 a year in rent. No stamp duty was payable on the property, which at the time would have been 4 per cent.

Mr Hunt and Mr Elms set up Hotcourses in 1991. Mr Hunt stood down as a director in 2009, but remains a major shareholder in the company. 

A spokesman for Mr Hunt said that all the Culture Secretary’s interests were properly declared and approved by his department’s permanent secretary. “Mr Hunt is a shareholder of Hotcourses and has not been an employee since the end of December 2009. The only way he can receive income is as a dividend paid to shareholders. As a shareholder, Mr Hunt has no responsibility for the day-to-day running of Hotcourses, including any financial decisions.” 

Mr Hunt owns 48.6 per cent of Hotcourses. In the previous financial year, it paid £2 million in dividends, meaning Mr Hunt would have received £972,000. 

Mr Elms said: “A dividend in specie [the name of the transaction] is the correct way to pay a non-cash dividend and all appropriate taxes were paid. 

“Mr Hunt has no responsibility for any financial decisions including the nature, amount and timing of dividend payments to shareholders.” 

Hundreds of companies brought forward their dividend payments to beat the tax rise in April 2010."

The Joy of Cover Ups - UKBA Hides Its Shame

As loyal readers know, cover ups are the politicians' "go to" tool when the shit hits the fan.

However, it is not just elected politicians who practise the dark arts of cover ups, but also their government agency appointees.

Step forward Marc Owen, the director of UKBA operations at Heathrow, who has made a complete fuck up of his attempts to conduct a cover up over the clusterfuck that is Heathrow's arrivals' processing.

Given that the entire world's attention will be focussed on the UK during the Olympics, Owen will learn that his political masters will not tolerate being blamed for this clusterfuck and will want the problem resolved and/or his head on a platter.

Hungry Like The Wolf - Next Course Jeremy Hunt

Oh dear, it appears that throwing Adam Smith to the wolves last week may not be enough to save Jeremy Hunt's career.

Cameron is now saying that if new evidence emerged showing Hunt's direct relationship with News Corporation had been too close, he will fire him.

Quelle surprise!

Cameron et al should know that wolves are very hungry creatures, and are not easily sated by just one or two courses!

The John Mann Award for Fuckwittery

Sometimes politicians display such utter fuckwittery that one wonders how it is they even manage to find their way to the "Mother of Parliaments".

Step forward John Mann MP to receive your Fuckwit award, courtesy of my ICAEW chum, Christie Malry:

Labour MP John Mann, a member of the Commons Treasury select committee, said Goldman Sachs should not defer tax payments when it was able to pay now.

"It's morally and ethically wrong. These are people who are at the heart of the problem in the financial world who've paid extraordinary bonuses to their partners and aren't prepared to pay a fair amount of tax. It's pure unadulterated greed."

Oh, FFS! With stupidity this unrestrained, it's a wonder John Mann can tie his shoelaces, let alone get elected as an MP and serve on the Treasury Committee. 

A company's tax bill is determined by tax law. And its reported profits are determined by accounting standards. Big companies report their consolidated profits for all the countries in which they operate.

Now these two sets of rules are different. So it's hardly surprising that sometimes they give different results. 

While some of the differences are about measurement, most of them are about timing. And usually this means the financial reporting numbers are faster to recognise profit than the tax man. The reason for that is to make it more likely that there's cash to pay the tax bill when it arises.

Because the main difference is one of timing, accounting standards force companies to account for these timing differences in their financial statements. And that's where deferred tax comes in. But deferred tax is a pure accounting concept. It's not something that otherwise means anything. 

So John Mann is being a prime fuckwit when he talks about Goldman Sachs deferring their tax bill. The amounts that are reported as deferred tax aren't due. They represent profits in the financial statements that will give rise to a tax bill at some point in the future but don't give rise to one now.
Goldman Sachs might well be able to pay more now. But there is simply no "more" tax bill to pay. Not until the profits reported this year become taxable in future years.

If In Doubt, Say Nothing

Oh dear, it seems that Hunt's Permanent Secretary is not publicly backing Hunt's version of events wrt Adam Smith's interactions with Murdoch.

"Five times in the House of Commons yesterday the Culture Secretary, Jeremy Hunt, told MPs that the Permanent Secretary (the most senior civil servant) at his Department approved the arrangements for the dealings with the Murdochs over their planned takeover of BSkyB.

Twelve times in the Public Accounts Committee this morning , the Permanent Secretary at the Department for Culture, Media and Sport himself refuses to answer questions about whether he DID approve those arrangements - namely that Adam Smith, Mr Hunt's special adviser who resigned yesterday, could liaise with News International."

Adam Smith's Resignation and The Invisible Hand

Politicians can be rather a loathsome bunch of individuals. Aside from breaking election promises and habitually lying to the voters, they treat each other with contempt (especially when they try to save their own skins).

Such is the treatment meted out to Adam Smith, Culture Secretary Jeremy Hunt's special adviser, who has been forced to quit in order to try to save Hunt's skin.

For why has he been forced out?

The enormous row (that is growing in strength and ferocity) over contact between Hunt's office and News Corporation re the BSkyB bid. Emails released on Tuesday showed that Adam Smith had been in contact with the company about its takeover bid.

Smith therefore has been sacrificed, in the hope that Hunt won't need to be.

It is of course ironic, and very instructive (as to how politicians stab each other in the back), to see that last night Number 10 insisted that Smith would not go.

Doubtless Number 10 will blame Smith's departure on an "invisible hand", but we know better don 't we children?

Here is Smith's "resignation" statement issued (and I assume written) on his behalf:

"While it was part of my role to keep News Corporation informed throughout the BskyB bid process, the content and extent of my contact was done without authorisation from the Secretary of State. 

I do not recognise all of what Fred Michel said, but nonetheless I appreciate that my activities at times went too far and have, taken together, created the perception that News Corporation had too close a relationship with the department, contrary to the clear requirements set out by Jeremy Hunt and the permanent secretary that this needed to be a fair and scrupulous process. 

Whilst I firmly believe that the process was in fact conducted scrupulously fairly, as a result of my activities it is only right for me to step down as special adviser to Jeremy Hunt."

The Joys of Living In A Council House

Full marks to Ayesha Chowdhury (council member of the London Borough of Newham) for once living "as the people do" in a council house.

However, it is rather odd that she chose to do this, as she in fact had a financial interest in a string of properties in Newham worth over £1M:

82 Downing, Beckton, E6 Co-Owner
95 Lonsdale Avenue, East Ham, E6 Co-Owner
6 Truesdale Road, E6 Co-Owner
100 Park Avenue, E6 Co-Owner
199 Tollgate Road Co-Owner
10 Harrier Way, Beckton E6 Co-Owner
27 Trader Road, Beckton, E6 Co-Owner
5 Hogarth Close, Beckton, E6 Co-Owner
47 Plymouth Road, E16 Co-Owner
205 Tollgate Road, Beckton Co-Owner
39 Albert Roase Close, E6 Co-Owner
59 Fourth Avenue E6 Co-Owner
16a Forest Side E7 Co-Owner
18 Eric Close E7 Co-Owner
96a Plashet Grove E7 Co-Owner
5 Chelmsford Close E6 Co-Owner
203 Tollgate Road, Beckton Co-Owner
5a Hogarth Close, Beckton, E6 Co-Owner

Is it not a bit selfish of her to deprive someone who really needs council housing of a place to live, given that she has several addresses at which she could live and that Newham is currently conducting social cleansing in time for the Olympics?