In their action against celebrities and corporations committing tax avoidance the Trade Union Congress (TUC) has released a spoof celebrity magazine ‘Kerching’, on celebrity tax avoidance tricks and ten ways to stop them.
TUC is the national trade union centre in the UK, representative of the vast majority of organised workers. On their website, the TradeKerching! Celebrity tax avoidance guide Union Congress has published a downloadable copy of spoof tax avoidance magazine ‘Kerching’, in what they call their guide to “tax dodging: How the celebs do it and how we could tackle it”.
Comparable to the weekly glossy, celebrity gossip filled OK! Magazine, the front cover of TUC’s spoof Kerching magazine includes highlights of main article features, including: “Topical Tax Havens: Top tips for hiding your dosh offshore” and “Limited Companies: How to avoid paying National Insurance”.
Offshore Tax Avoidance
The first tax dodging topic that TUC touch on is offshore tax avoidance, by using a satirical example of a comedian using the tax haven of Liechtenstein to avoid tax; which somewhat seems to make a dig at comedian Jimmy Carr, who used the K2 tax avoidance scheme to reduce his tax liabilities in the UK.
“Liechtenstein is very popular with celebrities who avoid paying UK income tax by setting up trust funds there,” the piece reads.
Speaking on Employee Benefit Trusts and the loan back scheme, Kerching magazine says that “HM Revenue and Customs has tried to stop these schemes but some seem to survive”.
Jimmy Carr was involved in a tax avoidance schemeFilm Finance Tax Avoidance Schemes
Discussing Film Finance Schemes, TUC gives thanks to loopholes in government legislation for allowing generous tax reliefs available to filmmakers.
Kerching states that film finance tax reliefs have been “abused in recent years” through leveraging and those films are now funded by borrowed money, although the investor receives a relief on borrowed money as well as their own funds:
“The result is that the total relief they get can be as much or even more than they actually invest themselves.”
Kerching features race car sportsman Jason, and how he avoids tax on payments for images, also known as Image Rights. Jason is said to avoid tax on money he receives for images, in addition to his income, by diverting money paid for image rights to other family members or by having it paid to offshore bank accounts.
TUC list the top twenty tax havens for stashing image rights money as:
“Andorra, Anguilla, Antigua, Antilles, Aruba, Bahamas, Belize, Bermuda, Cayman Islands, Cook Isles, Guernsey, Isle of Man, Jersey, Liechtenstein, Mauritius, Monaco, Panama, Thailand, Turks & Caicos Islands, United Arab Emirates.”
Under the heading “A Tale of Two Cities: Home is where the green stuff is”, the domicile rule is noted as being the “tax dodgers bestRobert Gaines Cooper Domicile Rule friend”.
If living in the UK, but it isn’t your “’natural home’ then you can claim to not be domiciled in the UK”, and will therefore only be taxed on what you earn in the UK.
Robert Gaines-Cooper lost his appeal at the Supreme Court in October 2011, following a lengthy residency battle with HMRC, thought to be worth £30m. Despite spending most of his time overseas, the court ruled in HMRC’s favour and said that Gaines-Cooper qualified as a UK resident and therefore was liable for UK Income tax and National Insurance payments.
Other celebrity vehicles for tax avoidance
Other celebrity tax avoidance tactics discussed in Kerching include whether “giving money to charity tax avoidance or not”, as some tax avoidance schemes abuse Gift Aid by over claiming for Gift Aid relief; ‘Relocation, Relocation’, touches on tax havens and says that “offshore is the key word in much tax avoidance”; The use of limited companies, by people not trading, in order to avoid PAYE; and abusing the tax system through personal service companies.
‘What is tax avoidance?’
TUC define tax avoidance as: “about getting round the law to reduce a tax bill”.
Disputing claims that tax avoidance, unlike tax evasion, is a legal way of reducing ones tax bill, TUC state that: “Tax avoidance is not illegal, but that is not the same as it being legal”.
After explaining the types of tax avoidance tactics in their spoof magazine articles, TUC present ten tax changes which they see as the future for tackling tax avoidance:
Introduce a ‘general anti-avoidance principle’ that makes all tax avoidance ‘unacceptable’, instead of the government’s general anti-avoidance rule which seeks to close down only ‘aggressive’ forms of tax avoidance.
Stop HMRC staff cuts so there are ‘adequate resources available’ to tackle tax avoidance.
‘Abolish the domicile rule.’
Make UK tax residency rules statutory, ‘rather than relying on HMRC guidance’.
‘Abolish unnecessary tax reliefs’ which encourage tax avoidance loopholes.
Introduce a charity tax relief reform to ‘stop abuse’.
‘Discourage the use of limited companies as national insurance avoidance schemes’ by introducing additional tax on investment income.
‘Introduce a minimum rate of tax to be paid on the income of those earning more than £150,000 a year’ to stop them benefiting from large tax reliefs.
Request full transparency on all UK residents holding offshore bank accounts to tackle tax avoidance through tax havens.
‘Reduce the risk of tax abuse’ by redesigning how small limited companies work.
TUC end their comedy issue of ‘Kerching: A celebrity guide to tax dodging’ by calling on the public to sign their online petition, which calls on George Osborne to close tax avoidance loopholes.