Thursday, April 28, 2016

Tom Hollandest

Tom Hollander is the actual best.
When I met Yoko Ono, it was quite different: I spoke for about 15 minutes while she didn’t say one word in return. Not one word. I’d been sat next to her at dinner because the person doing the placement was drunk. There was nowhere for her to turn. Except to her neighbour, which she did eventually, after I’d been reduced to, ‘That’s a really nice shirt you’re wearing, where did you get it?’ Admittedly my chat had become a bit stilted, because in my head a voice was screaming ‘Why won’t you talk to me you fucking snotty cow you think you’re so special when the only reason anyone’s even heard of you is because you broke up not only the greatest band the world has ever known but also one of the few things this country has had to be proud of since we defeated the Nazis.’
But you can’t say that sort of thing, so instead I went quiet.

Wednesday, April 27, 2016


There are a load of op-eds in support of the Doctors' Strike, some good and some not. All of them, however, tend to go big on the difficult and high pressure job that doctors do, and how important the NHS is to us all. A lot of them talk about patient safety, and how dangerous the proposed new contract is. A lot tug on emotional heartstrings:
What he meant by all this (we’d sit up at night talking and waiting for trains to go by in the distance) is that this was the first place he’d known any real kindness and he wished to return it. For most of us it will be the last place we know kindness. How sad that we have allowed it to fall into the hands of dreadful people who know no compassion at all, not even for themselves.
But since reading the FT on the strike yesterday, I find myself automatically completing these otherwise very convincing articles with "and that's why doctors must be paid slightly more on Saturdays."

I have to admit that this does slightly detract from the force of the argument.

Tuesday, April 12, 2016

Once more with feeling

I suppose in a way it's quite interesting to be in at the birth of a new political meme. This is the story that David Cameron personally intervened to block EU plans to tackle offshore trusts. Let's look at how the story was reported back when it actually happened:
New legislation planned in Brussels is set to heap fresh costs and paperwork on families’ financial planning, as well as leaving their affairs open to unwanted public scrutiny.  
British lawyers and tax experts are baffled by the potential implications. Most are bitterly opposed to the costs and intrusion that could result. The use of trusts or what the EU would define as “legal arrangements” is commonplace in Britain and Ireland, but not elsewhere in Europe. As a result many run-of-the-mill transactions between British individuals, or between individuals and financial institutions, would fall within the net of the law if applied to the UK. Similar transactions in Europe would not be affected, lawyers say.
Essentially the European Parliament weren't happy with proposed legislation to create a publicly available register of the beneficial owners of EU companies (which pretty much existed in the UK anyway) and broadened the scope to include all trusts as well. This was probably because EU legislators don't really know what trusts are, because they're only used in the UK & Ireland, and they think they sound dodgy.

The reaction of the British Government (and on the legal sector more widely) was that this was disproportionate and not particularly helpful to the wider aim. This was set out in the Lords by Lord Newby:
'The government opposes the mandatory registration requirement for trusts [which] unlike companies are used for a range of purposes, such as benevolence, inheritance, protecting vulnerable people and family support. As such, the implications for privacy are far greater, and trusts therefore warrant different treatment ... We consider registration of trusts to be a disproportionate approach and, in particular, one which undermines the common-law basis of trusts in the UK.'
This was what David Cameron had written to the President of the European Council about, and what the UK Government continued to lobby the EU about. Was this an attempt to assist tax avoidance? No.
The Treasury is now negotiating with the EU Council presidency and other member states to agree a compromise that would limit the scope of obligations on trusts to those holding financial assets, which the UK would satisfy through existing reporting obligations for trusts holding financial assets, domestic reporting requirements and automatic exchange of tax information agreements.
So in other words, the UK Government wanted to prevent a measure designed to prevent money laundering being applied so widely that it would affect hundreds of thousands of otherwise private legal arrangements. And it was successful in doing so.
The publication of details concerning the beneficiaries of trusts gave rise to an intense debate, as beneficiaries of a trust are in a very different position than, say, shareholders of a company. In many circumstances, beneficiaries are not aware of their position and often include minor and vulnerable family members. Accordingly, after intense lobbying by professional bodies, the final version of the 4th Money Laundering Directive has limited the circumstances in which information concerning trusts ought to be published on the new registers. 
A triumph for British diplomacy in preventing the negative and unintended consequences of a half-baked piece of legislation introduced by ignoramuses. Phew.

Now let's see what happens to that diplomatic triumph in light of the (entirely unconnected) scandal about offshore companies. First, the FT.
David Cameron personally intervened in 2013 to weaken an EU drive to reveal the beneficiaries of trusts, creating a possible loophole that other European nations warned could be exploited by tax evaders.
This is where the fun starts. Because the very first line of that is a touch misleading. It gives the impression that David Cameron's intervention was exceptional, or even that it was done in a personal capacity. It wasn't. It was a letter from a Head of Government setting out that Government's position - a position that was re-iterated in Parliament. David Cameron signed a letter written by civil servants explaining the UK's position on proposed legislation. I suspect he does that quite frequently. Anyway, at least the FT got the substance of the intervention right.

The Guardian, on the other hand, takes this and runs with it.
David Cameron intervened personally to prevent offshore trusts from being dragged into an EU-wide crackdown on tax avoidance, it has emerged.
Again with the personal intervention, but now it's about offshore trusts, and a crackdown on tax avoidance. Taking the first point first, it should go without saying (but apparently doesn't) that a register of beneficiaries of EU-registered trusts couldn't affect offshore trusts. Taking the second point, a directive that was about money laundering is now apparently part of a crackdown on tax avoidance. And, for good measure, "it has emerged" in this case means "a public letter that was reported on at the time, and remains on the Government website". Deep Throat this isn't.

And it really is as simple as that. A legally-supported UK Government objection to an ill-thought through piece of European heavy-handedness becomes David Cameron personally intervening to prevent the EU from cracking down on offshore trusts and tax avoidance. Sigh.

Monday, April 11, 2016

Oh no! More tax

Christ on a bike but this tax scandal is depressing. At its most basic, the story (as it actually affects British politics) is this:

  1. A global law firm had its confidential client documents stolen and circulated to the world's media (this is a Good Thing, because everyone hates secrecy when other people are doing it).
  2. Quite a lot of these documents were about setting up companies in low-tax jurisdictions.
  3. One of these companies was an investment vehicle established by David Cameron's father.
  4. David Cameron invested in this fund.
Everyone proceeded to go barking mad.

Let's just see if we can unpick all this and find out whether there's actually any wrongdoing, legal or moral, about all this - starting with Ian Cameron.

Blairmore Holdings is totally unexceptional

It's a collective investment fund, that distributes all returns to investors annually. It would have been based in the Bahamas both because it was an advantage to be in the dollar area, and because no local taxes were levied, avoiding double taxation for investors. Investors in these funds (provided they declared their income) would have not avoided any UK taxation - in fact, by increasing the returns to investors, Blairmore would have increased the amount of tax paid. There's a fabulously daft headline in the Guardian about this:
Fund run by David Cameron’s father avoided paying tax in Britain
Which is because "Fund run by David Cameron's father" wasn't in Britain. It's like complaining that a French bakery in Lilles avoids paying tax in Britain. This also makes comments by Jess Phillips that "David Cameron's dad didn't pay his fair share of taxes" stupid at best, and malicious lies at worst.

David Cameron hasn't avoided any tax

Which leads us to the next point. Cameron paid all the tax that was due on his investment in Blairmore - i.e. UK income tax on the dividends he received, and UK Capital Gains Tax when he disinvested. Since the purpose of Blairmore was to increase the income of its investors, a side effect was to increase their tax bill. There is simply not any avoidance going on here.

But wait! What about inheritance tax? 

This is a doozy. Once Cameron had opted for the "full disclosure" route, and told everyone about his finances, it was noted that his mother had given him £200k shortly after his father's death. This was described in the Mail on Sunday as a "tax bill dodge" on the grounds that unless she dies in the next couple of years, Cameron won't pay tax. This is less a "dodge" than "how the entire fucking IHT system works". What you're left with is "David Cameron is considerably richer than yow", which I suspect most people knew a while back.

Um, hypocrisy?

So the story is that the Prime Minister invested a relatively small amount of money into an investment fund, and paid all the tax that was due as a result. Which doesn't sound to me like Watergate - or a reason to arrange a demonstration calling for his resignation. The journalist who organised the demonstration has a quick response if challenged on why a Prime Minister who has manifestly not evaded tax, and actually not even avoided it, is this:
Saying, in other words, that the "real scandal" is that back in 2014 Cameron "personally interfered to protect offshore trusts from EU tax crackdown" which becomes:
Jesus, that sounds bad!

Doesn't it? It basically comes from this FT article, which claims:
David Cameron’s EU intervention on trusts set up tax loophole
From this Abi Wilkinson got the message that Cameron had personally lobbied the EU to "protect offshore trusts from EU tax crackdown", and that this intervention was a barrier to EU action against tax havens.

The only problem with this interpretation is that its nonsense. What we're talking about is the proposed Fourth Money Laundering Directive, that was introduced last year and was widely consulted on beforehand. One of the proposals was that, as well as a publicly available register of corporate beneficial ownership (i.e. who really owns what), there should also be a publicly available register of all trusts.

Trusts are very uncommon in civil code law jurisdictions, and are basically assumed by most Europeans to be nothing more than a vehicle for nefarious financial schemes (hence the Austrian finance minister calling the UK "the island of the blessed for tax evasion and money laundering" and specifically citing trusts in support). In the UK, however, trusts are pretty common, and most are used for family money management, especially in probate (where inheritances more complicated than "it all goes to my only child" require a trust structure in order to work). It is, in other words, another example of the incompatibility of common law and code law systems.

Anyway, Abi makes 4 specific claims. That Cameron personally lobbied the EU; that it was about offshore trusts; that it was a tax crackdown; and that it prevented action against tax havens.

Was it personal? Well, kinda. Cameron wrote a letter to the President of the European Council in his capacity as leader of the UK Government, setting out the position of the UK Government. I don't really see that as "personal lobbying" but it's not exactly wrong to do so.

Offshore trusts? Well no. The thing about offshore trusts is that they're based offshore. The thing about a proposed Register of EU Trusts is that it applies to trusts registered in the EU. The one isn't affected, remotely, by the other.

Was it a tax crackdown? It was billed as a money laundering crackdown and looks more like a privacy crackdown. And what was the intention of British lobbying in this respect?
As a compromise, the UK government intends to get the Fourth Money Laundering Directive obligations restricted to trusts that hold financial assets – which would specifically exclude, for example, will trusts. 'We want to ensure that, as far as possible, information about trusts that could be problematic for money-laundering purposes will be more generally available,' said Newby. 'Our proposals would do that in respect of the UK without having a full mandatory register in the same way as we propose for companies.'
 And did it prevent action against tax havens? No. How could it? What's the link?

And the moral of the story is...

People know naff all about finance or law. But they sure do hate rich people.

Wednesday, April 06, 2016

Tap tap

Is this thing still on? One of the problems of buggering off for weeks is that you feel you have to say something important in order to come back. I'm going to circumvent that feeling this time by pointing out that there's not necessarily a contradiction in this part of Alice Thomson's cri de coeur on the reverse in feminism:
Fifty years ago women were demanding the right to wear what they wanted. Now M & S has started selling burkinis in its stores at £49.50 with hardly any dissent. 
Just because a choice seems inexplicable to you, doesn't mean it isn't a choice...