Company Chancellor has a financial stake in paid just £5,964 in tax on £1.6 million worth of profits over eight years
- Chancellor has stake in a company which has paid an effective tax rate of just 0.4 per cent since 2010
- Revelation comes as Hammond announces new economic taskforce: “We know more can be done”
- UK Government has pushed back public register on UK overseas tax havens after threats to secede
- SNP’s Kirsty Blackman: “When it comes to Tory policy, it’s one rule for businesses and another for those in the corridors of power”
THE Chancellor Philip Hammond has announced a new economic crime taskforce - a day after it was revealed that he has a stake in a company which avoids tax.
The Mail on Sunday revealed that Hammond, a multi-millionaire, has an interest in construction firm Chiswell (Moorgate) Ltd, which has paid just £5,964 in tax on £1.6 million worth of profits since it was established in 2010, the year Hammond became a Minister in the Tory-Liberal coalition government. Hammond benefits from the company through his trust fund, which controls Chiswell.
The 0.4 per cent effective tax rate is significantly below the 19 per cent rate corporations are supposed to pay.
There is no suggestion of illegality on the part of Hammond or the company, with the company appearing to utilise a loophole allowing it to store up tax reliefs on profit-losing years for years when it is making a profit.
It has made a profit in five out of eight years of its existence, and therefore would be expected to pay £300,000 in tax.
The practices fly in the face of Hammond’s public statements that he wished to crack down on tax avoidance and make sure every company paid their “fair share”. In last year’s Budget, he announced a new tax aimed at raising more tax from big digital technology platforms like Apple, Google and Facebook.
Commenting, SNP Economy spokesperson Kirsty Blackman MP told CommonSpace: “The UK government’s track record is hardly encouraging and these latest revelations show that the Tories can’t expect to be trusted on enforcement of corporation tax.
“These reports show that when it comes to Tory policy, it’s one rule for businesses and another for those in the corridors of power.
“Whilst the UK government struck down SNP amendments to the Finance Bill which would have forced them to come clean about the rising corporation tax gap, we will continue to pile pressure on the Tories to make sure big business pays their fair share.”
A spokesperson for the Chancellor defended the practices of Chiswell, stating: “The Chancellor has no direct interest in this company, but in response to your query, we have checked with the professional advisers to the trustees who confirm that all tax returns that are required in respect of Chiswell (Moorgate) Limited and its subsidiary companies have been made and all tax due has been paid.
“The Chancellor has no direct interest in this company, but in response to your query, we have checked with the professional advisers to the trustees who confirm that all tax returns that are required in respect of Chiswell (Moorgate) Limited and its subsidiary companies have been made and all tax due has been paid.”
Lib Dem leader Sir Vince Cable criticised Hammond, saying it was “extraordinary that he has been careless enough not to ensure that his company is above tax dodges that others would be condemned for.”
Tax Research UK’s professor Richard Murphy said the opaque nature of UK company accounts meant it was not possible to identify Hammond’s full earnings and tax liabilities.
“It’s one of the absolutely fundamental failings of UK company accounts. We don't know because he doesn't have to tell us. Why is it that we cannot get data on the tax affairs of companies where we have a reasonable right to know? This is wrong,” he said.
The revelation comes as Hammond and Home Secretary Sajid Javid announced that they would jointly chair a new economic crime taskforce to cover fraud, bribery, money laundering and corruption.
The Economic Crime Strategic Board will be made up of representatives from the public and private sector, working closely with the UK financial sector in particular.
Hammond said shortly before the cross-departmental board held its first meeting: “We know more can be done, which is why the home secretary and I are launching the first ever cross-departmental board to prevent more people from becoming victims of economic crime.
“By bringing together specialists across the public and private sector, we can use the best of our expertise to maintain our status as a global financial centre.”
Bob Wigley, the chairman of UK Finance, welcomed the new Board, stating: “We want to ensure the UK is the safest and most transparent financial centre in the world. Banks already spend over £5bn a year fighting economic crime, but the private sector can’t tackle it alone.”
In 2016, Roberto Saviano, author of two investigative books into the Italian mafia and corruption, described the UK as “the most corrupt place on Earth”, due to the role of the financial centre of the City of London.
Saviano said: “If I asked you what is the most corrupt place on Earth you might tell me well it’s Afghanistan, maybe Greece, Nigeria, the South of Italy and I will tell you it’s the UK,” he said.
“It’s not the bureaucracy, it’s not the police, it’s not the politics but what is corrupt is the financial capital. 90 per cent of the owners of capital in London have their headquarters offshore.
“Jersey and the Cayman [Islands] are the access gates to criminal capital in Europe and the UK is the country that allows it.”
On Friday [11 January], the UK Government was accused of undermining parliament and caving in to UK overseas tax havens by delaying plans to introduce public registers of account holders, after a backlash from overseas territories including the Cayman Islands and the British Virgin Islands.
An amendment to the sanctions and money laundering bill, which was passed, set a deadline of 2020 for the public registers to be introduced, but this has now been moved back to 2023.
Cayman Islands and BVI have threatened to take the UK Government to court or even secede from the UK if the Bill was enacted, saying that the 2020 deadline would lead to a rush of business out of the overseas territories.
Labour MP Margaret Hodge, former chair of the Public Accounts Committee which led the push for the 2020 deadline, said: “This new timetable is a sleight of hand and an attempt to ignore the clear will of parliament. It was clear not just that order in council should be introduced in 2020, but the public register. We will have to consider what steps are taken to restore what was intended.”
Transparency International published a report in December which identified over £250 billion in fraudulent funds directed through UK tax havens, more than over 20 years of the UK Government’s foreign aid budget.
Picture courtesy of Foreign and Commonwealth Office
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