Jeremy Corbyn was doorstepped outside his home by a TV crew this morning. A reporter asked him for a comment on David Cameron. But he said he does not do interviews outside his home. He then brushed away the phone she was holding near his face (to record) and cycled off.
On the Today programme this morning James Quarmby, head of private wealth at Stephenson Harwood, a law firm, gave an interview defending David Cameron’s investment in his late father’s offshore trust. He said claims that Cameron was engaged in tax avoidance were being made because people did not understand the nature of his investment.
Here are the key points he made.
- Quarmby said that describing Blairmore Holdings as an “offshore trust” was misleading. It is an investment company, he said.
I think there is a massive misunderstanding about what he has invested in. And can you not ever use the term “offshore trust” again in relation to this investment. It’s not an offshore trust. It is an open-ended investment company which was incorporated in Panama and is resident in Ireland. A trust suggests something private, something that families use to hide money. It is not a trust. It is a company which is designed for investment.
- He said “millions” of people in the UK had similar investments.
I would say that there are millions of people in the UK who have invested in similar funds, so if he’s done something wrong, so have millions of people.
- He said if the fund had paid tax offshore, there would have been less money for the UK exchequer.
What everyone is missing on this is that this is a distributor fund, so every penny of profit is paid out to the investors. So if the fund did deduct tax at fund level, for every pound deducted at fund level, that’s £1 less received by the investor, that’s £1 less that goes on the tax return, and that’s 40p less going to the exchequer.
- He said investments like this were “really rubbish ways of avoiding tax”.
What you need to understand about hedge funds and investment funds generally is that most of them are really rubbish ways of avoiding tax. If I wanted to avoid tax, I would not put my money into a hedge fund on a distributor status which this was, situated anywhere, because all the profits are paid out every year and it goes on my tax return. There is no element of deferral of tax. You’ll get more deferral of tax investing in a UK company. So you’ve got to understand that people choose these funds because of the excellence of the people running them, and that’s why they’re in the portfolios, not because it’s underhand. This is about as boring as it gets for investment. It is no different from Mr Cameron investing in a UK stock.
Mark Ferguson, the former LabourList editor who now works for Unison, tweeted this last night.
And Lord Ashcroft replied with a tweet that suggests he thinks Ferguson may be on to something.
Sturgeon says Cameron's offshore admission 'leaves his credibility in tatters'
Nicola Sturgeon, the SNP leader and Scottish first minister, has said that David Cameron’s credibility is “in tatters” following his revelation last night about profiting from his late father’s offshore investment fund. She said in a statement:
David Cameron must now be completely transparent around his tax affairs. After four days of ducking and diving it is now clear that he personally benefited from offshore investments.
Whether or not it was legal, the tortuous way the information was dragged out of the prime minister leaves his credibility in tatters — and completely betrays public trust.
And to claim that the UK government is cracking down on offshore investments and tax havens while blocking EU moves to increase transparency is utterly hypocritical.
There are also now questions to answer over whether David Cameron’s interests have influenced his actions in parliament — and if they should have been declared in full before now.
People expect the very highest standards from the prime minister in this regard.
Like Labour, the SNP are accusing Cameron of hypocrisy. But while Labour seem to be basing their charge to a large extent on what Cameron said about Jimmy Carr and others (see 8.29am and 9.08am), the SNP hypocrisy charge is primarily based on the revelation that personally to prevent offshore trusts from being dragged into an EU-wide crackdown on tax avoidance. We covered that story in detail here yesterday.
Sturgeon also challenged Ruth Davidson, the Conservative leader in Scotland, to condemn Cameron.
Once again Ruth Davidson has remained silent while her Westminster colleagues bring politics into disrepute. She must make it absolutely clear that she condemns Cameron’s actions, on delaying and dodging the difficult questions.
Jess Phillips says Cameron has been a 'coward' in not coming clean earlier
The Labour MP Jess Phillips wrote a blistering article attacking David Cameron for Huffington Post on Wednesday. She has followed it up with another today, saying that Cameron is a “coward” for not coming clean earlier.
Here’s an extract.
David Cameron had the chance to show that politicians are not perfect. Politicians have had lives, made bad decisions, made mistakes. Just like every person behind every door in the country. He had the chance to dig deep, tell the truth and then work tirelessly to stop any evasion or avoidance of tax in the future. He would have got props for ‘fessing up. I like to be honest, so I am not saying I would have just let him off the hook had he shown such bravery. I probably would have crowed for a bit, but I would eventually have been silenced by his new brave attempts to stop the richest having access to the kind of wealth multipliers most of can never hope to understand, let alone profit from.
Instead what we got was five days of half-truths, with an ever-decreasing credibility. In the end, the sorry truth of his involvement is given in a statement in which he basically says, “you plebs have misunderstood taxy stuff and I’ve done nothing wrong.” (This is not an actual quote but it is what I heard) ...
It is really, really hard to say if you’ve made a mistake. It takes courage. The UK prime minister had a chance to show courage, he had a chance to give us some faith in politicians. Instead he was a coward. A coward who cheats. Same old, same old.
Stewart Wood, the Labour peer who served as one of Ed Miliband’s policy key policy advisers, has been flagging up this speech, covering tax avoidance, that David Cameron gave at Davos in 2013.
Here’s an extract from the speech.
Again let me put my cards squarely on the table. Of course there is a difference between tax evasion and tax avoidance. Evasion is illegal. It can and should be subject to the full force of the criminal law. But what about tax avoidance? Now of course there’s nothing wrong with sensible tax planning and there are some things that governments want people to do that reduce tax bills, such as investing in a pension, a start up business or giving money to a charity. But there are some forms of avoidance that have become so aggressive that I think it is right to say these raise ethical issues, and it is time to call for more responsibility and for governments to act accordingly.
In the UK we’ve already committed hundreds of millions into this effort, but acting alone has its limits. Clamp down in one country and the travelling caravan of lawyers, accountants and financial gurus will just move on elsewhere. So we need to act together, including at the G8. If there are difficult questions about whether existing standards are tough enough to tackle avoidance we need to ask them. If there are options for more multilateral deals on automatic information exchange to catch tax evaders we need to explore them.
The Labour MP Wes Streeting is also accusing Cameron of “misleading” the public.
My colleague Owen Jones believes that David Cameron has “lied by omission” over his financial affairs.
Caroline Lucas, the Green MP, is also saying David Cameron should make a statement to MPs about his finances when the Commons returns next week. She said:
The government’s shady response to these revelations has been utterly unacceptable. David Cameron should have been straight with the public but instead he’s dragged out this affair and attempted to avoid admitting that he profited from the sale of shares in an offshore fund.
It’s now time for the network of destructive tax havens – many of which are closely linked to Britain – to be shut down. The government must immediately force full transparency - insisting that every British territory demand the identification and publication of the beneficial ownership of all companies on their registers.
There is simply no excuse for a continued halfhearted approach to tax avoidance. It sucks resources from our economy – and further entrenches the divide between the haves and the have-nots. David Cameron must now come to parliament on Monday and be entirely honest with the British public – any further evasion of the truth over this issue will only add to a growing sense that this government simply can’t be trusted to take tax avoidance seriously.
Labour says Cameron should make statement to MPs about his finances
Labour’s Owen Smith, the shadow work and pensions secretary, was also on the Today programme talking about David Cameron. Like Tom Watson (see 8.29am), he accused Cameron of hypocrisy. He also said Cameron should make a statement in the Commons next week about his finances.
The prime minister now needs to come to the country - I think he should do it in Parliament next week - and come clean about what the government’s real intentions are about tax avoidance.
People will now have doubts about the trustworthiness of the prime minister, given that he has been so revealed as having double standards, speaking out of both sides of his mouth, not being true to what he said he would do when he came to power.
Cameron did not come clean earlier because he was defending his father's reputation, says minister
Nick Boles, the skills minister, has been giving interviews defending David Cameron this morning. He told the Today programme that Cameron did not come clean earlier because he was anxious to defend the reputation of his father. He said:
I’m sure that, with the benefit of hindsight, [Cameron] would rather that all of what has come out over the last four days had come out on the first day.
I think the instinct is one that we all can identify with, even if it was something that he might well have done differently if given a second chance.
I think he thought ‘I know that I have complied fully with all of the tax laws’ and I don’t like feeding this mill of preying on his father’s memory and his father cannot defend himself.
Plenty of people have been criticising Number 10’s handling of this story. David Cameron should have admitted that he made money from his late father’s offshore fund much earlier, it is said.
This is from Sir Christopher Meyer, the former ambassador who also served as John Major’s press secretary at Number 10.
And this is from Paddy Ashdown, the former Lib Dem leader who had his own experience of being the subject of a media scandal.
What Cameron said about Jimmy Carr's tax avoidance
The Labour claim that David Cameron is guilty of hypocrisy over tax avoidance refers in part to what Cameron said about the comedian Jimmy Carr after a Times investigation in 2012 said he was one of many celebrities involved in a legal but morally questionable tax avoidance scheme.
I think some of these schemes – and I think particularly of theJimmy Carr scheme – I have had time to read about and I just think this is completely wrong.
People work hard, they pay their taxes, they save up to go to one of his shows. They buy the tickets. He is taking the money from those tickets and he, as far as I can see, is putting all of that into some very dodgy tax avoiding schemes.
That is wrong. There is nothing wrong with people planning their tax affairs to invest in their pension and plan for their retirement – that sort of tax management is fine. But some of these schemes we have seen are quite frankly morally wrong.
But what Carr was doing was quite different from what Cameron was doing. Cameron was investing in his father’s offshore investment fund, Blairmore Holdings. The fund was launched in Panama, which means that as a company it did not pay tax, but investors in the fund had to pay normal UK taxes on the profits that they made.
Carr was involved in a much more complicated scheme, known as K2, that involved channelling earnings through a shell company. It was legal, but also under scrutiny by the tax authorities. This is how the Guardian described it at the time.
The scheme is understood to work by UK earners “quitting” their job and signing new employment contracts with offshore shell companies. Those companies then “rehire” their new employee back out to the UK but take their earnings. The offshore company then pays their employee a much lower salary but also “loans” them thousands a month. However these loans can be written down as tax liabilities, and so reducing the overall bill to the government.
After the controversy erupted Carr cancelled his involvement in the K2 scheme and apologised. “I now realise I’ve made a terrible error of judgment,” he said.
We’ve got pre-moderation on the comments again today. I hope that does not inconvenience anyone too much.
Well, finally we got an admission last night from David Cameron about his investment in his late father’s offshore trust. Here’s the Guardian splash with the full details.
Labour is accusing Cameron of hypocrisy. This is what Tom Watson, Labour’s deputy leader, told the BBC last night when it was put to him that Cameron said he was not dodging tax because, as an investor in the fund, he paid full UK taxes. Watson replied:
I would say, does he hold the British people in such contempt that he believes they don’t think that these schemes are used by people to avoid paying tax? That might have been the case when his father set the company up in the 1980s. It certainly wasn’t the case when he sold the shares in 2010. It’s an unacceptable answer and it doesn’t hold water and it will only lead to further detailed questions over days and weeks to come about what his other shareholdings were and how he arranged his own finances.
After all, he was lecturing very high profile people. He was describing them as morally wrong when they invested in similar schemes. He can’t say one thing to others and do another himself.
Asked whether Cameron would have to resign, Watson said:
I think it’s too early to tell. He may have to resign over this but I think we need to know a lot more about what his financial arrangements have been, why it’s taken three days for him to answer legitimate questions from journalists, why he didn’t come clean when he heralded in the new age of transparency, and what other shareholdings does David Cameron have or has had since he was a member of parliament.
The Labour MP John Mann was less equivocal. This is what he posted on Twitter last night.
Earlier this week, after Cameron/Number 10’s second attempt to answer questions about his involvement with his late father’s offshore trust (the ITV interview was attempt number five), I said Cameron had probably said enough to close this down as a story. I’m sorry about that; it turned out to be a very duff call. Today Cameron is under as much pressure as ever, and I will be covering all the developments in detail.
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