Outlook After the enduring and damaging ructions over the tax status of Lord Ashcroft, the Conservative Party donor, one might have expected David Cameron to think twice before appointing a government adviser likely to prompt a similar row. It was brave of him, then, to ask Sir Philip Green to head a review looking for public spending cuts. The Prime Minister surely cannot have been surprised that his choice has caused some consternation – not least, it is increasingly clear, among Liberal Democrat MPs whose votes he may need in order to push the cuts through Parliament.
Sir Philip, it should be said, dismisses allegations that anything is amiss with his tax affairs. He pays tax in the UK – as does his retail empire – and his wife, Tina, who owns most of the business, avoids doing so only because she lives in Monaco. We do not know what tax she had to pay there on the £1.2bn dividend paid to her in 2005, but the bill in the UK would have been around £285m, which is what has irked critics of Sir Philip's appointment to the Government.
Given the scale of the figures, their concern is understandable, but it is nonetheless misplaced. What the Greens have done is no more than what the vast majority of us do: they have arranged their family finances so as to pay as little tax as possible while staying within the law. If transferring assets between husbands and wives in order to minimise tax is suddenly to count as "tax dodging", the courts are going to be very busy.
The scale of the savings the Greens may have made – or may not, since we don't actually have the full details of their affairs – is irrelevant. The only thing that would make Sir Philip an unsuitable nominee for this post, at least on the grounds of his tax status, is evidence that he has breached the law, of which there appears to be precisely none.
There may well be many people who think it should not be possible for Sir Philip and his wife to arrange their finances this way (though would those who have been so critical in the past of non-doms want to see someone living in Monaco opting to pay tax here rather than her country of residence?). The Lib Dems, among others, have long campaigned for a crackdown on tax avoidance – or, as that means in practice, more regulation to prevent people exploiting existing legislation.
That is their right – and now they are in government, the Lib Dems may be able to make some of the changes for which they have been pushing. In the meantime, however, it is not realistic to expect any taxpayer to pay more than they need to.
Indeed, were Sir Philip to have somehow contrived to ensure his family overpaid their taxes, we might wonder what he was doing in charge of a review of spending and waste that is presumably designed to ensure that the Treasury incurs no unnecessary costs. Now let's see what he can come up with to help the public purse.Reuse content