Tax Avoidance: A few questions for Geoffrey Robinson, Treasury minister

Share
Related Topics
So it is all nice and tidy is it? Mr Geoffrey Robinson, MP, Treasury minister, is not a tax avoider. Having been revealed by the Independent on Sunday as the beneficiary of a multi-million-pound offshore trust, Mr Robinson and two cabinet ministers stated authoritatively that all was in order. The arrangement with the Guernsey based trust did not involve any tax avoidance. Mr Alistair Darling, Chief Secretary, said that Mr Robinson had done what ministers with shares had done in the past and "put them into a blind trust".

It is easy to be dazzled and confused by such manoeuvres. Let us examine them for what they are. The question is why rich people such as Mr Robinson have trusts and put their assets into them. After all, to do so reduces, at least marginally, your freedom of action. Is not Earl Spencer claiming in the divorce court that his family's wealth is all locked up in trusts and therefore cannot be touched? And in terms of lawyers' fees and trustees' remuneration, trusts are costly to set up and maintain. One reason is to disguise the ownership of assets. Another is to minimise or avoid the inheritance tax which would otherwise be payable by the beneficiaries of your will; nowadays trusts are much less useful than formerly in avoiding income tax and capital gains tax. Here, then, is a straight question: will Mr Robinson's heirs enjoy tax advantages from his family trust in due course?

We may also ask ourselves why trusts are created offshore, in places like the Channel Islands or the Cayman Islands. The explanation is that putting a bit of distance between your assets and the Inland Revenue has its advantages. It may be, for instance, that the buying and selling of shares within the trust can be conducted without paying tax as you go along. In the United Kingdom, if I own ICI shares and sell them in order to buy BP, I shall have to pay tax on any gain in ICI even though I re-invest the proceeds in BP. Off-shore trusts can avoid that necessity. Tax becomes payable only when the beneficiary in this country receives a dividend or capital payment.

Furthermore, it is sometimes the case that tax payable becomes due rather more slowly when shares are held in offshore trusts than when they are held directly by a UK resident. Delay has a monetary value. A second question, therefore: are there tax advantages for the operation of Mr Robinson's trust as compared with owning the same assets directly?

If we cluck-cluck about Mr Robinson's offshore trust and wonder about the advantages it may confer, Mr Darling informs newspapers that the money was put into the trust by a Belgium woman living in Switzerland, so it was not a way of avoiding tax in Britain. Assets weren't taken out of the United Kingdom. Forgive me, but I think that you should always inquire into schemes which involve Belgium women living in Switzerland putting money into trusts based in the Channel Islands for beneficiaries living in Britain. Why not just send a cheque to Mr Robinson's home address or transfer the assets into his name? I can think of a possible reason why not. Because UK tax would become immediately payable on the benefit.

Equally curious is the ambiguity in Mr Robinson's statement over the weekend. On the one hand, he stated that he had never transferred capital or other assets into the trust - Mr Darling's point. That is on line 21 of his statement. He was just the fortunate beneficiary of Madame Joska Bourgeois' munificence. But then, on line 27, he also admitted that the "right" to buy pounds 9m of shares in the prosperous British company, TransTec, which he controls, had passed to the offshore trust. The minister states that capital gains tax is liable on the transaction.

When we look at the details of this particular transaction, we find a further oddity. Between Mr Robinson and the offshore trust was interposed another company owned by Mr Robinson, Stenbell. He sold his rights to Stenbell; in turn Stenbell sold them on to the offshore trust. Again there are two reasons why this complication might be thought advantageous: to disguise the ownership of assets; or to harvest a tax advantage. Was this the case?

Finally, there is the matter of the blind trust. Blind trusts are devices which place the management of your assets into the hands of trustees who do not, indeed may not, tell you what they are doing. The technique is designed to prevent conflicts of interest. Ministers say blind trust, end of argument. Actually blind trusts are not all they are cooked up to be. Ministers know that they will regain control of their assets when they leave office. We are never informed who the trustees are. For all we know they may be friends, associates, employees of the companies in which the minister has an interest, chosen because they know what to do without being told.

But whatever the merits of a blind trust, in this particular case Mr Robinson's evident conflict of interest has not been removed. The offshore trust established for the minister's family, of which he is a discretionary beneficiary, has not been included in the blind trust arrangements. This is a serious problem. Treasury ministers set the tax rules for residents of the UK who are beneficiaries of trusts, whether established overseas or not. Mr Robinson, as a Treasury minister, has a conflict of interest by virtue of being the beneficiary of a trust.

Nor can it be argued that Mr Robinson, as Paymaster General, has nothing to do with personal taxation. As it happens, this morning, Mr Robinson will present the Government's proposals for creating individual savings accounts that provide limited tax advantages for ordinary people, perhaps less generous than the Tory schemes they are designed to replace. The final question, thus, is for the Chancellor of the Exchequer: given Mr Robinson's conflict of interest, should he remove Mr Robinson from playing any role in the Treasury's management of the nation's tax system?

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Ashdown Group: Senior Accounts Assistant - Accounts Payable - St. Albans

£26000 - £28000 per annum + benefits : Ashdown Group: Senior Accounts Assistan...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Day In a Page

Read Next
 

Errors & Omissions: Outgunned by a lack of military knowledge

Guy Keleny
Ukip leader Nigel Farage in Tiny Tim’s tea shop while canvassing in Rochester this week  

General Election 2015: What on earth happened to Ukip?

Matthew Norman
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions