Monday, 9 February 2015

Buddy Can You Spare A Beneficial Trust?

So there is a huge fuss about the HSBC bank and its ability to save its clients a great deal of money by moving it to offshore accounts allied to imaginative financial arrangements. One of the stranger aspects to this is politicians whose families for some time have benefited from such deals down the decades are doing much of the yelping.

What took them all so long?  It must be around thirty years ago that I was tottering from pub to pub in the City of London with persons working and active in that very field.  As they plied me with food and drink, who was I to complain?  It was not only politicians, singers, actors and the like but also media people in the BBC.

As is happened, my funds and finances were nowhere near enough to make such arrangements, the socialising was only personal and in any case my own tax avoiding had been the ordinary ones then widely in use.  These were mortgage, car purchase, using cash and ensuring things went on the expenses claims.

For those with real money there was nothing new about it then.  It had been going on for some time.  It is difficult to fix any precise date.  One factor was that when many small locations of Empire were granted independence there were problems of employment and finance.  If we did not want all their entire populations to arrive in South London jobs needed to be created.

In essence it was a marriage made, if not in heaven, then certainly not in the hell in the highly taxed UK of the 60's and 70's.  As some places close to home were already in the game, the Isle of Man and the Channel Islands, in the name of equality etc. why not these little places in the Caribbean etc.?

Monaco and Switzerland were all very well for certain kinds of elite but there was a kind of special frisson attached to the romantic or such places where tourism sat well with money moving and tax avoiding.  Films were made on the back of some very profitable money movements.

It was government and the politicians and their allies who enabled the tax havens and it was a kind of open secret amongst the top people that if you wanted to keep or make money grow you sent it somewhere else.  And went it did, in large sums.

But that was a different world, with only primitive IT systems and a lot of paper work etc. etc.  Now we are in a very different world in terms of globalised finance and with incredible powerful systems.  What may have been for the few then in avoiding tax is for the many now and routine for any entity of any size.  It is a kind of new democracy.

Forty or fifty years ago we opened the stable doors and let the horses who pulled the tax carts bolt.  They are now over the hills and far away and are not coming back.  But as a result of all our profligate spending and borrowing we need the loot.  The trouble is that as all the big boys are into moving money to low tax locations they prefer the government to look elsewhere.

One way governments have been trying to stay popular and keep the money flowing has been by extensive tinkering and tax fiddling and subsidies in the property market.  A striking example of this was the Care Act of 2014 which shifts costs onto the tax payer while enabling fortunes for owners, much of which will be destined for tax avoiding schemes in the fullness of time.

For all the false indication and promises that something will be done it is my view that it is already too late.  One simple reason for that is that the power of modern IT will always be ahead of them.  It takes time to make new laws and longer to implement them.  In that time the trace will disappear.

As the politicians thrash around looking for ways to raise some real money as the books are already so over cooked they could be about to burn.  There are things they cannot do because of the EU and other restraints.  The area where there is money to be had is the very area they do not want to touch.

It is property.  If they can persuade the tax avoiders and evaders to come home because all will be forgiven they might get away with it.  But I doubt if they can and some very nasty choices are in view for the post May government.

1 comment:

  1. "One of the stranger aspects to this is politicians whose families for some time have benefited from such deals down the decades are doing much of the yelping."

    They must think we don't notice, but we do.