Posts Tagged ‘Austin Mitchell’

From Private Eye: Lord Rothermere’s Non-Dom Tax Scam

January 27, 2015

Ferne House

Ferne House: Lord Rothermere’s home, except when it comes to paying tax

In my last post, I reblogged Tom Pride’s article demanding that on Holocaust memorial day, Lord Rothermere should apologise for his newspaper’s shameful anti-Semitic past. The Daily Mail was notoriously the newspaper that shouted ‘Hurrah for the Blackshirts’ in praise of Oswald Mosley’s stormtroopers in the British Union of Fascists. It also ran articles demanding an end to Jewish immigration, and even praising Hitler himself.

The Rothermere’s tradition of extreme right-wing views and demonization of the poorest and most victimised members of society continues today, with its constant campaigns and vilification against asylum seekers, immigrants, the unemployed and the disabled. As Mr Pride and Johnny Void have documented on their blogs, the Daily Mail has even stooped so low as to claim those reduced to using food banks aren’t really starving, but are simply scroungers.

Not only is this factually wrong, it is a piece of astonishing hypocrisy coming from the multi-millionaire Lord Rothermere. Rothermere is not only stinking rich himself, but Private Eye also revealed in 2009 that he was claiming non-dom status in order to avoid paying tax on his stately home, Ferne House. The story was in their issue for 6th – 19th March, and ran:

At Home with Lord Rothermere
Our Top Tax Man and the Non-Dom Press Baron

If an Englishman’s home is his castle, a sprawling neo-Palladian pile in the rolling Wiltshire countryside might be expected to bring with it full British tax status for the lord of the manor. But not, it seems, when the Englishman in question is an immensely wealthy and powerful press baron who enjoys the protection of the country’s top taxman.

Back in 1999 the young chairman of the Daily Mail and General Trust, the 4th Viscount Rothermere, aka Jonathan Harmsworth, bought a 220-acre estate called Ferne Park as home for his family, then comprising wife Claudia and two children under six.

By 2001 a new Ferne House had been built in the grounds to a £40m design by renowned Palladian-style architect Quinlan Terry. As the latest generation of the Rothermore dynasty expanded to four children by 2004, the Harmsworths had outgrown Terry’s first effort and in August 2006, local council records show, obtained planning permission for “new east and west wings”.

Despite a reported personal fortune of around £800m, Viscount Rothermere turned to his bankers for loans. Last month, under a regulatory amnesty following the well-publicised failure of Carphone Warehouse boss and Tory backer David Ross to declare his use of shares as security for personal loans, Rothermere came clean on his own similar arrangements. It emerged that in December 2006 he had pledged 8m DMGT shares he owned through a trust and DMGT’s Bermudan parent company Rothermere Continuation Ltd. At the time these were worth more than £50m, though DMGT’s announcement of the arrangement stated that this greatly exceeded the value of the loans. It was, however, “small when compared to the Viscount Rothermere’s net worth”.

Borrowing money rather using some of his offshore wealth had one clear benefit for Rothermere, an advantage he owed to his famous father Vere Harmsworth, the 3rd Viscount Rothermere. By living as a tax exile in Paris for most of his life, the 3rd Viscount had become “non-domiciled” for British tax purposes. And just like his hereditary title, this status passed – as a “domicile of origin” – Jonathan when he was born in 1967. A DMGT spokesman would only say the 4th Viscount’s domicile status was “a private matter”.

The principal tax break for a “non-dom” is that overseas income is only taxable when “remitted” to Britain. For Jonathan Harmsworth this has proved immensely valuable, as the hundreds of millions of pounds in DMGT dividends channelled over the years through Bermudan-registered Rothermere Continuation Ltd into trust of which he and his family are beneficiaries have magically become overseas income. Had this money been brought into the UK to pay for the new home in Wiltshire, it would have been taxable; the loan from the bank, on the other hand, would not.

But being a “non-dom” should not be so easy. The archaic status, used in British tax law since the Napoleonic wars, has to be sustained throughout a non-dom’s life by an overriding commitment to another country. This must be demonstrated by such choices as the location of the family home, upbringing of children and a person’s intended final resting place. As Harmsworth looks to have made a permanent family seat on the Wiltshire-Dorset borders, and he and his wife have reportedly become leading figures on the county scene, his non-dom status looks precarious to say the least.

These developments, coup0led with a strong court of appeal win for HM Revenue and Customs on a domicile case last year, proving the importance of where a person is committed to live with his family, unsurprisingly prompted an official re-think of the viscount’s status. Inspectors were busy investigating his media empire anyway, under “Project Mersey”, after the group had earnest itself a place on HMRC’s “high risk corporates” list by undertaking a number of tax avoidance schemes.

According to sources close to the review, the decision of HMRC’s Special Civil Investigation’s section was to launch a full-scale inquiry with a view to withdrawing Harmsworth’s non-dom status, if necessary through the courts. Late last year the plan was approved by HMRC’s solicitors and a high-level strategy board comprising the directors of the department’s Large Business Service, its Anti-Avoidance Group and its central policy unit.

But then the investigation was blocked by HMRC deputy chairman Dave Hartnett, who regularly steps into tax investigations and boasted to a parliamentary committee a year ago of his “board-to-board” engagement with big business.

When Austin Mitchell MP then asked Hartnett “Do [large companies] get a better deal when you get involved?” Hartnett responded “I sincerely hope not.” Viscount Rothermere appears to have got superior treatment, though, as Hartnett pressured HMRC officials to find a “technical” reason for not pursuing the investigation.

Why the HMRC boss should be so keen to let Viscount Rothermere off the hook, saving him several millions of pounds in tax annually, at the expense of the little people, remains a mystery. There is no evidence that the Mail’s political clout – or its editor and director Paul Dacre’s close relationship with Gordon Brown – played a part. Nor is there any indication that the connection between DGMT and HMRC director-general Melanie Dawes, whose remit covers the Large Business Service, had any bearing on the decision. Dawes, a career Treasury civil servant said by some to have been drafted into HMRC to keep an eye on the taxmen, just happens to be married to Benedict Brogan, who until last month was political editor of the Daily Mail.

PS: The Eye and others have long pointed ot the numbers of non-dom Labour party friends and donors in seeking to explain the government’s failure to scrap a tax break it once vehemently opposed (last year it settled on a pin-prick £30k annual charge for non-dom status). Perhaps we should have been looking elsewhere in the political forest too.

In other words, there were strong personal and professional links between Brown, senior treasury officials and Daily Mail, so it’s no surprise whatever Rothermere got away with his scam. It’s another example of the suspicious cronyism, which so effectively discredited the last vestiges of New Labour with Brown’s government.

As for Rothermere, I’m not just astonished at the man’s brazen hypocrisy in falsely claiming non-dom status for himself while his organ lambasts the indigent poor for scrounging. I’m also amazed at the way this government closed, or planned to close, one of rights of immigrants working in the UK. The government decided that they wanted to stop welfare payments going from immigrant workers in this country to support their children or dependents in their countries of origin. I can see little difference between an immigrant doing this, and Rothermere falsely claiming to be resident in France, so he can buy a family home here in Britain. If anything, Rothermere’s scam is worse, if only because he is well able to pay for the house himself many times over already. The immigrant workers’ dependents, however, are likely to be poor people in a poor country, and so have far more of a genuine need for the money.

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