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Dodgeville: tax games of the filthy rich who demand we face cuts

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The Tories are slashing jobs and services everywhere, claiming there’s no money. But the incredible tax-dodging of Britain’s billionaires shows that there’s plenty of wealth. Tom Walker unravels the complex legal dodges that the bosses commonly use to
Issue 2233

Philip Green is one of Britain’s richest men. He has an estimated fortune of more than £4 billion. Green runs the Arcadia Group, which includes more than 2,500 branches of the clothes shops Topshop, Topman, Dorothy Perkins, Burton, Miss Selfridge and others, as well as the department store BHS.

The Arcadia group made £280 million in profits this year—10 percent more than last year.

Green celebrates his wealth with a custom-made, solid gold Monopoly set. His wife, Tina, bought it for him for his 50th birthday. Each space on the board is inscribed with the name of something he owns.

So how much tax does Green pay on his mega-profits? None. Zip. Nada.

That’s why protesters have been invading his stores chanting “pay your taxes”—and as the cuts start to bite, targeting the tax-dodging rich is getting more popular by the day.

Green’s tax avoidance dates back to 2005, when the Topshop tycoon trousered the biggest paycheque in British corporate history: £1.2 billion.

“Forget the scale of the number,” Green said at the time, calling the payout “very conservative”. So small was it, in fact, that he couldn’t spare any of it to pay tax, and he used a series of legal complex manoeuvres to make sure he didn’t (see right).

The fashion magnate himself lives in London, in the £4,000-a-night Dorchester Hotel, and runs his businesses in Britain. He is not a “non-dom”.

He doesn’t need to be: his wife Tina, the ultimate “owner” of his empire, has lived in the parasites’ playground of Monte Carlo since 1998, where she perfectly legally doesn’t pay a penny in income tax.

Most weekends, Green hops into his £27 million private jet and pops over to see his offshore other half—and his yacht (see right).

Perhaps this might explain why Green keeps a scale model of his Gulfstream jet in his office at Arcadia. (It doesn’t explain, though, the photo of Gordon Gekko, the greed-obsessed character from the 1987 film Wall Street, on the wall.)

At his shops, workers call him the “Green Monster”. The press, on the other hand, call him “Sir”—he was knighted in 2006 for “services to the retail industry”.

And how have the Tories dealt with this shameless super-rich tax avoider? They made Green a government adviser on the spending cuts, signing him up to do a review of Whitehall “waste”.

“No one knows more about cost cutting than me,” Green boasted. Presumably he means cutting costs for other people. Just the week before his appointment, he was living it up at the Billionaire Club on Sardinia’s swanky Emerald Coast. He also has a taste for £5 million toga parties.

The 33-page document that Green’s review produced is full of nitpicking about the cost of civil service workers’ paper, ink, coffee and phone calls.

But what it doesn’t say, of course, is that it could all have been paid for a thousand times over at a stroke—if only bosses like Philip Green had been made to pay their tax.

How did Philip Green avoid paying tax on £1.2 billion?

In 2005 Green awarded a £1.2 billion “dividend” payment to Arcadia’s shareholders—basically himself and his family.

To pay for it, the Arcadia Group took out a loan. This allowed the company to pay less corporation tax because it could offset its “loan interest” against its profits.

Then Arcadia funnelled the dosh to its parent company, Taveta Investments Ltd, which was registered at an address behind London’s Oxford Street.

Taveta Investments Ltd in Britain is owned by Taveta Ltd.

Taveta Ltd’s office is on a back street in St Helier, Jersey.

In 2004, at least, Taveta’s shares were in turn owned by two entities:

CI Law Trustees and CI Law Nominees.

Both are also based in the St Helier offices—at 8 Duhamel Place. In 2004 a Guardian journalist found a list of more than 300 company names that were also “based” there pinned to a noticeboard.

From this point on, Jersey law does not require the companies to say who ultimately benefits from any payouts they make.

But somehow, in 2005, the cash still made its way into Tina’s bank account in Monaco. Green’s tax exile wife, it turned out, is the ultimate “owner” of his empire.

The yacht wot he’s got

Philip Green’s yacht, Lionheart, is worth £20 million—but then it is 63 metres long.

Custom-built by yacht-maker Fratelli Benetti in 2006, with the help of top Italian yacht interior designer Stefano Natucci, it is a thing of oceanic opulence—a boat to gloat about.

Variously referred to as a “superyacht” or even “megayacht”, it accommodates

16 crew and 12 guests as it sails around the Med. Green picked out the decor himself.

And a few years later, he bought a slightly smaller companion yacht, the Lionchase—firstly to bring visitors on board the Lionheart, but also, apparently, for his children to stay in.

Don’t pay as you go

The revolt against tax avoiders was sparked when activists noticed that Vodafone had legally avoided paying a £6 billion tax bill—as much as the Tories slashed from benefits in their spending review.

All of a sudden, the choice was stark: cut incapacity benefits for 500,000 people, or give a massive tax break to the biggest mobile phone company in the world.

Vodafone did a deal with the taxman that meant it did not pay around £6 billion that would have been due in tax after it profited from buying a German engineering firm.

The company stashed its cash away in Luxemburg and Switzerland. HM Revenue and Customs (HMRC) refused to agree the deal, believing it could get the cash back.

But then HMRC boss Dave Harnett intervened.

“We are sometimes too black and white about the law,” Harnett has told the Financial Times, summing up his attitude.

He replaced the team that had been working on the Vodafone case with a new one—and set them to work negotiating with Vodafone.

By some coincidence, though, the firm’s head of tax, John Connors, was a senior official at HMRC until recently and a close former colleague of Harnett’s.

The new team agreed that Vodafone could pay just £1.2 billion to settle the bill.

And it’s all completely legal. Whenever Vodafone is accused of “tax dodging”, both the firm and the government point out that there is no unpaid tax bill—but that’s only because HMRC wrote it off!

The government has produced a “corporate tax roadmap”, together with the Treasury’s “business forum on tax and competitiveness group”.

And who is in that group? Not only Shell, Diageo and GlaxoSmithKline (see below), but none other than the finance director of Vodafone.

The roadmap will open the floodgates for hundreds more Vodafone-style legal tax dodges. Meanwhile, we’ll be told that “there is no alternative” to massive spending cuts.

Boots, Cadbury’s… they’re all at it

Chemist chain Boots is run out of the tiny Swiss canton of Zug—a notorious “tax haven within a tax haven”. That’s saving the firm £100 million a year in tax.

The company, owned by private equity vultures, has a “headquarters” in Zug that bears quite a strong resemblance to a post office box.

Such moves are proving popular with other firms too. US multinational Kraft intends to turn Cadbury into a subsidiary of a Swiss company, potentially slashing its tax bill by hundreds of millions of pounds.

Retail giants Tesco, Amazon, HMV, WHSmith and Asda post CDs and DVDs bought online from the Channel Islands to avoid VAT.

HSBC is accused of trying to do a deal with the taxman similar to the one Vodafone did, saving £2 billion on its tax bill. Barclays bank has avoided up to £1 billion in tax using an intricate web of offshore Cayman Islands and Luxemburg companies.

Oil firm Shell and drinks giant Diageo have both “left” Britain for the low-tax Netherlands—although they haven’t actually gone anywhere.

HM Revenue and Customs investigated Diageo’s move, but the case was settled after a lengthy investigation. The exact terms of the deal are not known. What is known, though, is that when Diageo’s tax advisers got the news, they threw a champagne party.

George Osborne

Tory chancellor George Osborne has official responsibility for stopping tax avoidance.

But he’s used legal loopholes to avoid an estimated £1.6 million of his own tax.

Channel 4’s Dispatches revealed that he will benefit from a trust fund worth more than £4 million—and pay no inheritance tax on it.

Osborne loves to go on about how benefit fraudsters are “mugging taxpayers”. But he’s the real bandit.

Figure it out

£123bn—That’s tax evaded, avoided and uncollected each year, according to the PCS union and tax justice campaigners

That’s enough to:

  • pay for three million public sector jobs and
  • build 700 new schools and
  • 100 new hospitals


  • restore all the Tory-Lib Dem coalition’s cuts
  • and still have £42 billion left over


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