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Sunday, January 08, 2012

Tony Blair and the mystery of his tax bill

Key figures in Labour and the Trade Unions have been much exercised over the last 18 months in arguing that the best alternative to cuts in public spending is to close loopholes in the tax system so that the filthy rich are forced to pay their share. Putting aside the problems with enforcing this across international boundaries (it can be done but not to anybody's satisfaction), I tend to agree with them. That after all is why the UK Coalition is seeking to do just that.

Yesterday's Telegraph came up with a prime example of how legally organising your company's accounts so as to take account of unspecified costs can minimise a person's tax bill. The filthy rich person concerned is of course former Labour Prime Minister, Tony Blair.

The paper says that official accounts show a company set up by Mr Blair to manage his business affairs paid just £315,000 in tax last year on an income of more than £12 million. In that time, he employed 26 staff and paid them total wages of almost £2.3 million:

The accounts provide the strongest evidence yet of the huge sums generated by Mr Blair through his various activities since quitting Downing Street in June 2007.

He runs a business consultancy – Tony Blair Associates – which has deals with the governments of Kuwait and Kazakhstan among others and is a paid adviser to JP Morgan, an American investment bank, and to Zurich International, a global insurance company based in Switzerland. Mr Blair makes a further £100,000 a time from speeches and lectures while also presiding over a number of charities including a faith foundation.

Mr Blair has previously been criticised for cashing in on contacts made in Downing Street and these accounts will likely add to those concerns.

The documents also reveal that in the two years until March 31 last year, Mr Blair’s management company had a total turnover of more than £20 million and paid tax of about £470,000.

The Telegraph says that there is no suggestion that Mr Blair’s tax affairs are anything other than legitimate. The low tax bill is apparently because around £8 million of income has been classed as administration expenses and offset against the former Prime Minister's liabilities.

Still, it must be interesting to be on the other side of the argument over tax.
The law should be changed so that unspecified expenses are only allowed above a very low threshold such as 0.1% of turnover
I note you're treading carefully there, Peter!

Of course, the fact that the entire British political set-up is corrupt and undemocratic is entirely another matter.

How long before Clegg abolishes the House of Lords?... 2112 maybe?
I won't hold my breath.
There is no factual evidence that the £8million was not taxed due to it actually being consumed in administrative expenses. What is evident is that this income does not get paid as revenue (funnelling] from the limited partnership into the corporate entities Windrush and Firerush. A 'spokesman' says "the accounts did not relate to any of Mr Blair’s charitable activities". A strange statement. It's the first time I've ever heard of a politician not gaining public adulation for donations of large sums to charities. There is another possible explanation : That the partnership is building a balance sheet by means of property acquisition. Sound financial advise would usually suggest maximum administrative expenses be incurred by the corporate entities to reduce liability corporation tax, but any surplus cash assets in the partnership be invested in property, to offset inflation. That would indeed be a revelation. This appears to be a fishing exercise by the Daily Telegraph. Which reminds me, there's some strange tropical fish been caught off the Gower this year. My accountant tells me they are usually found in the Bahamas.
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