Tax Avoidance
The Times reports on what appears to be terrible hypocrisy on the part of Margaret Hodge who has used her position as head of the public accounts committee in the House of Commons to attack tax avoidance.
Yet she claims not to have understood the nature of company shares held in the tax haven of Liechtenstein even though she was a major beneficiary.
Amazing and yet another example of double standards and political hypocrisy from someone who should know better.
By Harry Wilson - The Times
Labour’s fiercest critic of tax avoidance and “secretive” offshore funds has received more than £1.5 million in shares from the tax haven of Liechtenstein. The money came through a controversial scheme that lets wealthy Britons move undeclared assets back to the UK without facing criminal action.
Margaret Hodge, who made her name taking on tax avoiders as head of the public accounts committee, was among the beneficiaries in 2011 of the winding-up of a Liechtenstein trust that held shares in the private steel-trading business set up by her father.
The Times has discovered that just under 96,000 Stemcor shares handed to Ms Hodge in 2011 came from the tiny principality, which is renowned for low tax rates. Three quarters of the shares in the family’s Liechtenstein trust had previously been held in Panama, which Ms Hodge described last month as “one of the most secretive jurisdictions” with “the least protection anywhere in the world against money laundering”.
The veteran Labour MP was accused of sheer hypocrisy. She has repeatedly attacked big businesses and bankers who used offshore arrangements, but has not declared that she benefited from an offshore trust.
Ms Hodge’s Stemcor shares were transferred onshore using the Liechtenstein Disclosure Facility (LDF), a tax deal signed between Britain and the principality to allow thousands of wealthy individuals to move billions of pounds back to Britain in return for paying the tax owed and a penalty.
The LDF was established in 2009 to encourage people with undeclared income or unpaid taxes to repatriate their assets from Liechtenstein by offering favourable terms. Tax liabilities under the scheme need be declared back to only 1999, rather than the standard 20-year period. Users must pay the back taxes due, plus interest for the period, but the penalty is set at 10 per cent of the sum owed, rather than 100 per cent, and there is no threat of criminal prosecution.
Last month the public accounts committee, led by Ms Hodge, raised doubts over the LDF. The MPs questioned whether it “struck the right balance between prosecuting tax evaders and allowing them to settle their affairs”.
A report by the committee said: “We are concerned that the current system still causes the odds to be stacked in favour of tax evaders using offshore accounts when the worst that will happen if they are caught is that they will pay the tax they owe and a fine.”
Nigel Mills, the Conservative candidate for Amber Valley, said last night: “To criticise that disclosure process while using it yourself appears hypocritical. Any reader of the committee’s report would want to know that someone involved in preparing it had used [the process] themselves. It would seem there are questions to answer here.”
As chairwoman of the committee, Ms Hodge attacked Stuart Gulliver, the chief executive of HSBC, last month for paying millions of pounds in bonuses through a Panamanian company.
“Indeed, you did take advantage of one of the most secretive jurisdictions, Panama, which the OECD [Organisation for Economic Co-operation and Development] has said has the least protection anywhere in the world against money laundering,” she said. “You could have set up an account in a north of England building society if you had wanted secrecy. You didn’t have to have this intricate system.”
However, evidence uncovered by this newspaper shows that the majority of the shares awarded to Ms Hodge and her relatives four years ago had once been held in Panama.
Using publicly available documents filed at Companies House by Stemcor, and advice from tax experts, The Times established that Ms Hodge and her four siblings were the beneficiaries of the Link Steel Foundation (LSF), a Liechtenstein-based company that in 2011 disbursed nearly 480,000 shares in Stemcor, then worth about £7.7 million.
Stemcor’s shareholder register shows that three quarters of LSF’s shares were transferred from Manselle Co SA, a Panamanian-registered company, between 1994 and 1995. It is not clear who set up Manselle and why its assets were moved to Liechtenstein. Ms Hodge would not comment.
She has always declared her holding of Stemcor shares — equal to about 10 per cent of the company, if trusts are included — in the parliamentary register of members’ financial interests but has made no public statement about the use of offshore vehicles or the Liechtenstein Disclosure Facility.
Philip Davies, the Conservative candidate for Shipley, said: “It is the sheer hypocrisy that we have become used to from Labour politicians.”
Ms Hodge, Labour’s candidate for Barking and Dagenham in east London, said that she had “no role in setting it [LSF] up or running it, and was not a beneficiary of the foundation until 2011, when the shares were brought onshore via the Liechtenstein Disclosure Facility, ending the structure my relatives created. At that point I then inherited additional UK shares in Stemcor. I was of course aware of this transfer and the increase in my shareholding.
“As a shareholder I have on a number of occasions sought and received assurances from the executive that the company always paid the appropriate tax. All I could do as a shareholder in a company not run by me, and over which I had no influence or control, was to ensure that any shares I held were above board and that I paid all relevant taxes in full. Every time I received any benefit from the company this happened.”
Ms Hodge said the LSF had been set up in 1970 by her “extended family: Jewish refugees who fled Austria and Germany for France and the United States”. Her immediate family, including her German-born father, moved from Cairo to Britain in 1948.
Dividends paid by Stemcor from 1995 until the Link Steel Foundation was wound up in 2011 would have totalled £1,418,166.56, of which Ms Hodge’s share would have been £283,633.31. A tax expert consulted by The Times said that in the 1990s it was common for dividend income to be paid offshore, in some cases to an account in another jurisdiction — to minimise tax. It is not known whether this was the case with Ms Hodge’s family foundation. From 1995-2011 dividend tax amounted to about 25 per cent in Britain.
Labour chief given £1.5m shares from tax haven
Margaret Hodge has made her name taking on tax avoiders as head of the public accounts committee - Ben Gurr/The Times
Margaret Hodge has made her name taking on tax avoiders as head of the public accounts committee - Ben Gurr/The Times
By Harry Wilson - The Times
Labour’s fiercest critic of tax avoidance and “secretive” offshore funds has received more than £1.5 million in shares from the tax haven of Liechtenstein. The money came through a controversial scheme that lets wealthy Britons move undeclared assets back to the UK without facing criminal action.
Margaret Hodge, who made her name taking on tax avoiders as head of the public accounts committee, was among the beneficiaries in 2011 of the winding-up of a Liechtenstein trust that held shares in the private steel-trading business set up by her father.
The Times has discovered that just under 96,000 Stemcor shares handed to Ms Hodge in 2011 came from the tiny principality, which is renowned for low tax rates. Three quarters of the shares in the family’s Liechtenstein trust had previously been held in Panama, which Ms Hodge described last month as “one of the most secretive jurisdictions” with “the least protection anywhere in the world against money laundering”.
The veteran Labour MP was accused of sheer hypocrisy. She has repeatedly attacked big businesses and bankers who used offshore arrangements, but has not declared that she benefited from an offshore trust.
Ms Hodge’s Stemcor shares were transferred onshore using the Liechtenstein Disclosure Facility (LDF), a tax deal signed between Britain and the principality to allow thousands of wealthy individuals to move billions of pounds back to Britain in return for paying the tax owed and a penalty.
The LDF was established in 2009 to encourage people with undeclared income or unpaid taxes to repatriate their assets from Liechtenstein by offering favourable terms. Tax liabilities under the scheme need be declared back to only 1999, rather than the standard 20-year period. Users must pay the back taxes due, plus interest for the period, but the penalty is set at 10 per cent of the sum owed, rather than 100 per cent, and there is no threat of criminal prosecution.
Last month the public accounts committee, led by Ms Hodge, raised doubts over the LDF. The MPs questioned whether it “struck the right balance between prosecuting tax evaders and allowing them to settle their affairs”.
A report by the committee said: “We are concerned that the current system still causes the odds to be stacked in favour of tax evaders using offshore accounts when the worst that will happen if they are caught is that they will pay the tax they owe and a fine.”
Nigel Mills, the Conservative candidate for Amber Valley, said last night: “To criticise that disclosure process while using it yourself appears hypocritical. Any reader of the committee’s report would want to know that someone involved in preparing it had used [the process] themselves. It would seem there are questions to answer here.”
As chairwoman of the committee, Ms Hodge attacked Stuart Gulliver, the chief executive of HSBC, last month for paying millions of pounds in bonuses through a Panamanian company.
“Indeed, you did take advantage of one of the most secretive jurisdictions, Panama, which the OECD [Organisation for Economic Co-operation and Development] has said has the least protection anywhere in the world against money laundering,” she said. “You could have set up an account in a north of England building society if you had wanted secrecy. You didn’t have to have this intricate system.”
However, evidence uncovered by this newspaper shows that the majority of the shares awarded to Ms Hodge and her relatives four years ago had once been held in Panama.
Using publicly available documents filed at Companies House by Stemcor, and advice from tax experts, The Times established that Ms Hodge and her four siblings were the beneficiaries of the Link Steel Foundation (LSF), a Liechtenstein-based company that in 2011 disbursed nearly 480,000 shares in Stemcor, then worth about £7.7 million.
Stemcor’s shareholder register shows that three quarters of LSF’s shares were transferred from Manselle Co SA, a Panamanian-registered company, between 1994 and 1995. It is not clear who set up Manselle and why its assets were moved to Liechtenstein. Ms Hodge would not comment.
She has always declared her holding of Stemcor shares — equal to about 10 per cent of the company, if trusts are included — in the parliamentary register of members’ financial interests but has made no public statement about the use of offshore vehicles or the Liechtenstein Disclosure Facility.
Philip Davies, the Conservative candidate for Shipley, said: “It is the sheer hypocrisy that we have become used to from Labour politicians.”
Ms Hodge, Labour’s candidate for Barking and Dagenham in east London, said that she had “no role in setting it [LSF] up or running it, and was not a beneficiary of the foundation until 2011, when the shares were brought onshore via the Liechtenstein Disclosure Facility, ending the structure my relatives created. At that point I then inherited additional UK shares in Stemcor. I was of course aware of this transfer and the increase in my shareholding.
“As a shareholder I have on a number of occasions sought and received assurances from the executive that the company always paid the appropriate tax. All I could do as a shareholder in a company not run by me, and over which I had no influence or control, was to ensure that any shares I held were above board and that I paid all relevant taxes in full. Every time I received any benefit from the company this happened.”
Ms Hodge said the LSF had been set up in 1970 by her “extended family: Jewish refugees who fled Austria and Germany for France and the United States”. Her immediate family, including her German-born father, moved from Cairo to Britain in 1948.
Dividends paid by Stemcor from 1995 until the Link Steel Foundation was wound up in 2011 would have totalled £1,418,166.56, of which Ms Hodge’s share would have been £283,633.31. A tax expert consulted by The Times said that in the 1990s it was common for dividend income to be paid offshore, in some cases to an account in another jurisdiction — to minimise tax. It is not known whether this was the case with Ms Hodge’s family foundation. From 1995-2011 dividend tax amounted to about 25 per cent in Britain.
