Earlier this month the Guardian front paged a story revealing that the City of London accounted for £11.4 million of the Conservative Party’s funding in 2009 – 10, in lurid terms we learned of the millions passed to Tory coffers by rich hedge fund managers. Guido can reveal that during that same period the Guardian Media Group’s coffers gained £39.3 million from investments in hedge funds. More than three times as much as they castigated the Tories for taking from hedgies…
GMG owns the Guardian and Observer newspapers, where journalists and columnists rail against the City, hedge funds and the short-termism of pin-striped financial traders. Documents obtained by Guido reveal that the GMG board approved investments now totalling £223.8 million in speculative funds in a range of assets. Alan Rusbridger, editor of the Guardian, sat on the board which approved the hedge fund investment plan, the board was at the time chaired by Paul Myners who also sat on the board of GLG partners, a hedge fund which is widely reported to have made big profits shorting UK banks.
The funds are traded by a number of specialist fund managers, overseen by the giant U.S. based asset manager Cambridge Associates. Cambridge Associates is a secretive, privately held firm with a client list which includes billionaires and government sovereign wealth funds. Guido has discovered that the £223.8 million is invested in emerging markets, bonds and hedge funds. The investments are principally in US Dollars and offshore from the UK.
These short-term funds are in addition to the GMG assets held in Cayman Islands domiciled corporations where the rate of corporation tax is zero. Sources suggest that GMG has between £300 million and £500 million held offshore in these opaque special purpose vehicles. Such tax haven domiciled corporate vehicles are used to shield assets from tax. Guido has discovered that one GMG controlled Caymans corporation was incorporated as recently as March 2008, a mere 5 months before the banking crisis wreaked havoc on the global economy.
So far GMG has ignored embarrassing questions posed since the winding up of the old Scott Trust. What Guido and many confused Guardian readers would like to know is how the use of these opaque investment vehicles is compatible with the public positions taken by the newspapers and even members of the board. Will Hutton for example is a former editor of the Observer who sits alongside Alan Rusbridger on the board of the Scott Trust Foundation. Is Hutton, a noted campaigner against hedge funds, comfortable with GMG having hundreds of millions in assets both offshore and invested in hedge funds? Are the perennially loss making Guardian newspaper’s columnists like Polly Toynbee happy to have their six-figure salaries paid out of the profits of hedge fund raids on the currencies of emerging market countries? Isn’t it about time the Guardian’s senior executives explained openly and honestly to its readers how it really survives despite losing money every year?
On Saturday morning The Guardian decided to give UK Uncut a front page boost. The protestors managed to shut down three dozen of the 1,720 branches of Barclays bank. Surprised they found any branches to occupy given Saturday opening hours.
The gist of the shabby story was Barclays bankers are evil tax dodgers. The evidence was a hatchet job with the paper making the spurious claim that Barclay’s only paid 1% tax on their £11.6 billion profits. In arriving at a profit before tax figure of £11.6 billion, The Guardian has added the profit from the ongoing business (£4.5 billion) to profits from a disposed business (£726 million) and the gain made on disposal of that business (£6.3 billion) to reach a total of £11.6 billion.
What they chose to ignore however was the total tax take Barclay’s had to pay; payroll taxes, bank levy, non-recoverable VAT, employers NI, SDRT and so on. Over the weekend Tim Worstall and the FCA Blog tore chunks out of the piece:
The article compares the cash paid to HMRC in respect of UK corporation tax in 2009 (£113 million) to the profits generated by the consolidated Barclays group worldwide in 2009. In the UK, tax is paid in arrears, so 2009 taxes would relate to widespread 2008 losses, not 2009 profits.
Multinational companies such as Barclays pay tax in a number of jurisdictions. Generally speaking Barclays only pays UK corporation tax on profits it generated in the UK. Anything earned outside the UK doesn’t get taxed here. So it’s a howler to compare the UK corporation tax payment to the global consolidated profit. Most of those profits were taxed where they were made.
In 2002 (under Gordon Brown, Chuka), the UK government introduced the substantial shareholdings exemption, a corporation tax exemption for UK businesses disposing of a substantial shareholding in a part of their business. The idea was that businesses should be able to restructure their businesses without having to worry about chargeable gains implications. Barclays are heavily criticised by The Guardian for using it. The last time that Guido saw this being used was by the, err, Guardian Media Group to save themselves some £60 million of taxes in 2008:
“In 2008 GMG sold half of Auto Trader publisher Trader Media Group and made an exceptional (one-off) profit of more than £300 million. No tax was payable on the return from that sale because under UK law GMG qualified for SSE”
In 2008 The Guardian made £302 million in profits and paid no corporation taxes. The CEO, Carolyn McCall, was paid an £827,000 package. Yet we don’t see the UK Uncut crowd kicking up a stink about The Guardian’s tax structures or their fat cat pay and bonuses.
Over the weekend the Guardian editor Alan Rusbridger (half-a-million a year since you asked) tweeted about Barclay’s offshore holding corporations. Guardian Media Group holds hundreds of millions in assets in a Caymans Island domiciled offshore corporation.
Guido put it to the GMG press office that GMG has £223.8 million invested in an overseas/offshore hedge fund managed by Cambridge Associates which trades currency derivatives. They don’t deny it and have declined to confirm the fund’s structure for tax purposes.
Guardian readers seem to be under the illusion that it is owned by a not-for-profit charity. The Scott Trust was wound up in October 2008 and the Guardian is a for-profit-privately-owned media business, the well paid directors of which confirm in their annual accounts that they operate tax strategies in line with their fiduciary duty to the shareholders – just like any other business.
The old Scott Trust was set up in 1936 to avoid inheritance taxes and wound up in 2008 so that GMG could cynically exploit the SSE capital gains tax shelter to pay 0% in corporation taxes on their £302 million in profits that year. GMG claim that it was about modernising the holding structure, in fact it was a disingenuous cover for corporate venality.
For three quarters of a century the The Guardian has been shirking taxes, Guido has no problem with them acting in their shareholders’ best interests. The hypocritical cant from them however about others doing the same is beyond contemptible…
The news that more than half of the council chief execs are paid more than the PM has caused a fair flurry of chatter today. It made it out on to the wires and was picked up by almost all of the news outlets. Except the BBC. A quick look over at the website and it seems large publicly funded salaries are not something they wish to talk about.
No hangover from the Black and White Ball for George Osborne, he was up bashing bankers at the break of dawn. And what a coincidence he’s up against Balls in the House today in what will no doubt be the first of many ugly brawls. However before they even face each other, Balls has won the day.
Last night Balls claimed Osborne was “all talk and no action” and as if by magic Osborne gave ground. While the extra £800 million levied on those driving growth in the City will blunt Balls’ sword today, what about next week and the week after that? Will Osborne raise a tax a week to avoid standing by his principles?
The half-point fall in GDP has serious political ramifications. If we get a second quarter of what Gordon Brown would call “negative growth” we will be in recession. Ed Balls will have been proved right and George Osborne’s credibility will be shattered. One policy change could prevent that happening. Suspend the VAT hike.
The short-term political hit of executing a u-turn versus the wrecking of the long-term mission to cut the deficit is a calculation that George Osborne won’t like to make. He is touring the studios saying that he “won’t be blown off course by bad weather”. The trouble is he is making the bad weather with this VAT hike.
The VAT hike depresses GDP growth, adds to already rampant inflation and hits the poorest hardest. If GDP in this forthcoming quarter is slightly negative, he’ll have only himself to blame. Why maintain a tax hike that suppresses the very consumer spending necessary for growth?
Guido didn’t weigh in on the minimum pricing story yesterday because if he jumped on every broken promise from Dave he would be typing till the cows came home. Instead of living up to his promise of being on the “cider” pubs (gettit?) Dave is continuing the crippling of the industry. Proponents of the hike Alcohol Concern say “duty is so low in the UK, that it will still be possible to sell very cheap alcohol and be within the law.” Something that is frankly nonsense given booze duty is up 26% in the last two years. The British Beer and Pub Association are quick to hit back. Just look at the how much tax Brits pay on their drink compared to their neighbours:
It’s not much better here in Ireland, guess Guido will have to stay in France more often…
In what is a bid to soothe ruffled LibDem feathers, rather than in response to the looter’s protest, the government has just announced a new clamp down on tax avoidance. Guido mentioned at the weekend how quiet the left were about the Guardian’s tax avoidance in contrast to their attitude to Philip Green. There hasn’t been a squeak from the likes of left-wing millionaire Richard Murphy, a Rowntree and TUC funded, self-styled “fair tax” expert. But then he did give the Guardian Media Group accounts his seal of approval, after GMG made a £302 million profit in 2008 and paid not a penny in corporation tax.
Murphy, of the Toynbee school of hypocrisy, seemingly wears his principles on his sleeve and argues for anti-avoidance measures and crucially that the philosophy behind tax collection should be judged by the spirit not the letter of the law. However has Murphy always practised what he preached?
Before he discovered the cause of “Tax Justice” between 2001 and 2003 he wrote technical articles for The Guardian advising how to minimise tax on employing a nanny, how to minimise tax for the self employed, maximise your tax allowance through taking out a stakeholder pension and attacking legislation which requires accountants to report tax evasion. On second reading Murphy’s recent line that he was just highlighting the holes doesn’t really wash, especially when his own tax practises are examined. Although Murphy puts his home address on all his business literature – it is the registered address for all his companies – he does not pay business rates on the property. Not quite within the spirit of the law now is it…
In February 2009 Guido’s co-conspirators held a tax justice demo outside the Guardian’s spanking new HQ. Shouting “Scott Was a Tax Evader” and “GMG Fat Cats Pay No Tax”. We didn’t manage to get any support from multi-millionaire, three home-owning, anti-poverty campaigner Polly Toynbee. We would have dragged her out if we could…
The Guardian Media Group is one of the shrewdest corporate avoiders of tax in Britain, in 2008 it made a £300 million profit and yet managed to pay no corporation tax, the following year in 2009 it still paid no corporation tax, it uses the offshore Caymans tax haven to own assets, it uses tax efficient trusts and deploys all manner of perfectly legal tax shelter strategies to avoid paying tax. Polly seems silent about this tax dodging…
Philip Green is a sharp businessman who turned round the Arcadia chain when they were closing shops and made them profitable. He turned Top Shop from a fading also ran into an international brand with cheap chic credibility. In doing all that he secured thousands of high street jobs, boosted profitability and made a billion.
He bought Arcadia via an offshore company, perfectly legally and paid that famous billion pound dividend perfectly legally. He did it the way he did it because this country punishes entrepreneurs and risk takers with capital gains taxes on top of income taxes. Double taxing those who create and produce.
Arcadia pays hundreds of millions in taxes every year, VAT, carbon taxes, stamp duty, business rates, National Insurance, employee’s income taxes and the myriad of other taxes that penalise enterprise and entrepreneurs. That isn’t enough for the type of parasites and political activists the great novelist Ayn Rand correctly identified as “looters”.
The looters are killing this country because, in their humanitarian noble-minded, public-spirited contempt for entrepreneurs, they forget how much they rely on entrepreneurs. With each new restrictive regulation designed to enhance equality and “justice” they make it harder for the remaining entrepreneurs to create the Vodafone-supplied iPhones from which they tweet their bleatings about “fighting the cuts”. Self-styled “Anarchists” calling for higher taxes to fund a bigger state are no anarchists.
Philip Green deserves his billions, he is a self made man who left school at fifteen, worked hard, took risks, clearly enjoys himself and defends his just rewards from the rapacious grasp of the tax man. If only we had one hundred more Philip Greens…
Fraser Nelson: Put Your Money on Ed Miliband to Win | Guardian
Guido Fawkes is Too Aggressive | The Times
Ditch Tobacco Plain Packaging | Grassroots Conservatives
What Farage, Boris and Rob Ford Have in Common | William Walter
Labour Spell New Adviser’s Name Wrong | ITV
Dave Stung by Jellyfish | Sun
City Minister’s Inheritance Tax Dodging Trusts | Indy
What I Would Have Done if I was Sarah Wollaston | Iain Dale
Boris is an Epic Europhile | Louise Mensch
Warsi Got PM to Confront “Secular Fundamentalism” | Fraser Nelson
Guardian April Fools Apology | Press Gazette
Rod Liddle on the loony UN sexism special rapporteur:
“There is more sexism in Britain than in any other country in the world, according to a mad woman who has been sent here by the United Nations.
Rashida Manjoo is a part-time professor of law at Cape Town University in the totally non-sexist country of South Africa (otherwise known as Rape Capital Of The World).
Mrs Magoo has been wandering around with her notebook and is appalled by the sexist “boys’ club” culture here, apparently.
I don’t doubt we still have sexism in the UK. But is it worse than in, say, Saudi Arabia, d’you think, honey-lamb? Or about 175 other countries? Get a grip, you doolally old bat.”