New defence minister in tax loophole scandal

#1
So, if £30million is "offshore" or "out-of-area" then it does not incur tax. If Armed Forces personnel are "out-of-area" or "offshore" then they do incur tax. Is the Drayson example an indicator that service personnel will no longer be taxed on deployment?!? Or is it another fat cat crony minister displaying the expected virtues of greed and duplicity?

On a serious note, did Drayson have any insider knowledge that, in the City, would lead to prosecution?

From the Sunday Times:

http://www.timesonline.co.uk/article/0,,2087-1613094,00.html

Minister put millions in tax haven
Robert Winnett

A multi-millionaire businessman who became a Labour minister last week has admitted holding part of his personal fortune in an offshore tax haven that experts say could have helped him avoid £3m in tax.
Lord Drayson, the new defence minister, established offshore trusts and companies in the Isle of Man that handled £30m he raised from the sale of his pharmaceuticals business. Experts say such arrangements are normally set up to avoid tax.

His actions, disclosed after inquiries by The Sunday Times, will embarrass the government, which has repeatedly sought to stop wealthy Britons avoiding tax by moving fortunes offshore.

He closed his offshore companies on March 8 this year — the week before Gordon Brown, the chancellor, introduced new laws to restrict British residents’ use of tax havens.

Last week financial experts said a scheme such as Drayson’s could have saved millions in tax. His decision to put the companies into liquidation in March is described as “immaculate timing”.

Yesterday, Drayson admitted holding “financial interests” offshore but said he brought his money back to Britain in the autumn.

Following an approach by The Sunday Times, his spokesman distributed a statement to left-leaning newspapers about the offshore trusts in the hope of diluting the political fallout for Labour.

Drayson was made a Labour peer by Tony Blair in May last year before being promoted to the defence team in last week’s reshuffle.

He has been a prominent Labour supporter since 2001 and has donated more than £1.1m to the party.

The chancellor is known to take a dim view of wealthy individuals who employ leading accountants to devise sophisticated tax avoidance schemes.

The issue has become particularly sensitive because the middle classes have been hit by a series of tax rises — including a clampdown on schemes to avoid inheritance tax on family homes — to pay for Labour’s spending on public services.

The Sunday Times can disclose that Drayson set up two offshore trusts — named Ventana and Amalfi — for him and his wife in 1997 shortly before PowderJect, the company he co-founded, was floated on the stock market.

Each trust, registered in Douglas, the capital of the Isle of Man, held 2.825m shares in PowderJect. Six months later the Draysons formed two offshore companies, Vardale and Sherdley, which were owned by the two trusts.

In 2003, PowderJect was bought by an American company that paid the Draysons’ offshore companies more than £30m for their shares. The money was sent to the Isle of Man, beyond the grasp of the UK Inland Revenue.

Financial experts estimate that such an arrangement could have helped the Draysons to avoid at least £3m in capital-gains tax on the sale of the shares. There may also have been inheritance tax benefits.

They could also have added to their fortune, tax free, by investing in shares, property and boats via offshore trusts and companies.
Mike Warburton of accountants Grant Thornton said: “Although I cannot comment on the Draysons’ circumstances, this type of offshore scheme was used to minimise British tax bills. However, the chancellor blocked this loophole in his March budget.”

Labour was hit by a scandal in 1998 after it emerged that Geoffrey Robinson, then a Labour Treasury minister, benefited from an offshore trust.

Drayson’s offshore links are the latest problem to beset his political career. He first rose to public prominence in 2002 for winning the contract to supply a smallpox vaccine to the government shortly after donating money to the Labour party.

The government has refused to release the minutes of a private meeting held between Drayson and the prime minister before the contract was awarded.

It has led to questions as to whether Drayson had any inside knowledge or influence.

However, he and the government were cleared of any wrongdoing by the National Audit Office and a parliamentary committee that investigated the matter.

Last year, Drayson was ennobled by Blair and donated £500,000 to the Labour party within weeks. He gave a further £500,000 last December and was appointed minister for defence procurement in last week’s reshuffle.

Yesterday a spokesman for Drayson said: “When Lord Drayson was an active businessman, some of his and his family’s financial interests were held in trusts offshore.

“However, since entering public life Lord Drayson took steps to ensure the trusts came onshore and would be taxed accordingly.

“This move was completed last autumn. As a minister he abides by the ministerial code.”
 
#3
Quote:
Last year, Drayson was ennobled by Blair and donated £500,000 to the Labour party within weeks. He gave a further £500,000 last December and was appointed minister for defence procurement in last week’s reshuffle.
Does 'conflict of interest', or buying ones appointment come into question here.

How does BLiar present this appointment as 'the best man for the job'?

Who else has bought their appointment?
CORRUPTION!
 
#4
what will gordon have to say about it? :wink:

The chancellor is known to take a dim view of wealthy individuals who employ leading accountants to devise sophisticated tax avoidance schemes.
 
#5
A terrible example of "do as I say, not as I do". Complete corruption and yet I suspect it will disappear from the national memory the same way as all the other examples of sharp practice that this government has carried out.

BLiar and his cohorts are doing a pretty good impression of a dictatorship. Only thing missing is a funny salute.
 

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