Tuesday, 8 July 2014


Jean Claude Juncker - new President of Europe.
Ex-PM of notorious tax-haven Luxembourg.


Price Waterhouse Coopers PWC were hauled over the coals yesterday by Lady Margaret Hodge, Chair of the UK Commons Accounts Committee, for lying to Parliament about mass marketing tax-schemes via Luxembourg, particularly (but we can assume not exclusively) to multinationals. Even The Guardian, courageous journal to a fault., felt obliged to repeat the tax-haven-serious-money mantra "but of course it is all perfectly legal". I repeat, for the sake of clarity, that such scheming is only legal in the laws of the tax-haven; in this case Luxembourg. The basic ploy is to pretend that £10 Billion of capital is lodged in and controlled by a Luxembourg company that in turn "lends" the dosh to associated companies in main countries, at very high rates, thus creating a wholly silly and false tax deductible invoice from Luxembourg to, say, Germany; siphoning out the taxable profits. Lady Hodge was not convinced that two hapless guys, paid minor pocket money as "Directors" in Luxembourg, actually had real control of £10 billion of multinational assets. So the siphoning invoices are a scam - dishonest - made up - silly - and NOT tax-deductible in the main countries.


9 DEC 2014.

UK Commons Account Committee and PWC tax schemes.

Thank you Diarmid for your view from inside the committee room.

Two men and a dog in Luxembourg allegedly administering $10Bn of loan capital in Luxembourg, charged via self-invoicing at ludicrously high rates of interest, to siphon taxable profits from large countries, back into Luxembourg, is as UK Committee Chair, Lady Margaret Hodge, accused PWC – simply false accounting. Such transactions break the 4 basic tests: they are not Commercial, are not at Arms Length, are not Necessary, and are for Tax Avoidance. Europe does not need new EU-trans-border BEPs agreements to claw back the tax due to the main economies. The main countries simply have to deny the self-invoicing in their tax-regions and raise tax bills, plus compound interest, plus penalties – back dated to 1980 when bent bookkeeping became fashionable under Thatcher & Reagan.

It will be interesting to see how the PWC Audit partners will treat the self-invoices. Are they prepared to conspire to attempt to justify fabricated bent bookkeeping – and risk personal criminal charges?

“The emperor has no clothes”



Subject: [Eurodad tax] RE: Live now: UK Parliamentary hearing on tax, PWC and luxleaks

I went to this meeting; the people from PWC and Shire got a monstering from bad-tempered MPs who were initially interrupting each other to ask hostile questions. They were accused of lying several times and at one point, one of the MPs threatened to put the man from Shire under oath. It did calm down a bit later on.

The most illuminating part of it, for me, was that Shire ran $10bn of intra-group loans through a Luxembourg finance company with two staff, paid 135,000 euros a year between them (and one sounded like a nominee director). Shire's finance director was asked six or seven times what the commercial purpose of this arrangement was, other than avoiding tax, and all he kept saying was that it was "efficient."

I'm not sure what will come of it, though. As the man from PWC pointed out more than once, the UK's CFC rules were designed in such a way as to encourage Luxembourg-type arrangements, with the support of all our big political parties...



Diarmid O’Sullivan
Policy Advisor, Tax Justice
ActionAid UK

Update 18th September 2014

Will honesty triumph over lies and obfuscation? 

The ICIJ report on ending the tax abuse games played by multinationals. These rules will also sweep up very wealthy individuals who hide assets in tax-havens. Repatriating all the tax-evasion-capital-flight will re-boot the world economy and create immense new productive wealth.

By Hamish Boland-Rudder | "You multinationals stand ready," the OECD's tax director Pascal Saint-Amans said at a news conference this week. "It's over."

The conference marked the launch of the first seven initiatives aimed at overhauling the international tax system, which include plans to force companies to share earnings data in all jurisdictions, and steps to eliminate abuse of tax treaties and stamp out use of tax havens. But does it really point to the end of corporate tax avoidance?

Update 9TH JULY 2014 

The Guardian names tax-haven family fortunes

The BBC & The Times blow the whistle on sports celebrities' and VIP's tax evasion

Taxing questions
The Times takes aim at a number of "top businessmen, criminals, celebrities, QCs, NHS doctors, party donors and a judge" who it claims "tried to shelter £1.2bn through one of Britain's most aggressive tax avoidance schemes". 

All were investors in the Liberty tax strategy, which was not illegal but faces an HM Revenue and Customs (HMRC) challenge against its methods, the paper says, noting that tax avoidance costs the economy "at least £5bn a year". Explaining why it believes such schemes to be "technically legal and still wrong", the paper's editorial argues: "It is unfair on fellow citizens because it imposes a higher burden on them, and it is especially unfair when avoidance schemes are available only to the wealthy."
Meanwhile, the Daily Mirror says David Beckham is among 1,300 people, including many famous names, who've been warned they might have to pay a total of £520m to the taxman after investing in Ingenious Media, which funds films. "HM Revenue and Customs believes they were a means of dodging tax rather than a legitimate investment," says the paper, although it quotes Ingenious Media describing the payment demands as "indiscriminate and unfair". The Beckhams' spokesman reportedly says the couple have "never been involved in aggressive tax avoidance schemes".  http://m.bbc.co.uk/news/blogs/the_papers

(COMMENT - The PR machine for the tax evasion industry still convinces all media and many hapless clients that such schemes are "wholly legal". But it is most unlikely that they are legal. It is most likely that they are fraudulent - and many are fraudulent-conspiracies. All legitimate profit and money transfers that are tax-deductible in the homeland country require that the transactions are (1) ARMS LENGTH (not from you, to you, by you) (2) ON NORMAL COMMERCIAL TERMS (not exaggerated contracts or values to transfer profits offshore) (3) WHOLLY NECESSARY (for the commercial enterprise) and (4) NOT TO AVOID TAX (not as single or group transactions, devised to reduce homeland taxes). 

A rule of thumb test used by accountants is "Have you been advised to hide your identity from tax collectors at any stage in the chain?" If YES, the transactions are almost certainly illegal and the scheme will fail in court. It is time that the media took some sensible tax advice from experts other than the major tax-planners who, like Arthur Andersen, are and have been criminally complicit in such schemes for 30 years, and might be jailed - as happens to American professional tax schemers. I SAY AVOIDANCE - YOU SAY EVASION )


To the Tax Justice Network - A burning question:

EU Commission President Jean-Claude Juncker will, I imagine, be most reluctant to in any way discomfort Prime Minister David Cameron, whose inherited wealth comes partly from his father's tax-haven trusts, but, if Mr Juncker could find an appropriate way of introducing a burning issue, he should in his new role, take up the question that my Member of Parliament, The Right Hon. Andrew Smith MP, was barred  from asking on the grounds of tax-payer confidentiality; "Who, in government, uses tax-havens?"

The question is aimed at all elected representatives, all civil or public servants, all special advisers, and all those in the legal system. Given the generous "sweetheart" tax deals, of billions of Euros, for major companies, approved  by ex-head of UK taxation David Hartnett; and given the number of top rank private tax-planners now serving or advising The Treasury and HMRC via revolving door placements, ordinary taxpayers have a right to know which of them, if any, have offshore assets or contracts.

In my view, Tax Evasion Capital Flight (TECF), estimated globally at $1 trillion per annum, is the largest single factor behind Europe's alleged banking, fiscal and under-investment crises and thus is causing massive youth unemployment. This vitally important question ought to extend to all governments, local, regional and national, across the European Union. Taxpayer confidentiality should not apply to any government officers or judiciary. If government officers or their families avoid taxes and export capital, why should any citizens pay tax?

Noel Hodson
It may be self-defeating to ask the longest serving Prime Minister of a prime tax-haven, Luxembourg, to help to Stop Tax Haven Abuse (read the current US Treasury analysis below) - but stranger things have happened. He does at least understand the system. 

NOTES - From Wikipedia.

Jean-Claude Juncker (French pronunciation: ​[ʒ̊ɑ̃ːkloːd ˈjʊŋ.kɐ]; born 9 December 1954) is a politician who was the Prime Minister of Luxembourg from 1995 to 2013. He was the longest-serving head of government of any European Union country, and one of the longest-serving democratically elected leaders in the world, by the time he left office.[1] He was also Luxembourg's Minister for Finances from 1989 to 2009 and the first permanent President of the Eurogroup from 2005 to 2013, his tenure encompassing the height of the European financial and sovereign debt crisis.


http://fas.org/sgp/crs/misc/R40623.pdf  -  Congressional Research Services - Jane G Gravelle, Senior Specialist in Economic Policy, USA - jgravelle@crs.loc.gov has written Tax Havens International Tax Avoidance and Evasion for the US Treasury - January 23rd 2013. Which very carefully skirts the issues of How Much and By Whom, but summarises the top 20 odd remedies that the US "Stop Tax Haven Abuse draft" recommends are enacted. (My holiday reading - read it from the back).  Jane Gravelle carefully underestimates the huge amounts involved,  as her brief is to summarise the annual tax evaded - which is in the hundreds of billions of dollars.    

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