Revealed: Rishi Sunak ‘listed in tax haven as trust beneficiary’ while chancellor

As Akshata Murty bows to pressure to pay UK taxes because they are not compatible with her husband’s role as Chancellor of the Exchequer, new allegations emerge about him being a beneficiary of tax havens.

Are taxes only for the little people? – Owl

Anna Isaac www.independent.co.uk

Rishi Sunak has been listed as a beneficiary of tax haven trusts while setting taxes in the UK as chancellor of the exchequer, according to documents seen by The Independent.

Trusts in the British Virgin Islands and Cayman Islands, created to help manage the tax and business affairs of his wife Akshata Murty’s family interests, note Mr Sunak as a beneficiary in 2020, according to people familiar with Ms Murty’s financial affairs and evidence reviewed by this publication. Mr Sunak became chancellor in February that year, and had previously been chief secretary to the Treasury since 2019.

Documents seen by The Independent show trusts linked to Ms Murty, her family and companies linked to their businesses. In a number of them, Mr Sunak was listed as a beneficiary.

Pat McFadden, Labour’s shadow chief Treasury secretary, said Mr Sunak being listed as a beneficiary of tax haven trusts is “extremely serious” and called for answers.

He said: “We need urgent answers from the chancellor as to why he has been linked to a tax haven. We need full transparency about this and the other stories about the chancellor emerging over the past 24 hours.”

Questions about Mr Sunak’s financial arrangements have come to the fore since The Independent revealed on Wednesday that Ms Murty had non-dom status, meaning she is not obligated to pay UK tax on foreign earnings. Sources also claim that Ms Murty, whose family business is worth £3.5bn, had created a trust which would perpetuate some of these benefits of non-dom status beyond the 15-year limit.

In a U-turn on Friday, Ms Murty announced she will now pay UK taxes on all her worldwide income, saying she did not want her financial arrangements to be a “distraction” for her husband in his role as chancellor.

A spokesperson for Mr Sunak said they “did not recognise” the claims on use of tax havens, while a spokesperson for Ms Murty declined to comment. They previously claimed that she was a non-dom as a result of being an Indian citizen, though experts pointed out that use of the tax status was her choice.

On Friday, Mr Sunak admitted he had also held a US green card while living in Downing Street. Green card holders must pay tax in America and declare their intention to make the US their permanent home.

A spokesperson for the chancellor said he had used his green card for travel purposes until October 2021 on his first US trip in a government capacity, at which point he returned it after discussion with authorities. They added: “Rishi Sunak followed all guidance and continued to file US tax returns, but specifically as a non-resident, in full compliance with the law. All laws and rules have been followed and full taxes have been paid where required in the duration he held his green card.”

Last year she collected dividends of £11.5m from her estimated £700m stake in Infosys, the IT firm set up by her father, potentially saving around £4.5m in UK taxes through her non-dom status. She has previously stated that she “has always and will continue to pay UK taxes on all her UK income”.

It comes as Mr Sunak’s popularity with voters has sunk to an all-time low, according to polls, as increases in inflation and national insurance contributions (NICs), as well as energy bills, spark a cost-of-living crisis. Mr Sunak’s spring statement last month was criticised for not doing enough to help the worst off.

Sir Keir Starmer has accused Mr Sunak was guilty of “breathtaking hypocrisy” for raising taxes while his wife benefits from non-dom status. The Labour party, the Lib Dems and the SNP have all urged the chancellor to give further details of their financial affairs, and the extent to which he may benefit personally.

While the Treasury has said that Mr Sunak declared his wife’s tax status when he became a minister in 2018 and again when he joined the department, officials told The Independent they had not been informed, and felt “uncomfortable” about the implications. The Treasury and Cabinet Office did not respond to requests for comment concerning Mr Sunak’s alleged beneficiary status in the British Virgin or Cayman islands trusts.

Tax havens have no – or minimal – taxes on companies and other corporate structures and entities. They also often offer a high degree of financial secrecy often when companies are registered there, or trusts are created as beneficiaries of companies within their jurisdiction. Their use by British residents is entirely legal.

Ms Murty may be making use of a loophole left after the tightening of non-dom status by then chancellor George Osborne in 2015. By creating a trust as a non-dom, that entity can continue to have non-dom status even if its beneficiaries are no longer able to choose to use the option for tax benefits. The rules allowing this were brought into effect on 6 April 2017, and there is no suggestion of legal wrongdoing in this or her use of non-dom status.

Johnson’s energy policy: picking the losers

Johnson’s political cowardice applies the brake to cheap energy as he bets nuclear 

Nils Pratley www.theguardian.com 

The two main criticisms of the government’s new energy security strategy are fair. The tiptoeing around onshore wind, which got gentle words of encouragement but no change to planning regulations, looks a case of political cowardice. It is perverse to apply a handbrake to “one of the cheapest forms of renewable power”, to use the government’s own description, when public opinion is broadly supportive of turbines on land. Objections from Tory backbenchers should have been ignored.

Equally, the lack of new measures on energy efficiency is bizarre since every serious body, from the International Energy Agency to our own National Infrastructure Commission, has been banging the drum for ages. “A gradual transition following the grain of behaviour” translates as a win for the cold hand of the Treasury.

There were two clear positives in the mix, it should be said. First, the target for more offshore wind is genuinely ambitious. A fivefold increase in capacity to 50 gigawatts by the end of the decade is a significant upgrade on the previous aim of 40GW. The target may even be achievable given the current rate of progress. And from the perspective of energy security – the focus of this policy, don’t forget – offshore’s bigger turbines and higher load factors are always going to score well versus onshore.

Second, solar was given a boost with the aim (though not a target, note) to increase capacity fivefold by 2035. It is illogical that the government seems more willing to flex planning rules for solar than for wind, but solar is the quiet success story of the renewables revolution. It has outpaced every cost projection over the past decade. Expansion looks the easiest to deliver.

Then, though, one comes to the meat of the plan. The big bet on nuclear is, to put it mildly, hopeful. The government is trying to replace current capacity that will largely go offline by 2050 and also double nuclear’s share of electricity supply versus today’s position. The plan strains credibility. Up to eight new reactors – call it four new two-reactor plants the size of Hinkley Point C – is an enormous undertaking.

The best that can be said is that it is possible to imagine how events could, possibly, run favourably. Hinkley could arrive within its revised timetable without further cost hiccups. Sizewell C in Suffolk, the next plant on the block, could attract the desired rush of private-sector investors under a new financing model that would allow the juice to be priced within the £60-£70 a megawatt hour range of political acceptability. And success in financing Sizewell could breed confidence and get the show rolling.

There are, though, a lot of assumptions in that list. The biggest unknown is whether the government is prepared to back the EPR design – the one used at Hinkley and set for Sizewell – for all the new plants. Logic says it should because mixing and matching designs is a recipe for higher costs and surprises, a point stressed by the energy analyst Peter Atherton. The productivity gain in constructing Hinkley’s second reactor, for example, is said to be 15%. In a complex process, replicating one design has demonstrable value.

The government is not, though, at the stage where it can have sufficient confidence to back EPRs wholeheartedly and mean it. Talk of “leading the world” in nuclear construction should therefore be filed under “believe it when you see it”. You have to know what you plan to build to make such boasts. There is an alarming nuclear-sized question mark at the heart of this strategy.

Seve Bell’s cartoon comment:

The Economist noted: Copy, paste,repeat

(It’s supposed to provide benefits)

Owl notes that the only EPR nuclear reactors generating any power yet are the ones built by the Chinese in China, operating commercially from 2018 and 2019.

The construction of the Olkiluoto 3 power station in Finland commenced in August 2005. It is late and over budget. Olkiluoto 3 achieved first criticality in December 2021. Grid connection has just taken place with regular generation finally expected in July.

Construction of the French EPR at Flamanville started in December 2007 is also late and over budget. After many problems, including the late discovery of welding issues, the revised schedule fuel loading is to take place in mid 2023. 

At Hinkley Point C, final government approval was given in September 2016 and, after the (now usual) set of cost increases and delays, has an expected operational start date of June 2026. In the light of Olkiluoto and Flamanville this still looks optimistic to Owl

See https://en.wikipedia.org/wiki/EPR_(nuclear_reactor)

Canada proposes foreign buyers home real estate ban

Canadian Prime Minister Justin Trudeau has proposed a two-year ban on some foreigners buying homes.

www.bbc.co.uk

The measure comes as the country grapples with some of the worst housing affordability issues in the world.

Prices have jumped more than 20%, pushing the average home in Canada to nearly C$817,000 ($650,000; £495,000) – more than nine times household income.

But industry analysts say it’s not clear a ban on foreign buyers will address the problem.

Data on purchases by foreign buyers in Canada is limited, but research suggests they amount for a small fraction of the market.

“I don’t think it’s going to have a huge impact,” said Ben Myers, president of advisory firm Bullpenn Research & Consulting in Toronto, who found foreigners accounted for just 1% of purchases in 2020, down from 9% in 2015 and 2016.

“It’s a fairly low number and let’s face it, the people that really want to buy … are going to find alternative ways to do it.”

Mr Myers said the soaring housing costs reflect strong population growth and a shortage of supply, due in part to rules that restrict development.

The issues have worsened since the pandemic hit in 2020, when policymakers in Canada and elsewhere slashed interest rates to stabilise the economy, lowering borrowing costs and boosting demand even further.

The moves have fuelled the soaring housing prices seen in many markets around the world, but in Canada the disconnect between home prices and incomes is one of the most dramatic, according to OECD data.

Campaign promise

Mr Trudeau pledged to tackle housing affordability during his campaign for election last year.

In addition to the temporary ban on foreign buyers, the budget proposal his government unveiled on Thursday sets aside billions to spur new construction and proposes new programmes, such as a tax-free savings account for first-time buyers.

Mr Trudeau has also discussed banning certain bidding processes that favour investors, who by some measures have accounted for about one in five homes purchased in Canada since 2014.

The proposed ban on foreign buyers would exempt permanent residents and foreign students and workers, as well as those buying their primary residence.

The proposal builds on actions such as special taxes that some parts of Canada have already taken against out-of-town and foreign buyers.

In Ontario, for example, provincial Premier Doug Ford recently announced plans to raise an existing tax on foreign buyers from 15% to 20% and expand it beyond Toronto to the entire province.

While foreign purchases are not the driver of the affordability issues, taxing them at least captures revenue that can be re-deployed to address such problems, said Steve Pomeroy, head of Focus Consulting, a housing policy firm.

“If you ban them, you don’t really have much of an impact on suppressing rising home prices and you give up the revenue,” he said.

New Zealand introduced a similar measure banning foreign buyers in 2018.

“It’s good politics because it’s easy to blame a victim that nobody cares about,” Mr Pomeroy added. “I don’t think it will have much of an impact.”

Paul Kershaw, professor at the University of British Columbia and founder of Generation Squeeze, also said he saw little in Mr Trudeau’s proposal likely to slow price increases or significantly address affordability.

“It’s not clear the housing measures will be sufficient to break Canada’s addiction to high and rising home prices,” he said, noting that for existing homeowners, the high prices help amass wealth.

Mr Pomeroy said he does expect price appreciation to slow in coming months, as the central bank raises interest rates. The Canadian housing market is particularly susceptible to such moves, since many buyers rely on five-year mortgages rather than the long-term ones common in the US and UK.

But higher interest rates will only make it less affordable for prospective buyers trying to break into the market, he warned.

Mr Myers said over the long-term, he expects hot markets such as Toronto and Vancouver to become dominated by renters, as regular buyers get priced out of the market, unless politicians address supply.

But Mr Pomeroy said high development costs means that adding supply will not necessarily reduce prices, unless the additions are dramatic.

“Unless you’ve got born into the right family … the prospects for young buyers are quite dim,” he said.

Budleigh makes Sunday Times best places list

(This year the judges decided not to include Cornwall, in recognition of the problems caused in the county’s housing market by incomers buying second homes.) 

Pity they didn’t extend that to Devon as well. – Owl

Dan Wilkins www.exmouthjournal.co.uk

People of Budleigh Salterton already knew they lived in an idyllic part of East Devon, but now the whole country knows it. 

The seaside town best known for its pebbly beach and independent shops has been named in The Sunday Times Best Places to Live 2022, released today (Friday, April 8) and is one of the top 10 locations in the South West. 

A rather dull Sunday morning with very little sun but somehow Budleigh Beach is still just as beautiful. I just wish I had taken some money with me so that I could have bought some of the freshly caught fish straight off the beach! According to the judges, ‘unspoilt’ Budleigh is ‘no longer a sleepy retirement town’ and has become a ‘hotspot’ for young families, ‘lured by Colyton Grammar, one of the best schools in the Southwest’, as well as a ‘truly lovely’ beach. 

Judges also said the town’s literary and music festivals give Budleigh ‘intellectual bonus points’. 

The town has grown by 6 per cent since 2020 and for those looking to re-locate to Budleigh, the average house price is currently £445,000 – according to data supplied to The Times by Halifax. 

The national newspaper’s expert judges assessed a wide range of factors, from schools, transport and broadband to culture, green spaces and the health of the high street. 

The judges looked to celebrate improving towns, villages or city centres, attractive, well-designed homes and locations ‘bursting with community spirit’. 

Other South West locations named in the list include Bridport and Sherborne in Dorset, Bristol, Charlton Kings in Gloucestershire, Ashburton, Stroud and Wellow. Chalke Valley in Wiltshire was named top in the South West. 

Helen Davies, The Times and Sunday Times property editor, said: “The Sunday Times Best Places to Live list is necessarily subjective.  

“Leave it just to statistics and you will never capture the spirit of a place. For that, you need to visit to take into account that ‘you have to be here’ feeling. Is the pub dog-friendly, for example? Can you live car-free? What are the schools and houses like? Is it multicultural and multigenerational, and can it offer a good way of life to lots of different sorts of people?” 

To view The Sunday Times Best Places to Live 2022, visit https://www.thetimes.co.uk/best-places-to-live    

Midas collapse set to leave £60m of debts unpaid

Exeter-based construction giant is in administration and assets are only likely to pay for small fraction of money owed, a new report reveals

William Telford www.devonlive.com

The fallout from the collapse of South West construction giant Midas is even worse than initially thought with more than £60m of debts now unlikely to be paid including £4.5m owed to its own employees. New figures from administrators reveal nearly £70m is being claimed by creditors with more than 1,500 of them likely to receive no cash.

Reports from global business advisory firm Teneo Financial Advisory Ltd show the two main companies in the Midas family – Midas Group Ltd and Midas Construction Ltd – have realisable assets of just £8,354,644. But when preferential and secured creditors are paid it means there will be a predicted shortfall of £60,290,904 for the hundreds of small firms and individuals in the supply chain.

This includes £4,578,369 owed to 300 Midas workers who were made redundant when the companies went bust. That’s an average of about £15,000 each. Although headquartered in Exeter, Midas was involved in huge construction projects across the South West and companies owed cash include several in Plymouth.

Midas Group Ltd and its subsidiaries Midas Construction Ltd, Midas Retail Ltd, Mi-Space (UK) Ltd, Mi-Space Property Services Ltd, Midas Commercial Developments Ltd and Falmouth Developments Ltd all fell into administration in January 2022 blaming a toxic cocktail of Covid, inflation, money owed to them but not paid, and cash flow problems for causing a financial doomsday.

Administrators at Teneo Financial Advisory Ltd have now revealed Midas Group Ltd owned two office blocks, in Newton Abbot, in Devon, and Newport, in Wales, which are expected to sell for £1m and £1.3m. But when preferential creditors have been paid it leaves just £844,169.

Once some secondary preferential claims are settled it will mean an estimated deficiency for creditors of £9,015,966. A list of those owed money shows 61 employees are claiming £1,407,669 of that sum.

But the vast majority of the Midas debt is with its commercial construction arm Midas Construction Ltd. A report by Teneo shows £7,329,500 is likely to be clawed back from customers who owed the firm money. But this is a fraction of the £48,560,404 it was owed when it went belly up, and included the £36,902,858 value of work in progress when Midas fell into administration.

Once preferential and secondary preferential creditors and floating charge holders have been paid it leaves a mere £3,394,786 for unsecured creditors. But £51,274,938 is owed to more than 1,500 of these creditors meaning there will be a shortfall of £47,880,152. The list of creditors shows Midas 239 employees are owed £3,170,700 of that sum.