[A-List] UK state: Mittal scandal

["Keaney Michael" <Michael.Keaney@xxxxxx>]

David Leigh is the journalist who uncovered a great deal concerning the
"Wilson plots" of MI5 and assorted other branches of the British secret
state to undermine and overthrow the governments of Harold Wilson.


Donor uses tax loophole Blair pledged to close

David Leigh and David Pallister
Tuesday February 19, 2002
The Guardian

Lakshmi Mittal, the billionaire Labour donor at the centre of the
"steelgate" affair, avoids paying UK personal tax by exploiting a legal
loophole which Labour pledged to close before being elected, the
Guardian has established.

The government has taken no action to change the law since 1997.

It has already come to light that Mr Mittal's company, LNM, which
received a letter of support from Tony Blair to help him buy a Romanian
steelworks, was not British, and does not pay British corporate taxes.

Now the Guardian has discovered that Mr Mittal himself claims what is
known as "non-domicile" status - a loophole under which rich foreigners
residing here do not pay income tax, capital gains tax or inheritance
tax on their worldwide income.

Non-domiciles only pay modest amounts of tax on income generated in the
UK itself, or actually brought into Britain. Mr Mittal has saved himself
millions of pounds that would otherwise have been due to the UK
exchequer.

Just as the profits of his com pany LNM are sheltered in the Caribbean
tax haven of the Dutch Antilles, so Mr Mittal's global personal assets,
estimated at £1-£2bn, are sheltered offshore.

Even his £6m house - called The Summer Palace - in Hampstead, north
London is owned by an offshore company, Leadon Ltd, set up by offshore
tax specialist Malcolm Finney, formerly with Mr Mittal's London lawyers
Nabarro Nathanson, and now a tax-avoidance consultant.

The Inland Revenue has been trying for more than 10 years to close the
loophole which has brought rich foreigners to London. They proposed
doing so in a consultation paper as long ago as 1988.

What Mr Blair will find embarrassing is that, before coming to power,
Labour accused the Tories of blocking reform in order to continue
soliciting donations in return from Greek shipowners and Indian
millionaires who retained their tax privileges.

One Labour policy document warned: "Taxation of non-residents,
non-domiciles and those with offshore accounts should be overhauled. It
is indefensible that a very wealthy few are able to live and work in
Britain with out making a fair contribution through taxation."

After winning office in 1997, Labour dropped the plan to abolish the
loophole.

David Mills, a commercial lawyer who has assisted thousands of European
non-domiciles to set up in the UK, and who advocates taxing them, says:
"No other country that I know of gives its visitor residents such
special treatment... which doesn't seem quite right, somehow,
particularly when they can well afford to make a reasonable contribution
to the cost of making Britain the nice place to live in they evidently
think it is."

For the purposes of donating, Mr Mittal is a Commonwealth citizen who
has registered to vote. Although Labour has outlawed foreign donations,
this makes him British.

But for the purposes of taxpaying, he is an Indian national, temporarily
residing in Britain. Thus he can keep all his foreign capital and income
away from British tax.

Mr Mittal's spokesman refused yesterday to say how much tax Mr Mittal
paid in the UK as a proportion of his global income. He said it was
"private".

Full article at:
http://politics.guardian.co.uk/labour/story/0,9061,652606,00.html

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney@xxxxxx