[A-List] UK corporate state: tax shelters

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

Private Eye

No. 1049, 8-21 March 2002

In the Back: Havens Above

Getting information from the Inland Revenue is always a tough business,
but the Eye has had special problems trying to probe the growing links
between the Revenue and the big accountants and banks whose main job is
to avoid paying taxes and rip off the Revenue.

A request on 11 February for a list of "secondees" from private industry
to the Revenue brought an answer on 19 February: a list of 13 secondees,
mostly from professional tax avoiders like KPMG, PriceWaterhouseCoopers
and Ernst & Young. Further questions extracted the fact that most were
members of an advisory group that no longer exists.

So the Eye tried again and at last got a list of real names of six
secondees from big business. They are: Susan Wallis from Boots and
Earlette Blake from BT, who are now working in the Revenue's human
resources section; Lucy Chadwick and Tom Ground from Accenture (once
Andersen Consulting) and now part of the Revenue's "quality public
services team"; David Evans from KPMG, now working in the Revenue's
"business tax" section; and Peter Mainds from Barclays Bank, now in the
Revenue's enforcement office.

There are certain oddities in the lists. For instance, the first answer
from the Revenue listed only one secondee from Accenture; the second
lists two. Nor is there any mention of Anthony Davis, who has just
joined the Revenue on a fixed appointment for a year fresh from the most
artful of all tax avoiders, Ernst & Young.

Mr Davis now works in the business tax section, whose staff have been
instructed to act as "champions for business" and where he will have to
keep well clear of the recent warnings to tax inspectors to watch out
for at least two schemes for blatant tax avoidance masterminded by, er,
Ernst & Young.

Barclays Bank, which nurtured Peter Mainds, is also well known in the
Revenue for its tricky avoidance schemes. As for KPMG, which produced
David Evans, it was commissioned in 1999 by the government to produce an
"independent" report on regulation in British dependencies in the
Caribbean. The report drew loud acclaim from government ministers
Melanie Johnson (Commons) and Baroness Scotland (Lords). But the warmest
tribute came from the chief minister of the British Virgin Islands, the
Hon Ralph O'Neal, who proclaimed that his government "welcomes this
comprehensive report".

Implementing the (very mild) recommended regulations, he said, was
"integral to the BVI's commitment to being in the top echelon of
offshore financial services". The same sort of gushing praise was heaped
on the KPMG report from the governments of the Cayman Islands, the Turks
and Caicos Islands and Montserrat. In all these places there was
widespread relief that the British government, thanks to KPMG, would not
embark on any of the reckless attacks on tax havens that some Labour
enthusiasts had threatened.

A few months later, the confidence of the British government and its
supporters in Caribbean tax havens was reinforced by the sale of £1bn
of British tax offices to a company whose parent (audited, inevitably,
by Arthur Andersen) is registered in the British Virgin Islands (see
last Eye).

Despite the sale, however, and the praise from KPMG, the British Virgin
Islands are still branded as harmful by the Organisation for Economic
Cooperation and Development (OECD), of which Britain is a member. In
November 2001 it published a list of 35 tax havens regarded as an
international menace. Eleven of these have since made some commitment to
make their tax regimes more transparent. The OECD's deadline for such
commitments was 28 February. Among territories that have not met the
deadline are the British Virgin Islands.


Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney@xxxxxx