• Continued from last week
We were then treated to a giant screen video of Mr Nick Parker, President of The Institute of Chartered Accountants in England and Wales [ICEAW]. His deposition was on taxes.
“With utmost sense of responsibility, our Institute is compelled to warn against the imminent crackdown by Her Majesty’s Revenue & Customs [HMRC] on off-shore trusts. It will hit workers including cleaners, teachers and nurses who have been misled into using these schemes which are technically deemed as “disguised remuneration” by HMRC whereby the employer contributes to an offshore trust, instead of paying remuneration directly to the employee.
Thereafter, the trust would pay the money to the employee in the form of loans (usually interest-free) on terms which effectively meant that they would never be repaid during the employee’s lifetime. As we have explained on our institute’s website, workers would be severely hit if and when taxes are imposed on transactions some of which go as far back as twenty years ago.
This is little sympathy for those people who adopted disguised remuneration to avoid (evade) tax and national insurance contributions and knew exactly what they were doing. However, others do not deserve heavy penalties as they may not have understood the schemes or had a choice if they wanted the work.
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In Britain, workers such as nurses, teachers, information technology workers and cleaners were often paid earnings at around the national minimum wage with the balance being paid through loan arrangements. They may have been uneasy about receiving loans rather than pay but assumed that employers were acting within the law. HMRC should have acted far sooner against the schemes. It is beyond doubt that employees and contractors in disguised remuneration loan schemes were avoiding tax. We urge HMRC to adopt a sympathetic and flexible approach that would allow people extended time to pay their tax bills. The exchequer’s need to recover tax lost needs to be balanced with legitimate expectations.”
Actually, it was former Chancellor of the Exchequer, George Osborne ( who is now the Editor of “Evening Standard”, a free newspaper) and a fierce critic of Prime Minister Theresa May whom he has labelled as “Dead Woman Walking” who announced the (tax) charge in his 2016 Budget and expected to raise £1 Billion from employers, companies and individuals.
In its very measured response, HMRC insisted:
“Our policy measures ensure that those who have used disguised remuneration tax avoidance schemes pay their fair share of tax and national insurance. We accept 95 per cent of Time To Pay requests covering accelerated payments. Any taxpayer who thinks they will have problems paying tax bills should talk to us. We have an outstanding record for supporting those with genuine financial difficulties.
In July this year, the Supreme Court ruled in favour of Her Majesty’s Revenue & Customs after a long-running dispute over offshore trusts used by Rangers Football Club in a case that would have wide-ranging implications for similar tax avoidance schemes.” The credit for the video was rightly awarded to Vanessa Houlder.
Straight after the coffee-break, Donald Trump was back on centre stage:
“It is not true that I hate everybody but there are times when you have to fight for what you believe and make things better. Neither is it true that I only like people who are like me; or that I am only comfortable with billionaires. I have just had a terrific meeting with Rudd who is my long-time friend and confidant. He is my genuine friend.
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That he is a very successful businessman is an entirely separate matter.”
What Trump chose to brush off is that he is not only the wealthiest President of the United States of America ever but his cabinet is saturated with billionaires like Wilbur Ross, the U.S. Commerce Secretary who is worth $2.5 billion; Carl Ichan, Trump’s Special Advisor on Financial Regulation worth $16 billion; Steve Schwarzman who is the Chairman of Trump’s Strategic & Policy Forum who has a net worth of $11.8 billion; Stephen Feinberg, Trump’s Unofficial Intelligence Advisor who is worth $1.2 billion; Co-chairmen of Trump’s Infrastructure Committee – Richard LeFrak and Steven Roth who are worth $6.5 billion and $1.1 billion respectively.
Donald Trump took the XKPMG partners completely by surprise when he insisted that since we had all listened to the Institute of Chartered Accountants in England and Wales, Mr Nick Parker, there are other matters which should be of grave concern to us. As if on cue, the front page of “The Financial Times” of 15th September 2017 popped up on the screen with the bold headline:
“KPMG AXES SOUTH AFRICA EXECUTIVES AS GUPTA ROCKS PROFESSIONAL SERVICES”
“The South African scandal engulfing President Jacob Zuma and the billionaire Gupta family spread deeper into the global professional services sector yesterday when eight senior executives were dismissed from KPMG’s division in the country.
The biggest political scandal to face South Africa since the apartheid era has already triggered the collapse of PR firm Bell Pottinger and forced McKinsey, the consultancy firm, to launch an investigation into its work in the country.
Public outrage about the Guptas’ role in South African politics intensified in June when leaked emails fuelled fears the family was exploiting its friendship with Mr Zuma to win state contracts and manipulate political appointments. The family and Mr Zuma deny the allegations. The KPMG departures came after an internal investigation found the firm had missed red flags in its auditing of companies owned by the Gupta family. The auditor said on Friday that KPMG South Africa had received warnings “regarding the integrity and ethics of the Guptas” that were not acted upon, and which should have led to it cutting ties with the family sooner.
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KPMG audited companies linked to the Guptas for 15 years but ended its relationship with them in March 2016, as the political scandal over the family’s links to Mr Zuma deepened.
Trevor Hoole, the KPMG South Africa chief executive who left yesterday, admitted last month that the group “should have stopped working for the Gupta companies sooner than we did”.
KPMG has become central to the Gupta scandal since the leaked emails showed its South African office allowed a Gupta-owned company, Linkway Trading, to treat spending on a Gupta family wedding as a business expense.
Opposition parties and activists, who have accused Mr Zuma of running a state system riddled with corruption and cronyism, have turned their focus on global companies tainted by the scandal.
Save South Africa, a civil society group has accused KPMG and Bell Pottinger of playing a “central role in facilitating state capture”. It has urged KPMG and McKinsey clients to drop the firms.
KPMG has denied that it “was involved in, or condoned, any alleged money laundering activities” connected to Gupta-owned companies or facilitating offshore tax evasion.”
J.K. Randle
