Publication targets the super-rich who avoid paying £25bn taxes each year
The TUC has today published Kerching! – a spoof celebrity-gossip style magazine – to embarrass the government into acting against the celebrity tax dodgers who are only paying a fraction of the tax they should be.
With tax avoidance by companies and the super-rich costing the public purse an estimated £25 billion a year, Kerching! A Celebrity Guide to Tax Dodging lists the ten most popular ways which celebrities and corporations regularly employ to get around tax rules, including the use of offshore trusts, an over-enthusiastic use of Gift Aid and an extensive use of tax havens like the Bahamas, Mauritius and Panama.
The eight-page glossy also features ten steps the Chancellor could take this autumn to make tackling tax avoidance a key government priority, bring much-needed funds into the public coffers and help tackle the deficit.
Kerching! is calling on everyone, from low-paid cleaners and carers to celebrities who do pay their fair share of tax, to sign the TUC petition urging George Osborne to shut down the UK’s tax loopholes here.
Amongst the top ten tax-avoiding tips outlined in Kerching! for celebrities wanting to hide their dosh are:
- Income that should be liable for tax in the UK can be put into an offshore company or trust in a tax haven like Liechtenstein. This income is then lent back to the tax-avoiding celebrity, who pays a small amount of interest but never actually settles the ‘loan’ in full. This way the superstar celebrity gets to stay living and working in the UK, but avoids paying tax on most of their income.
- Celebrity sports stars can avoid paying tax on income made from the use of their image rights. The money they receive for the use of these photos goes into companies the sports celebs own, and as a result they pay significantly less tax than they would have done had they been paid for the use of the images as part of their salary.
- Super-rich husbands or civil partners can abuse the tax system by making sure that income they themselves should be paying tax upon is paid to their wife or civil partner.
Kerching! says that the domicile rule is the tax dodger’s best friend. This allows super-rich individuals to live here, but by claiming the UK is not their natural home, place most of their income offshore.
The UK’s tax residency rules are also much used by celebs, says Kerching! Anyone spending less than 90 days a year in the UK can claim to be a non-resident, and because the definition of a day for tax purposes is open to interpretation, top earners can be in the UK for up to four days a week, 40 weeks a year, and still avoid the tax man.
TUC general secretary Brendan Barber said: “The overwhelming majority of people in the UK have little choice over the amount of tax they pay and unlike big corporations and super-rich celebrities don’t have the means to employ expensive accountants to help them avoid paying their fair share of tax.
“Each year billions of pounds which the super-rich should be paying in tax leaves the country and is lost to the public purse. Meanwhile the government’s insistence that rapid spending cuts are the only way to reduce the deficit, no matter what effect austerity is having upon the UK economy, means that it is ordinary families who are suffering, while those most able to afford to pay more get away virtually scot-free.
“The Chancellor has said he finds tax avoidance morally repugnant – so do we and that’s why we want him to act. Closing down the multiple loopholes which super-rich celebrities and their accountants jump through on a regular basis could make a huge difference to our public finances and take the pressure off the little people who are bearing the brunt of the government’s austerity measures.”
The ten simple steps the TUC’s Kerching! says the government could take to crack down on tax avoidance include:
- The introduction of a new tax law – a general anti-avoidance principle – which would treat all tax avoidance as unacceptable, and which would be much stronger than the current change ministers are proposing.
- A halt to the current round of job cuts at HM Revenue & Customs so that there are enough staff and resources available to tackle the widespread degree of tax avoidance in the UK
- Abolishing the domicile rule, putting the UK’s tax residence rules on a statutory basis, and reforming tax relief on charitable donations to stop abuse and ease the administrative burden on charities.
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