Panama Papers

chewmylegoff

Generali wrote: »

The hedge funds I worked for were organised with a management company based in London running funds that were incorporated in a tax haven.

The reason for this had nothing to do with tax avoidance or evasion: for example the US Government has a tax form that US investors with money outside the US are meant to have sent to the IRS which we used to send accurately and on time. The reason was that when you have investors from a number of countries it is far easier to incorporate the fund in a place which doesn't charge you income or capital gains tax on the fund and then let investors sort out their own tax affairs.

I have no doubt that some didn't but I do know that many did report properly to the IRS, at least they did the investment in our fund, I can't speak for the rest of their tax affairs.

I think the fundamental problem that this all stems from is that we have a rich elite that feel that they just aren't the same as the rest of us. They don't use state schools, hospitals and welfare systems and simply don't see why they should pay into a system that they and their families are highly unlikely ever to use.

Interesting response to all this from Mr Corbyn: bring back the Empire! That'll show Johnny Foreigner what's what eh, eh!

My understanding is that the primary reason that hedge funds are organised in that way is nothing to do with tax avoidance for the clients (who as you point out are subject to local taxes on their income/gains) but more to do with (I) avoiding tax on the investment fees and (II) having the fund in a jurisdiction where the hedge fund directors will face less scrutiny if the whole thing goes bust.

Most hedge funds I have come across, which is a fair number, have a double Cayman structure - ie the fund is in Cayman and so is the maangement company. The management company then delegates investment management to a UK (or Swiss, or US) based investment manager. The 2+20% fees are paid by the fund to the Cayman manager and then the Cayman manager remits enough money to the UK investment manager to cover its costs. The hedge fund partners then divide up what is left in the Cayman manager between themselves and they are often non-Dom for UK tax purposes.

That is not what is being alleged here though but it is the main avoidance (or probably evasion really) problem (and hence the stories of hedge fund managers paying less tax than the cleaners).

However, that is not what appears to being alleged here. The Labour Party were happy enough to receive donations to fund their party fron people with tax arrangements like that an don't seem to be paying any of it back. On that basis it seems that there is more evidence that they have benefited from aggressive tax avoidance than David Cameron has personally (although of course the Tories have received donations from the same sorts).

mwpt

Moby wrote: »

That's because like Qatar, Saudi Arabia, Abu Dhabi etc it profits enormously from its migrant workers.....but so long as they keep the streets clean for johnny foreigner
http://www.theguardian.com/global-development-professionals-network/2014/apr/21/singapore-address-treatment-migrant-workers

Perhaps your efforts might have better reward if you focused your criticisms on the countries which these migrants voluntarily left, in order to move to a better life somewhere else. Or are they immune to criticism from the left wingers for some reason?

EDIT: I may have been a bit harsh above, I realise you were just responding to a post from someone else about Singapore. It's just that I moved to the UK precisely to get away from gross inequality and corruption and I'd like to see a little more focus on the reasons migrants leave originally. My perception is that it is un-PC in the UK to criticise developing nations for some reason.

vivatifosi

chewmylegoff wrote: »

The structure is accepted by governments around the world and everyone knows about it, it isn't some big secret.
None of these funds pay UK corporation tax because SHOCK HORROR they are not UK companies and they do not operate in the UK. If there is a UK based maangement company, it will pay UK corporation tax on its profits.

Part of the problem here (and possibly previous leaks) is that the assumption of many appears to be that anyone named in the Mossack Fonseca files is a bad guy, whereas the real figure may be 50%, it may be 5%. This ties in neatly to the thread on how to explain offshore banking to a five year old.

The focus should rightly be on those running a country while squirreling away its gains, or laundering the proceeds of crime, or, for example, actively evading tax through hiding money through structures in multiple tax havens. Plus in all such cases, any bankers or advisors who have knowingly enabled this.

There are two parts of this story that I'm surprised have yet to play out. The first is that there has yet to be a focus on the advisors. Yet some very respectable businesses will be party to these deals. The second is that Panama is rumoured to be where the cartels launder a lot of south American drugs money, yet that hasn't really come out yet.

Moby

mwpt wrote: »

Perhaps your efforts might have better reward if you focused your criticisms on the countries which these migrants voluntarily left, in order to move to a better life somewhere else. Or are they immune to criticism from the left wingers for some reason?

EDIT: I may have been a bit harsh above, I realise you were just responding to a post from someone else about Singapore. It's just that I moved to the UK precisely to get away from gross inequality and corruption and I'd like to see a little more focus on the reasons migrants leave originally. My perception is that it is un-PC in the UK to criticise developing nations for some reason.

Fair enough and I agree... migrants are caught between a rock and a hard place often. Places like Singapore then take advantage. I also thought the phrase ' mass chavvy benefits culture' rather offensive.

Generali

chewmylegoff wrote: »

My understanding is that the primary reason that hedge funds are organised in that way is nothing to do with tax avoidance for the clients (who as you point out are subject to local taxes on their income/gains) but more to do with (I) avoiding tax on the investment fees and (II) having the fund in a jurisdiction where the hedge fund directors will face less scrutiny if the whole thing goes bust.

Our structure, which IME is pretty normal, was that the fund was in the Cayman Islands and subject to Cayman Islands tax laws which is simple and thus cheap to administer.

OTOH the management company, which sold fund management services to the fund for 2 & 20 or 1.5 & 15 depending on the liquidity clients wanted, was based in the UK and thus was regulated by the FSA according to EU and UK law.

That way clients had a fund that didn't cost a huge amount to administer while having a management company that was properly regulated. Before anyone asks, the management company paid dues to the FSA in just the same way as if the fund was based in the UK so we weren't getting a free ride in any way.

We paid PAYE, NI, business rates etc in the normal way and employed IT people, compliance etc. Plus we bought breakfast, lunch (and all too often dinner) so created jobs, taxes and profits. We had overseas investors so were also exporters.

I should get a medal for services to socialism or something.

Moby

vivatifosi wrote: »

Part of the problem here (and possibly previous leaks) is that the assumption of many appears to be that anyone named in the Mossack Fonseca files is a bad guy, whereas the real figure may be 50%, it may be 5%. This ties in neatly to the thread on how to explain offshore banking to a five year old.

The focus should rightly be on those running a country while squirreling away its gains, or laundering the proceeds of crime, or, for example, actively evading tax through hiding money through structures in multiple tax havens. Plus in all such cases, any bankers or advisors who have knowingly enabled this.

There are two parts of this story that I'm surprised have yet to play out. The first is that there has yet to be a focus on the advisors. Yet some very respectable businesses will be party to these deals. The second is that Panama is rumoured to be where the cartels launder a lot of south American drugs money, yet that hasn't really come out yet.

Of course there are different motives between individuals regarding these issues. Some are more culpable than others but as chewmylegoff says the purpose is often: '

(I) avoiding tax on the investment fees and (II) having the fund in a jurisdiction where the hedge fund directors will face less scrutiny if the whole thing goes bust.

Is that not culpable as well? To me that is stretching moral relativism beyond the pale....especially when those taking advantage of such choices are often judging others and making policy regarding welfare benefits and taxation for those who do not have such options available to them; the very same people who believe it is correct that I have not deserved a pay rise for the last six years because I work in public services and the country can't afford it!

vivatifosi

Moby wrote: »

Of course there are different motives between individuals regarding these issues. Some are more culpable than others but as chewmylegoff says the purpose is often: ' Is that not culpable as well? To me that is stretching moral relativism beyond the pale....especially when those taking advantage of such choices are often judging others and making policy regarding welfare benefits and taxation for those who do not have such options available to them; the very same people who believe it is correct that I have not deserved a pay rise for the last six years because I work in public services and the country can't afford it!

They may well be morally or ethically questionable, but if they are legal, then what needs to be done is the law needs to be changed, rather than chasing people for using legal structures.

It strikes me that the current govt is at least trying to change things, e.g. through restricting non doms, but this will take time. I'm not a Tory, I'm a floating voter, but do find the lack of activity undertaken by the Brown govt on such matters disappointing, particularly when he was so quick to cut the 10% tax rate.

Generali

Moby wrote: »

Of course there are different motives between individuals regarding these issues. Some are more culpable than others but as chewmylegoff says the purpose is often: ' Is that not culpable as well? To me that is stretching moral relativism beyond the pale....especially when those taking advantage of such choices are often judging others and making policy regarding welfare benefits and taxation for those who do not have such options available to them; the very same people who believe it is correct that I have not deserved a pay rise for the last six years because I work in public services and the country can't afford it!

We weren't structured in the way chewy describes but of course the reason that poor people don't need to avoid tax is because by and large they don't pay it.

Moby

Generali wrote: »

We weren't structured in the way chewy describes but of course the reason that poor people don't need to avoid tax is because by and large they don't pay it.

Agreed....but there's a huge 'middle class' who feel disempowered and taken advantage of.......ie the rules apply to me but not to them.......the people Bernie Sanders and Trump are pitching at.

Double_V

antrobus wrote: »

Because it's a strategy often adopted by small poor countries as a means of transforming themselves into small rich countries.



Yes. All you need is a spare aircraft carrier and some marines.



By defintion, 'tax havens' are only of any foxin use if you're paying taxes. Which kinda lets the poor off the hook. Except fot the poor who live in the tax havens. They often do quite well out of it.



What! Is Edward Snowden wanted for questioning on another criminal charge? What's he supposedly done this time?

Or you could simply pass bills/sanctions etc whoever is the body.
Like UN intervenes and orders countries not to make this or that. Why can't they do the same.

Somebody who leaked these docs must be inspired by Snowden.