Unpaid tax at rest in the water

With all of Covid and Brexit swishing around it is still interesting to see what else is making the news. I see the British owner of a high street discount retailer is in trouble for tax avoidance. A few years ago they sold some of the shares in their company and then took the £235 million profit without seeing the need to pay any British tax.

Instead, they took advice from one of the Big Four tax avoidance specialists - a well-known and reputable sounding firm. For suitably agreeable fees, the tax advisory firm suggested that the owner relocate to Monaco.

Pass the luxury yacht catalogue.

Oh well, it turns out that the advice given might have been unsuitable because the owner of the company could not stay in his house in Liverpool for 2-3 days a week without HMRC noticing.

He did buy the yacht though and a whopping big one it is too. Not as big as 'Sir' Philip Green's yacht (the so-named 'Lionheart' aka 'BHS Destroyer'), but large, nonetheless. Notice the money-loading-bay at the back of Lionheart pictured below:

Alas, the poor tax-avoiding mite has to pay the full whack on the profit from the £235m sale now. It's apparently some £84 million in taxes - which seems to be at a surprisingly low rate of 35%. I'd have expected it to be more like 45% or £105 million. Of course, he's decided to sue the tax advisors for the £135 million which is what it amounts to after interest charges and so on.

But then, it is difficult to get the staff these days. I notice that the same Big Four accounting firm was featured in a Financial Reporting Council warning of an “unsatisfactory” deterioration in inspection results for audits of FTSE 350 clients over the past year, after only two out of three of the audits scrutinised met the watchdog’s standard of needing 'only limited improvement'.

The watchdog’s sharpest criticism was reserved for the auditor of that cake shop, when a multimillion-pound black hole was discovered in the accounts last year. The cake shop went bust, but I expect the accountants got their fees.

Cake and eat it?