21 Jun 2013

Puzzle of Ukip leader Nigel Farage’s offshore trust

It’s all a bit of puzzle. Nigel Farage set up a family trust in the Isle of Man – the Farage Family Educational Trust. That’s not disputed. And he transferred his shares in the family metal brokers firm – Farage Ltd – to that trust. That’s not disputed either.

But then Mr Farage says that in 2004 he waived his rights to dividends from Farage Ltd in favour of his brother, Andrew. The result is that no money was transferred to the trust beyond the cost of setting it up.

Which raises the obvious question of why he bothered. Mr Farage says it was to “mitigate” the effects of inheritance tax on his children, though when I caught up with him outside his home in Bromley today, Mr Farage suggested on camera that a trust in the Isle of Man didn’t count as offshore (which it certainly does).

Mitigating his children’s inheritance tax bill would have been tax avoidance, of course. But because no money went into the trust fund, no avoidance occurred. His accountant told Channel 4 News it’s a “story out of nothing”. And Mr Farage even claims he’s not wealthy enough for inheritance tax to be a problem.

But I suspect HMRC will be looking closely at what Farage arranged. An official told us today that they like to “read the newspapers” and “come up with interesting stories”.

And Farage’s waiving of dividends in favour of his brother seems to have been an extraordinarily generous act, for Farage Ltd made profits of almost £1m between 2004 and 2010, so Farage’s decision turned out to be a brotherly gift of almost half a million pounds.

Some papers today – the Mirror and Telegraph online – have suggested Farage is guilty of hypocrisy, but I think they’ve misunderstood the Ukip leader’s recent speech to the European parliament on tax. I’m not sure Farage has actually attacked tax avoidance in the same way George Osborne and Margaret Hodge have done.

Nigel Farage is something of a Teflon politician – as with Boris Johnson, mud doesn’t stick to him that easily. But he and his party are going to be subject to a lot more scrutiny in the months ahead. As are other politicians who set up arrangements to avoid paying taxes.

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6 reader comments

  1. ukp22 says:

    His party just lost their deposit, up here in the Aberdeen by-election, which SNP won. Why did your programme or web page report this to the rest of the UK?

  2. Philip says:

    The thing about Teflon is that eventually it wears out (or, in my case, when I’ve scrubbed too hard at it with something abrasive). I suspect that few politicians remain Teflon-coated throughout their careers. rather like so many “celebs”, the media build them up & sustain them for a while, but there always seems some sort of tipping point and then their at their throats like rabid rats. And as for Farage & Johnson, soon couldn’t be quick enough!

  3. Jim West says:

    I think it is unfortunate that Mr Farage felt the need to apologise. I don’t have a problem with him mitigating inheritance tax. What I want is the chance to do the same, as well as everyone else.

    Inheritance tax is an unjust tax on social mobility. There are many people in this country up to their necks in debt buying their own homes. Should they succeed they may not be able to pass this gift intact to their children.

    Inheritance has no relationship to what the government needs to run its affairs. If one dies and leaves a house to ones children, this does not increase the need for roads, schools , hospitals or anything else the government spends money on.

    People who have bought property should be allowed the right to pass a chance of a debt free life to their children

    1. Weimer says:

      The point is not whether the taxes are just or unjust since viewpoints will vary on that particular issue. The point is and always will be what the current law is . Mitigate for change by any means but one cannot simply take the law into one’s own hands by circumnavigating it by illegal means. I am rock solid certain that you upon hearing about a recipient of state benefits, who considered that the amount he was receiving was insufficient to deal with the cost of living , working or defrauding the system to obtain a more realistic sum (in his estimation) would decry him in very unfavourable terms. There is no difference between the two .

  4. Mark Thompson says:

    The fact that Nigel Farage technically never actually avoided paying tax, is it not best to concentrate your anger on people who have? Such as Carr, Blair and all your favorite Rock/sports stars?

    The spin on this smear campaign is ridiculous.

  5. Ummer Farooq says:

    Bilderberg don’t want Nigel Farage to succeed. So here comes the lies.

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