Blair faces tax probe

Former prime minister Tony Blair

The trust was set up to manage his multi-million wealth after contact with the then head of HMRC, reports Asian Lite News

Tony Blair faces questioning over claims he used a secret trust to manage his multi-million-pound wealth after contact with Britain’s top taxman. Two of the former Prime Minister’s advisers claimed Dave Hartnett, Head of Revenue & Customs, was said to have approached by a consultant hired by Mr Blair’s lawyers about the controversial trust.

Former prime minister Tony Blair
Former prime minister Tony Blair

Its existence last night raised questions on whether the alleged access amounted to special treatment by senior tax officials. Senior politicians demanded an inquiry into the ‘special treatment’ of high-profile individuals by Britain’s tax investigators, HMRC.

Tory MP David Davis, the former shadow home secretary, questioned what private discussions might have taken place. He said that these arrangements appear to have been put in place without any proper scrutiny, and are not available to ordinary taxpayers.

Mr Davis said he would write to the public accounts committee calling for ‘an inquiry into special treatment of high-profile individuals by HMRC’. Tory MP David Mowat, who sits on the PAC, told the Sun on Sunday, “It would be wrong if senior well-connected individuals got different tax treatment from the Inland Revenue than the rest of us.”

According to an investigation by The Times, discussions with HMRC officials, which took place shortly after Mr Blair left office a decade ago, included how his advisers would treat the trust for tax purposes. They told undercover reporters that Mr Blair had used the interest-in-possession (IIP) trust to receive payments from his consultancy work, including with controversial regimes.

The trust sits at the heart of his business empire and had remained secret. IIP trusts are legal entities that can hold property, shares or other sources of income for a beneficiary, most commonly for their lifetime.

According to experts, such trusts can offer significant tax advantages, including the possibility of passing on wealth to children free of tax. The trusts do not have to file accounts. Lawyers for Mr Blair said the trust had been set up due to a desire for privacy. They stressed that he did not seek or obtain a tax advantage.

One leading tax QC said that ordinary taxpayers ‘wouldn’t have got anywhere near’ Mr Hartnett or other top HMRC staff. The Times was not able to verify independently that Mr Hartnett was contacted as the two advisers separately claimed.

Mr Blair’s representatives said that Mr Hartnett had not been consulted on his behalf and no special treatment had been sought or received. Mr Hartnett has previously been criticised for offering ‘sweetheart’ deals to companies including Goldman Sachs and Vodafone during his time as head of HMRC. There is no suggestion that he offered such a deal to Mr Blair.

One adviser told reporters posing as advisers to a wealthy Indian family looking to do business with them: “We went on a one-to-one basis to HMRC”.

Asked whether the consultant was able to approach Mr Hartnett , one adviser is said to have answered in the affirmative. He said HMRC officials would not be as approachable today out of fear of being hauled in front of the public accounts committee.

Mr Hartnett, on the other hand said last night that he had ‘no recollection’ of the advisers’ claims. Asked whether he had provided any guidance while in his role at HMRC, he was reported to have said: “I can’t answer that question. I’m still bound by taxpayer confidentiality.” Mr Hartnett, who left HMRC four years ago, added that he does not give advice to individuals.

IIP trusts only pay tax on dividends at around 10 percent so low tax is usually the reason they are used. IIP holders can chose who is beneficiary of dividend so therefore way of paying low tax on assets.

The IIP Trust offers Mr Blair the option of future tax savings, enabling him to pass on some of his fortune to his children while ‘working around the IHT’ (inheritance tax rules), the advisers allegedly boasted. Mr Blair and his wife Cherie have assiduously secured their children’s finances by purchasing several properties for them. Eldest son Euan, 32, has a £4.5million townhouse while Nicky, 30, has a £2.1million townhouse and daughter Kathryn, 28, owns two properties.

The byzantine web of companies and limited liability partnerships set up for Mr Blair has always made it impossible to know exactly how much money he is making. If the advisers’ claims to The Times are accurate, up to £50million was paid into Windrush – the name of a series of interlocking companies and partnerships set up to manage Mr Blair’s finances.

Mr Blair also has Firerush, a mirror-image structure of companies, through which an undisclosed amount was paid. Mr Blair’s lawyers said that his advisers had followed normal tax procedures and it was ‘common practice’ to communicate with HMRC in the way he did.

A spokeswoman for Mr Blair denied that he received ‘any special ‘privilege’ from the tax authorities’. She added, ”Tony Blair did not set up this structure for reasons of tax advantage. He has paid full UK tax on all his earnings. He specifically instructed the accountants who set up the structure that there was to be no tax advantage or avoidance through it.’

The disclosures come after David Cameron and other senior politicians disclosed personal tax data after the publication of the Panama papers.