The Prime Minister’s Tax Returns

Thanks to several newspapers, I was yesterday given a preview of information provided by David Cameron to the press on his tax returns.

The numbers themselves are relatively unsurprising.

So that my readers can see them I have cut and pasted below an extract from what Downing Street provided to the newspapers:


If you plug these numbers into your pocket calculator the tax paid is broadly what you would expect it to be. I have one or two observations to make on the numbers – see below – but I can see nothing especially exciting beyond what immediately meets the eye. And what immediately meets the eye is not especially exciting.

But does the exercise succeeded in delivering what is likely to be its objective? To improve our understanding of the Prime Minister’s financial affairs and quell speculation of hypocrisy?

The first and most important point to make is that the Prime Minister has not published his tax returns. He has provided a sort of dance-of-the-seven-veils version. He’s shown you quite a lot of what you might like to see – but not all of it. ‘What else is there?’, you are bound to ask. Why can he not show us his actual tax returns? If the objective really is to improve transparency – you really don’t want me to push my metaphor – he ought to have followed John McDonnell’s example and published his full tax returns.

And you’re not made more comfortable when you come to look at who has provided the information.

It comes from a firm of accountants, called RNS, under cover of a letter, addressed to the Prime Minister, (the “Cameron letter”) which provides:



The Cameron letter follows very closely the format pioneered by Zac Goldsmith in February (the “Goldsmith letter”):


But unlike the Goldsmith letter, the Cameron letter has no accompanying Press Release.

Zac’s Press Release made it very clear that the letter was from Zac’s accountants:


But we are not told, and do not know, whether the accountants that wrote the Cameron letter were his. Reading it, and the notes provided with it which talk about what the authors “understand” about his expenses, I have a sense that it was written by accountants other than Mr Cameron’s. If this sense is justified, if the letter comes from someone who isn’t Mr Cameron’s accountants, it takes us a (difficult to understand) further step away from actual transparency.

A couple of other points about form.

The letter does not pretend that any exercise has been done over and above the mechanical one of extracting information from past self-assessment tax returns. I mean no disrespect when I say it involves no professional judgment by RNS.

But it does come from a professional firm – and that has useful consequences.

The numbers are what the numbers are. The Prime Minister has not invited us to take on trust what he says they are; instead he has delivered them in the form of a letter from a certified professional bound by a code of professional ethics. My view, and the view of most, is that it couldn’t properly be suggested these numbers are false even were they to be given by the Prime Minister himself. But I know that some would and so having a professional say that they represent what is reported in his tax returns might be thought to be a sensible precaution.

The final point to note is that the letter is addressed to the Prime Minister, not to anyone else. The firm of accountants will have the Prime Minister as its client, not anyone else. This tells us something – this is not the place for a detailed analysis of the law – about who the firm intends should rely on the letter and to whom it owes its professional duties. Again, let me be explicit, I do not say any conclusion should or even can be drawn from this, but I might have done it differently.

Turning to the detail of the numbers, it is noteworthy that David Cameron received £6,681 in interest from what we are told is “interest on savings with a UK high street bank”. If you assume a (relatively high) 2% rate of interest and that the interest is before deduction of tax, this implies he had during the course of the year an average of £334,050 sitting in his bank account.

The notes also record that David Cameron has voluntarily overpaid tax on occasion:


And has donated royalties from his book to charity:


Some will say that this voluntary largess is a privilege of wealth.

Perhaps it is.

But having myself lived in poverty and now in wealth I very much appreciate that wealth enables me to spend to nurture my self-sense of moral well-being. And I remember, too, the moral humiliations that poverty brings. But whatever your view, mine is that we must recognise that these are careful and responsible acts that many do not undertake.

The capital gains and losses are described by the notes as being from the sale of “units in Blairmore.” But “Blairmore” is not a legal entity – or a description of anything – and all the lawyers I know, and accountants too, would have used its proper name. My sense of slight unease is not diminished when I contrast the clumsy “Blairmore.” with the full technical description elsewhere in the notes of the “Income Tax (Earnings and Pensions) Act 2003”. And it is positively exacerbated when I recall that in his ITV interview, David Cameron starts off by talking about the asset that he sold as a “unit trust” and then several minutes later describes it as “Blairmore Investment Trust.”

The notes also state that:


This is, perhaps, rather bold of RNS. It cannot know what other sources of income or gains the Prime Minister has. It can only know what it has been told.

But leaving that aside, the substance is consistent with various other statements that the Prime Minister has made about not having any offshore interests himself. These are set out here.

However, the statement does nothing to address the concern that the Prime Minister, his wife or children might benefit in the future from a discretionary trust. (I should say explicitly, to be transparent myself, that earlier in the week I reached a different view but I now regard myself as having been precipitous to do so).

The closest the Prime Minister has come is to say this:


But an offshore discretionary trust for his children is not one which “the prime minister, Mrs Cameron or their children will benefit from in the future.” It is not a future interest in possession trust in respect of which it could fairly be said that those entitled will benefit. An offshore discretionary trust is one from which they only might benefit, depending on how the trustees choose to exercise their discretion.

There are two points that makes this gap in the Prime Minister’s language interesting to me.

The first is that it has been left.

The Prime Minister could very well have said:

As far as I am aware, there neither is nor has been any non-UK discretionary trust of which the Prime Minister, his wife, or children are or have been potential beneficiaries.

but he did not.

The second is that had you asked me or other tax professionals several weeks ago what arrangements you might have expected Ian Cameron to have made for his family, an offshore discretionary trust would have featured heavily amongst the responses. It’s a perfectly natural arrangement for someone with extensive offshore interests to enter into. It would be surprising if someone who had shown an appetite for complex offshore arrangements involving exotic tax haven locations such as the Bahamas and Panama, and really rather ugly features such as bearer shares, had opted for tax simplicity in the disposal of his estate.

So although it is speculation, and although I do not want to speculate in a destructive way, my own personal judgment is that it is reasonable speculation.

In summary?

The financial acts that I can see, and of course there are many I cannot, and that are acts of the Prime Minister, are by and large decent and responsible. The financial acts that make me uncomfortable are the acts of his father, from which of course David Cameron benefits, but they are not his acts and he did not choose them. And the weaknesses of this exercise, if you regard it as an exercise in enhancing transparency, may perhaps stem from a desire to obscure the latter.


19 thoughts on “The Prime Minister’s Tax Returns

  1. As you say nothing very surprising.
    But did not McDonnell get mixed up over his expenses page and the specified one for MPs, not the normal SA population.

  2. ” this implies he had during the course of the year an average of £334,050 sitting in his bank account”

    And a large inflow of cash considering the previous year’s income from interest was less than half?

  3. It seems also strange that according to the latest reports that he received his legacies from father £300,000 and two tranches of £100,000 each from his mother over 2010-2011 yet the interest was minimal until 2013-14?
    Could be a perfectly normal explanation. Just looks odd.

  4. More smoke and mirrors. There’s BIG tax difference between a unit trust and a trust. None of the summaries of the tax returns show where the other income comes from. He’s either completed the Trust or Foreign Income, supplementary tax returns and they would reveal all. That’s why we won’t be shown a copy of his tax returns.

  5. Surprising to me, Iain, that given the gulf between the quality of the information John McDonnell has provided, and the quality the Prime Minister has, your knee jerk reaction is to kick out at John McDonnell. Perhaps you might think about how you got there?

  6. What surprises me is the capital loss in 2010-11. I can’t help thinking Cameron is smart enough to avoid making actual losses, and wondering whether it’s some kind of artificial loss created purely for tax purposes.

  7. No evidence of that, of course, and lots of smart people in one field manage to lose money in others.

  8. Thanks for the prompt.
    Reactions to blogs are often immediate and are not always lengthy analyses. Mine was to agree with you, and add what was effectively a small footnote on the M return. I don’t think that was saying there is no gulf.

  9. Some of you seem to want to find wrong doing just because he’s an Evil Tory.

    Blairmore was a company, an investment company, a collective investment scheme, interests in which were subject to the UK offshore funds regime. When all of those terms are correct in various legal contexts is it any wonder that lay people don’t know what to call it? Particularly if they’ve heard of investment trusts, which are UK companies listed on the Stock Exchange!

    However, it certainly wasn’t a trust or a unit trust. And investors in it were taxed in effectively the same way as investors in a UK authorised fund, which also doesn’t pay UK tax (being exempt on capital gains and effectively exempt on income).

    Back in 1984 Panama was actually a reasonably respectable offshore jurisdiction, seen as stable and within the US sphere of influence. It was a few years later that we found out it was a corrupt, CIA controlled, cocaine cartel.

    Bearer shares were standard with Panamanian companies and a pain in the neck (or wherever) as they were like bank notes. Hence the need for the Blairmore shares to be kept in the safe and counted from time to time to make sure none had wandered.

    Not much interest until 2013-14 when he received legacies and gifts in 2011 (and sold investments in 2009)? It takes time for an estate to be wound up and distributed, and he might have put a large chunk into a one year savings account or other bank product with interest paid at the end of that period.

    Surprised that he makes capital losses? Shares can decline in value, you know.

    He must have filed other tax return pages so that he’s hiding receipts from offshore trusts? But then the figures published wouldn’t be accurate and the accountants say they are.

    The sad thing about this is that the truly corrupt who are stealing from their populations are being ignored in the UK when we should be demanding something is done about them.

  10. @ Paul Hale

    “Some of you seem to want to find wrong doing just because he’s an Evil Tory. ”

    There may be something in that. But he has brought a lot of the oprobrium and suspicion on himself by his self confessed cack handling of the affair. Not really what you would expect from a Prime Minister with hs multitude of well paid advisers.

  11. He should just publish the returns, like he said he would do in 2012.

    The continual confusion in the press and elsewhere between a non-UK investment company (taxed under the offshore fund rules) – which is what Blairmore Holdings Inc is and was – and other sorts of investment vehicles – unit trust, investment trust company, offshore trust, etc – is very annoying.

    He held shares in an investment company set up outside the UK. That company is subject to a specific tax regime. He paid the tax that a UK person holding that sort of investment is required to pay. End of.

  12. Personally I see an analogy between tax avoidance om a large scale under the veil of secrecy in the same way I saw Trevor Chappell bowl, under instructions from his skipper also his elder brother, the last ball of a one day match, between Australia and NZ, underarm to stop NZ scoring a six off the last ball to win the match.
    It was within the rules but it just wasn’t in the spirit of the game and as most commentated an abuse of the rules. But it was seen by those who want to win at any cost perfectly valid.
    You pays your money and those who have a large amount take that choice.

  13. £300k + £200k = £500k inheritance. No inheritance tax paid = tax avoidance. It’s called cooking the books.

  14. In the mid-1980’s, there was already plenty of evidence that Panama was a corrupt military dictatorship, even though Noriega remained in office until 1989.

  15. “There are no offshore funds/trusts which the Prime Minister, Mrs Cameron or their children will benefit from in future.”

    Doesn’t this leave open the possibility for the family to benefit in future from an offshore fund/trust that has yet to be set up? Technically, It only rules out funds/trusts that exist today.

  16. This debate is beyond ridiculous.The correct questions to pose are
    1/Did Cameron make a wrong tax declaration? NO
    2/Did Cameron directly or indirectly benefit from his father’s tax planning?YES
    3/Should Cameron be more taxed than an individual with the same income profile?NO
    4/Is it appropriate that Cameron in his capacity as Prime Minister should benefit from his father’s tax planning or should he be more heavily taxed?The clear and unambiguous answer is “MAYBE”???It depends on the respondent.
    If the respondent is wealthy,conservative voting,past pupil of a Public School etc,I suggest that his answer will be YES.However,if the respondent is poor,labour voting,past pupil of the State education system,his answer will be NO.
    My conclusion is if you are a labour voter,you will believe that Cameron has received a benefit from Tax avoidance undertaken by his father and this is inappropriate.A conservative party voter will contend that the P.M. did nothing wrong and it’s not his fault that he is wealthy or that his wealth is inherited and he went to Public School.
    The objective observor will conclude that the obvious advantage enjoyed by Cameron should not be derived in whole or in part from a tax system that treats its clients differently.It is this difference that creates tax planning opportunities and those tax advantages are paid for by other members of the taxpaying class.
    It is not criminal to enjoy legitimate tax advantages but every tax break must be paid for.

  17. this is a controversy which the general public (including me, of course ) can not be expected to understand. It seems to hinge on who has the best lawyer/ accountant/PR. Prime ministers and ex-prime ministers do not scrabble behind the sofa cushion in case any wayward 50p pieces are hiding there and the figures are secondary and larg
    ely academic. Unless the situation is transparent – which it seldom is – remember Lloyd George – it will be between the tax payer and his/her conscience and the clue will be his/her behaviour in other areas of life.

  18. I will just repeat that this summary does not fulfil David Cameron’s promise from 2012 to publish his tax returns.

    In general, I don’t think we have any right to demand that he does, and he has no obligation to do so, but he said he would.

    I doubt there is anything interesting to see – at least, not since 2010 – but he should do what he said he would do and not attempt to weasel out of it.

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