Unscrambling eggs

The Referendum was an instruction to make an omelette. Eggs were cracked. More will be. And scrambled. And when they are, they are.

Since the result became known I’ve written twice: this on how we might avoid leaving the EU and this on whether the decision to leave is one for our elected Parliament or an unelected Prime Minister. Those posts have been widely read. I have been asked by different groups to help them think through what happens next.

Perhaps unsurprisingly, much of their thinking – and some of my own – has focused on whether the electorate’s decision to Leave might be reversed. I have, since Friday, said that I think it between very possible and probable that, in some form or other, we will not Leave. That remains my view. But in working to achieve that goal it is important to keep ahold of what it is that we really seek.

The City is concerned about the impact of Leaving upon its health. The thoughtful among us should be concerned about that concern. Although many of us would agree that the City should not be so important to the public finances of the United Kingdom, still it is important. Reducing our exposure by generating other strengths is a gradual exercise which, properly conducted, would take decades. To reduce it by Leaving is like losing weight by severing a leg. And alongside the economic impact of Leaving on the City – and at least as important – will be the impact on the so-called ‘real’ economy.

Some worry about what Leaving means for an apparently – the data is unclear – growing class of people living economically marginal lives. On all objective analyses, Leaving will generate meaningful pain for those least well-placed to bear it. I’ve written elsewhere about what shape that pain takes. I shan’t repeat it here.

Others are concerned about what Leaving means for our cultural fabric. I spoke earlier this week to a Government minister who compared the campaign fought by members of the Leave team – and the subsequent upsurge in racial violence – to the ascension of Hitler in Nazi Germany. Some will say this is scare-mongering – but for others it is a profound worry.

Still others fear for the future of our democracy. What will happen when the truth about what Leaving means is revealed to those who were persuaded to vote for it?

There will be other concerns too. But in thinking about how to address them they must be separated out because they are different. And although their solutions overlap they are different too. And, and this is important to grasp, some eggs are scrambled already.

A reversal of the decision to Leave the EU might suture back on the leg. Not as good as it was – true – but much less bad than it could come to be. We might then ask seriously – not merely rhetorically as so often we hitherto have – what an industrial policy that generated growth in the real economy looked like.

A reversal should also help those living economically marginal lives. But the experience of many since the global financial crisis of 2008 is that there is a big difference between that “should” and “will.” Remaining might create the conditions within which more can be done. But Remaining won’t do it.

And if this is your concern your focus should be, alongside working to Remain, supporting those politicians whose commitment to the lives of working people is otherwise than synthetic. I am, for the moment, a member of the Labour Party so let me say this very clearly. Those politicians are to be found in all political parties: Labour is far from having a monopoly on morality or concern for the dispossessed. But the key point is this: even were we to step back from the precipice, Remaining will not automatically improve things for the poor.

As to the effects on the cultural fabric of our nation, this, egg is, I am afraid, already broken. Already, as Paul Lewis observed, the small minority of our country that is racist believes itself to have the express or tacit support of 52%. No doubt this was not the intention of those like Michael Gove who say, now, that they “shuddered” at the rhetoric of hate employed by their allies but said, then, nothing in case to do so cost a few votes. But even if the enormous upsurge in racial hatred was not Gove’s intention it was a predictable consequence and one he did nothing to stem. For him, it was a price worth paying to achieve the result he wanted. If you value our tolerance, you should oppose those prepared to sacrifice it to win a few votes.

Alongside opposing such politicians you should support the major public voices for pluralism in our society. You may find it hard to give money to the Guardian – there are personal reasons why it is extremely difficult for me – but without it a powerful, and positive, voice for tolerance is lost. Support it.

If you believe that fascism thrives when people feel ignored by ‘normal’ politics then the prospect of failing to deliver the result of the Referendum will rightly concern you. But lies were told about immigration and the NHS and jobs and public finances, and the lies will be discovered. Do we, do our politicians, wait until the victims discover that we knew of the lies all along and did nothing to tell them – do we kick the can down the road? Or do we confront the truth now for an environment where the underlying issues can better be addressed? The fight against what looked to that Government minister like fascism is only beginning. It is no time to opt for easy choices.

The concerns you may have about Leaving? Do not think that Remaining solves them. It is a necessary precondition. It is necessary but not sufficient.

The Big Green Button Bill

“There’ll be rioting in the streets,” I’ve been told over and again, “if the result of the Referendum is ignored.”

But here’s the thing.

There’s no good outcome from this. There are only more and less bad ones.

The promises the Leave camp made to voters – that immigration would (in some sense) stop or that £350m per week would be available to spend on the NHS – have already been jettisoned. But these are only small things. The Leavers had no plan. David Cameron has resigned and no one is running the country. Day by day our economy is bleeding out. When these things eventually come to sound in a huge hit to investment and economic growth and public finances; when Project Fear is revealed to be Actual Reality, and benefit spending is slashed, and hard working voters find they’ve lost their jobs, and there is less public money available to spend on the NHS, and class sizes grow because there is less money to spend on schools… what then?

How will disenfranchised voters then feel about the promises that were made about how their lives would improve? Promises that were not merely broken but were revealed to be exactly the opposite of the truth? What then? Could there then be rioting on the streets?

These are not my fears alone. Speaking before the Referendum – and in lines I quoted repeatedly before its outcome was known – Donald Tusk, President of the European Council, said this:

As a historian I fear Brexit could be the beginning of the destruction of not only the EU but also Western political civilisation in its entirety.

Of course, it is not for me, or anyone else acting alone, to choose where we now go. That is a choice to be made by whatever our democratically elected Government comes to be. Acting consistently with the rule of law. But I write these lines in order to explain that my conscience is clear in acting, so far as I can, to reverse the result of a referendum, and as soon as possible.

One important idea emerged yesterday on the blog of the UK Constitutional Law Association (and I do encourage you to read the important blog post to which this post is indebted). And it is this.

The process of leaving the European Union begins with us formally notifying the European Council of our intention to leave the European Union. But who is it – exactly – that does that notifying? Who gets to press the Big Green Button?

Among the powers held by the Prime Minister are a collection of powers left over as a relic from medieval times when they were exercised by the King or Queen. Constitutional lawyers call them the Royal Prerogative. The Royal Prerogative is used to conclude – and relevantly end – treaties with foreign states.

But there is a funny thing about the EU Treaties that make up the legal framework of the European Union. They are given effect to in the United Kingdom by an Act of Parliament: the European Communities Act 1972. And whoever presses the Big Green Button will, in effect, denude that Act of content. They will render it, by commencing a process that concludes with our withdrawal from the European Union, an empty vessel. A dead parrot. And the idea that the Prime Minister, by her or his action, might be able to destroy an Act of Parliament is one that suggests we are less democracy and more dictatorship. As it was put in The Case of Proclamations of 1610 :

  …the King by his proclamation… cannot change any part of the common law, or statute law, or the customs of the realm…

So what does all of this mean?

It means that pushing the Big Green Button might not be something that the Prime Minister can do. It might instead require a new Act of Parliament – a Big Green Button Act. And if we do need a Big Green Button Act, Parliament would need to choose to have it. MPs would need positively to choose to have it. MPs including your MP.

This image taken from here shows the declared positions of our MPs on the 22nd of June.


As you can see a huge majority backed ‘Remaining’. Of course, there is a difference between, first, the outcome that an MP might have preferred before the outcome of the Referendum vote was known and, second, how an MP would choose to vote on a Big Green Button Bill after the Referendum vote was known.

You may think that the outcome of the Referendum should dictate how your MP should vote.But (wrote Edmund Burke, the political theorist) what your MP owes you is:

not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion

And Parliament is a place:

where, not local purposes, not local prejudices, ought to guide, but the general good, resulting from the general reason of the whole.

So how, in practical terms, would your MP vote in a Big Green Button Bill?

MPs inclined before the Referendum result to vote Remain and who live in areas – in particular Scotland and London – which supported Remaining may feel little difficulty in voting against a Big Green Button Bill now. The (relatively small) number of MPs inclined to vote Leave and in areas that support Leaving will feel no difficulty in voting in favour of such a Bill now. But, at least I would say, an MP in a Leave area whose judgment told her or him that Leaving would be bad for the United Kingdom – bad for its economy; bad for the the Union; bad for jobs and the NHS and education; bad for its place in the world; bad as heralding the arrival of racial intolerance; and, yes, bad for the long term future of democracy – should vote against that Bill.

And, whatever the outcome in the House of Commons, to pass, a Big Green Button Bill would also need to be approved by the House of Lords.

And if the Big Green Button Bill did not pass then we could not begin the process that concluded with us leaving the European Union. Absent further action, we would Remain.

In the coming days I will take legal advice from our leading constitutional lawyers. I have already begun that process. If the advice is that pressing the Big Green Button may or does require new legislation, I will then consider what to do. Should we seek a declaration in the High Court, and then (by way of leapfrog appeal) the Supreme Court that a Big Green Button Act is required?

Can the Scottish Parliament block Brexit?

Section 29(2)(d) of the Scotland Act 1998 provides, somewhat inelegantly, that a provision of an Act of the Scottish Parliament is not law if it is incompatible with EU law.

To similar effect, section 57(2) of that Act provides:

“A member of the Scottish Government has no power to make any subordinate legislation, or to do any other act, so far as the legislation or act is incompatible with any of the Convention rights or with EU law.”

These provisions caused Sir David Edward, a former judge of the European Court of Justice and a very serious lawyer indeed (as well as being an exceptionally nice man), to suggest to the House of Lords Select Committee on the European Union that you would need legislative consent from the Scottish Parliament to withdraw from the EU (see paragraph 70 here and question 17 here).

The easiest way to understand his point – or the easiest way I can find to explain it – is this.

The sections of the Scotland Act I have set out above would, if unamended, leave the Scottish Parliament and Scottish Government bound to act consistently with EU law. That would be a nonsense if we were no longer ‘in’ the EU. Moreover, there is a constitutional convention – the so-called Sewel convention – that (with one proviso) the Westminster Parliament needs the consent of the Scottish Parliament to legislate on matters that have been passed to the Scottish Parliament (so-called “devolved matters”). So, the argument runs, in order to amend the Scotland Act 1998 to enable the Scottish Parliament and Government to act inconsistently with EU law, the Westminster Parliament would need the consent of the Scottish Parliament. And (given that, in the Referendum, Scotland voted ‘Remain’) the Scottish Parliament would not give it.

The problem with the argument, at least as I see it, is the so-called proviso. The Sewel convention has now been enacted in section 28(8) of the Scotland Act 1998. You can see it here but what it says in context is:

(7)     This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland.

(8)     But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament.

You remember that proviso I mentioned? The Westminster Parliament retained a residual right to legislate without the consent of the Scottish Parliament in non-normal circumstances.

And if a decision in a UK-wide referendum to depart from the European Union is not a non-normal circumstance I don’t know what is.

The Scottish Government website also makes reference to a Devolution Guidance Note 10 which you can read here. That note provides, relevantly:


And were I arguing in court for the Westminster Parliament, I would certainly be saying that the need to amend legislation to enable the Scottish Parliament to act inconsistently with a law that no longer applied was incidental to or consequential upon the decision to remove the United Kingdom from the European Union.

It follows that, with real deference and respect, I disagree with Sir David.

I am grateful to Jim Fitzpatrick (@jimfitzbiz) for the information that led to this post.

How to deliver a second Referendum

Here’s what Boris Johnson wrote back in February:

There is only one way to get the change we need, and that is to vote to go, because all EU history shows that they only really listen to a population when it says No.

He may have had in mind the second Irish referendum on the Lisbon treaty which followed after the Irish voted ‘no’ in the first – and secured further concessions from the other Member States.

“Say ‘no’ for a better ‘yes'” isn’t bad as a negotiating ploy. But it’s not much of a campaigning slogan. The Leave camp ditched it for ‘Take Back Control’.

And the rest is recent history.

It wasn’t only Boris who saw the attractions of a second referendum. So did Nigel Farage. Speaking to the Mirror he said this:

“In a 52-48 referendum this would be unfinished business by a long way. If the remain campaign win two-thirds to one-third that ends it.”

It’s fair to say he meant a 52-48 win for Remain rather than that very vote for Leave. But, you may think, what’s sauce for the Goose…

But could we have a second referendum after a Leave vote? And what might it take to bring such a thing about?

Let me begin my task by clearing away a little undergrowth.

The referendum result creates a democratic imperative for the UK to depart but, as the great legal blogger David Allen Green has set out here, it doesn’t create a legal one. The legal one follows not from the referendum result but from our decision to trigger the exit procedure in Article 50 (which I turn to below). Some have mooted that our Parliament could simply ignore the referendum result. Although that may be right in legal theory I don’t, myself, consider it a practical likelihood. But, what democracy has commanded shall be done it can also command to be undone. Or, to put the matter less grandly, a second vote, this time for Remain, would undo the democratic imperative of the first.

So I see a refreshed democratic mandate as key.

How might such a thing be delivered?

I can see two routes.

First, were we to have an early General Election fought by one party on an explicit Remain platform and were that party to prevail it would, I think, amount to a ‘refreshed democratic mandate’. The electorate would have spoken such that the result of the Referendum would be superseded.

Second, even without such a General Election, Parliament might decide that circumstances had changed sufficiently, as in Ireland, to put the proposition to the electorate again.

What would make these routes more or less likely?

The General Election route requires that three things happen.

First, there would need to be a General Election. The Fixed Term Parliament Act 2011 requires that (absent a no-confidence motion in the Government) the motion for an early general election achieve a two-thirds majority in the House of Commons. But if the Government took the view that such was desirable – and several Brexiteers have already mooted such a thing – it is unlikely that the Labour Party would stand in its way.

Second, one or other side would have to stand on an explicit Remain platform. That would not be the Conservative Party. And such also seems inconceivable under Labour’s present leadership. Writing to Labour members on the 24th of June Jeremy Corbyn said this:

After yesterday’s European referendum, politicians of all parties must listen to and respect the vote. Millions of voters have rejected a political establishment that has left them behind. Communities that have been hardest hit by government cuts and economic failure have voted against the status quo.

This is not the language of a Leader who wishes to Remain. But Jeremy Corbyn is to face a leadership challenge and the overwhelming majority of the Parliamentary Labour Party – and indeed its voters – support Remaining. Were a new Labour leader to be selected, Tim Farron’s pitch for a pro-EU social democratic coalition might fall on fertile ground. And, of course, Nicola Sturgeon has made plain her intention to keep Scotland in the EU.

And, third, that Remain platform would need to win. You will have your own views about the likelihood of that prospect. But Luke Baker has referred to the possibility of Buyers’ Remorse about Leaving. Not even a day in there is much anecdotal evidence of this. And if the Project Fear predictions of the poor, derided “experts” come to pass it is possible that the population might come to welcome an opportunity to Remain.

The other possible route to a second Referendum is much simpler. Again, it has three steps.

First, it would require a recognition on the part of the EU that the concerns of the local electorate be met with concessions. The public could, I think, only sensibly be confronted with the In/Out question afresh if the circumstances had changed since last it was asked. This was, in effect, Boris Johnson’s “Say ‘no’ for a better ‘yes'” strategy. This has, in fact, happened on three occasions: Ireland (twice: Lisbon and Nice) and Denmark (once: Maastricht).

Second, there must be a desire on the part of the Government of the day to deliver a second referendum. This will in large part be contingent on whether the public’s attitude to the prospect of Leaving sweetens or sours: Buyers’ Remorse again.

An EU contemplating an existential crisis of its own in consequence of the UK’s likely departure – perhaps facing demands from other Member States for referendums of their own – might increase the pressure on our Government by dangling concessions directly in front of the UK public. You might even think that this was Wolfgang Schäuble’s intention when he talked of the UK having “associate member” status. You might also read into Boris Johnson’s comments of Friday morning a desire to keep this door open:

In voting to leave the EU it’s vital to stress that there’s no need for haste, and as the Prime Minister has just said nothing will change in the short term except work will begin on how to extricate this country from the supranational system. As the Prime Minister has said there is no need to invoke Article 50.

Any or all of these circumstances could create huge public pressure for the question to be put afresh. Pressure no sensible Government could ignore.

Third, a renewed Referendum would have to be won. But, as this rather elegant piece by Ece Özlem Atikcan explains, they do tend to be.

Of course, had we left in the meantime, all of this would be academic. And the timing is important. Too soon and we may not have time to see Buyers’ Remorse. Too late and it may be difficult to derail the process. Again, a close reading of Mr Johnson’s comments suggest a sensitivity to the possibility of a golden moment.

If you assume this golden moment arises before we have triggered Article 50 (and, for reasons I don’t want to get sidetracked by why I regard as hollow the threat to treat the Referendum result as triggering Article 50), we can simply ignore such conditions as it imposes. But what if you assume that, under pressure from an EU with problems of its own to resolve, we have already triggered the process?

Were you to read Article 50 as you might a piece of domestic law, you would note it has no reverse gear. Once you start the process, you’re on the way to the exit door. This is a point that David Allen Green has made here. But for myself I have little doubt that the process can be abandoned once started. As a general proposition, in my experience, EU law bends much more to pragmatism than does English law. This was also a point made by Professor Derrick Wyatt QC in his oral evidence to the House of Lords Select Committee on the European Union. And Sir David Edward, former judge of the European Court of Justice, giving oral evidence on the same day said:

It is absolutely clear that you cannot be forced to go through with it if you do not want to.

Perhaps we might all feel differently if Article 50 stated explicitly that a member state, having triggered the Article 50 process, cannot abandon it. But it doesn’t; it’s just silent on the issue.

So. Let me sum up.

Form your own view, but I think Buyers’ remorse is likely. I think the electorate will come quickly to appreciate that the ‘look behind you’ of the Remain campaign did not warn of an approaching pantomime villain. Rather, there is a very real likelihood of a very meaningful deterioration in the lives of a great many people. The fruits of victory may quickly turn to ashes in the mouths of Brexiteers. It is, I think, likely that the EU will seek to engage the UK public directly – and I very much hope they do. And, although here I speculate, I do sense an ongoing ambivalence on the part of Boris Johnson to the creature he has delivered. Where lies his place in history on delivering a disaster to a country he loves? Mix these ingredients together and you have the recipe for a refreshed democratic mandate for Remain.



The Out campaign – and the attitude to tax of its funders

If you click here you can see a link to the Electoral Commission list of donations to referendum participants arranged by size.

I have listed below the ten donors of the largest donations, in descending order, to the ‘Out’ campaign and some material in the public domain that might cast light on the attitudes of those donors to tax and tax planning.

There is, of course, much other material in the public domain about those individuals – both positive and negative. It is my intention only to set out what is in the public domain that could reasonably be thought to cast light on their attitudes to tax and tax avoidance. Where I have given other information it is only by way of introduction to individuals about whom little else is known.

1. Peter Hargreaves gave £3.2m to Leave.EU Group Limited.

Here’s what the Daily Mail records him as saying about corporation tax.

I never understood why companies should pay tax. They don’t have a vote. If they didn’t have to pay tax, they would come here in droves and employ millions of people who would pay loads of tax.

This is consistent with other public statements that suggest he believes that lower taxes generate more tax receipts. He took steps to pay an increased dividend before the 50% tax rate came in.

2. Better for the Country Limited – otherwise known as Leave.EU – made a non-cash donation of £1.95m to Grassroots Out Limited. The Guardian has identified that Leave.EU was incorporated by STM Fidecs Nominees Limited, a company based in Gibraltar that “specialises in financial planning…. for high-net-worth individuals… re-locating to, other, frequently lower, tax jurisdictions.”

Its shares were then transferred to Arron Banks who remains, so far as the public record discloses, both a director and 100% shareholder. Arron Banks’ name has appeared in the so-called Panama Papers. The Guardian reports that he has set up “37 different companies using slight variants on his name.” That, you may think, is a tendency associated with a desire to reduce transparency.

The Guardian report also contains this paragraph.


3. Diana Van Nievelt Price gave £1m in cash to Vote Leave Limited. Little is know of her.

4. International Motors Limited gave £600,000 in cash to Vote Leave Limited. “Lord Robert Norman Edmiston” is a director of International Motors Limited. The shares in that company are held by I.M. Group 1991 Limited, the shares in that company are held by I.M. Group Limited, and the shares in that company are held by “Robert Norman Edmiston”. Lord Edmiston is said by the Mirror to have had his first application for a peerage blocked by HMRC over a tax dispute. He is also reported to have received an “accelerated payment notice”. Accelerated payments notices are given by HMRC to those claimed by it to have used a “tax avoidance scheme”.

5. Patrick Barbour gave £500,000 in cash to Vote Leave Limited. Patrick Barbour was  until 10 April 2013 a trustee of the Politics and Economics Research Trust. I have written here about how over the last five years 79% of its grants have been made to the so-called Taxpayers’ Alliance. And I have described PERT as “channelling money to the Taxpayers’ Alliance.” The Politics and Economics Research Trust is currently in discussions with the Charity Commission “about decision making and monitoring of grant funding.” I hope to write more on this after the Referendum. Patrick Barbour has also written papers for the Taxpayers’ Alliance.

6. Gladys Bramall gave £500,000 in cash to Vote Leave Limited. She is a former member of the BNP but little else is known about her.

7. Jeremy Hosking made two donations to Vote Leave Limited (£500,000) and Brexit Express (£480,000). He operates a hedge fund.

8. Peter Cruddas gave £350,000 in cash to Vote Leave Limited. Peter Cruddas is a one-time resident of the tax haven Monaco and former Co-Treasurer of the Conservative Party who resigned over the ‘cash for access’ scandal.

9. Terence Adams gave £300,000 in cash. He appears to have construction interests in the US.

10.= John Stuart Wheeler gave £250,000 to Vote Leave Limited. The Guardian has written of his £5m donation to the Conservative Party in 2000 which was followed shortly thereafter by Conservative MPs seeking to change the Finance Bill in a manner which would benefit the tax treatment of financial spread-betting, the industry in which Mr Wheeler then operated. Jonathan Wood also gave £250,000 to Vote Leave Limited. There is a Jonathan Wood, hedge fund manager, who has made substantial donations to the Conservative Party. The Evening Standard reports he has lived in Switzerland and Monaco – both might reasonably be described as tax havens.

For reference – and I imply no connection to the matters stated above – I have written here about some highly misleading tax related statements made by leading Vote.Leave figures such as Michael Gove, Boris Johnson and Iain Duncan Smith. I have written here about how leaving the EU will reduce the UK’s ability to combat tax avoidance.

For the sake of transparency, I should say that I will be voting Remain tomorrow.


Statistics, Vote Leave statistics, and lies.

As the Institute for Fiscal Studies has stated, there is “near consensus” that Brexit will damage the economy.


On any view the mid-case £30bn is a very substantial sum of money. Illustratively, to recover it by way of income tax would require an increase in the basic rate of income tax to in excess of 26.5%. It represents about 25% of all NHS spending in 2019-2020. To recover it, either the budget deficit target would have to be abandoned, or spending cut, or taxes raised or some combination of all three.

In an effort to address this very serious concern about the effects of a ‘Leave’ vote, leading Brexiteers including Michael Gove, Boris Johnson, Priti Patel, Dominic Raab and Iain Duncan Smith this morning wrote a letter making a number of promises about where in a post-Brexit world funding might be found (the “Letter“).

The Letter can be read here and it states (in particular):

For example, the UK is set to pay out between £7 billion and £43 billion by 2021 in tax refunds to big businesses which have successfully used the European Court and EU law to escape taxes lawfully imposed on them in Britain.

It continued:

If we Vote Leave, the Government will pass legislation to prevent these payments being made so that taxpayers are not given these huge bills.

But is this statement true?

The £7.3bn figure comes from Table 4.15 of the OBR’s Economic and Fiscal Outlook from March of this year. It is the sum of this line:


The March 2016 Outlook gives you no further detail of what “tax litigation” relates to but the July 2015 Outlook does and states this:


So the £7.3bn covers sums which HMRC expects to pay out from litigation cases when the amount can reliably be estimated.

But contrary to what the Letter states, the £7.3bn figure does not derive from “tax refunds to big businesses”. It covers all tax refunds to individuals, partnerships, trustees, small businesses, and big businesses.

Contrary to what the Letter states, the £7.3bn figure does not derive from businesses “which have successfully used the European Court and EU law”. It derives from all claims in all courts domestic and EU (and conceivably foreign) and based on all law domestic and EU (and conceivably foreign).

Contrary to what the Letter states, the £7.3bn figure does not derive from attempts to “escape taxes lawfully imposed on them in Britain”. It will derive from the recovery of taxes wrongly over collected by HMRC, taxes wrongly levied by HMRC, taxes lawfully collected in advance and which later have to be repaid and interest on those taxes, whether that wrongful levying or overcollecting or repayment derives from HMRC’s mistaken understanding of domestic or EU (or conceivably foreign) law or otherwise.

Finally, contrary to what the Letter states, the £7.3bn figure is not the bottom end of a range with £43bn at the top. The bottom of the range is £0. The £7.3bn figure represents the aggregate of sums which HMRC expects to pay out (but might not do). This is not a hypothetical point: in 2009/10 well over £2bn (a sum larger than is expected to be collected in any year addressed in the “tax litigation” line above) was written back (see page 92)

Let me put the matter in a nutshell.

The Letter – which let us remember has been signed by Michael Gove, Boris Johnson, Priti Patel, Dominic Raab and Iain Duncan Smith – is (in the respects identified above) simply false.

What of the £43bn figure?

It is the sum total of the £7.3bn above and a further £35.6bn of contingent liabilities or “possible liabilities for cases currently in litigation”: see paragraph 9 of the auditor’s note to HMRC’s annual report for 2014-15 here. Possible, but not very likely as you can see from the highlighted passage earlier in the annual report here:


“The likelihood of a transfer of economic benefit is remote.”

This £35.6bn figure, again, does not relate to big business, European law, breaches of Europe law, or a successful use of the European Court. There is simply no basis for these claims. Moreover, to imply it is remotely realistic that £43bn could be paid out, again, simply does not bear analysis.

The Letter very materially misleads the public. Michael Gove, Boris Johnson, Priti Patel, Dominic Raab and Iain Duncan Smith should immediately disavow the baseless claims to which they have, one hopes inadevertently, put their names.


Leave – and become tax haven UK

Last month a hedge fund threatened to move from Connecticut to another state. Its boss, Ray Dalio, earned $1.4bn last year. That’s as much as 34,482 teachers earning the average salary for teachers here of £29,000. But that wasn’t enough for him and he demanded Connecticut help him build new offices. They gave him $22m. You can read about the story here.

That’s $22m that he doesn’t need. It’s about 1.5% of what he earned last year. But it reduces Connecticut’s ability to employ policewomen and firemen; to repair its roads and look after its elderly; to run its schools and operate its healthcare programmes.

That can’t happen in the EU.

We have rules – called ‘State Aid’ rules – which stop powerful corporations playing countries off, one against the another. They know Member States can’t give the money – and this stops them demanding it.

You will have read about the tax shenanigans of Apple. Starbucks. McDonald’s. Amazon. Google. The arrangements of each of those companies is being looked at by EU institutions to see if they comply with European law. If they don’t, State Aid rules mean they will have (in effect) to repay the tax they’ve wrongly underpaid.

Corporate tax avoidance is a huge problem. The European Parliament has estimated it cost the EU €160-190bn last year alone. As the second biggest economy in Europe we will have suffered a substantial share of that loss. Without the protection of State Aid rules we won’t be able to claim it back.

We’ll be weak. And we’ll get weaker.

Here is Jason Collins, Head of Tax at Pinsent Mason – a law firm based in London which is very vocal in calling for measures which help its clients – talking about what will Brexit will mean for the UK tax system.


Translated, what this means is that those huge multinationals, if we leave the EU, will be free to demand more tax breaks from the UK.

You think we’ll be able to resist?

By the end of this Parliament, we’ll be collecting almost £15bn a year less in corporation tax than we were in 2010 in consequence of huge cuts in tax rates (see paragraph 1.159 here). £15bn is more than we spend on housing (and utilities such as street lighting) and contributions to the EU combined. The present government tried to do even more for these corporations – but turned back in the face of pressure from the EU.

Pretend, if you like, that we’re big enough to go it alone. Pretend we can face these companies down and that corporate tax avoidance won’t get worse. We’ve the fifth largest economy in the world, after all. But bear in mind that the global revenues last year of one company – Apple – were about a third of all the tax paid over to HMRC. And look at the evidence of how we’re already failing.

Alone, things will get worse, and quickly. There will be less tax available to spend on the NHS and schools. There will be less to build better roads for your communities and support more house-building for your children. More libraries will close – and there will be more foodbanks as welfare is cut further.

But together, we’re stronger.

The Taxavoiders’ Alliance

“When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.”

Were there a Humpty Dumpty award for imaginative use of language the TaxPayers’ Alliance would be my nominee. Because embedded in its funding machinery is a rather nifty tax avoidance wheeze.


We only offer charitable status to those who deliver (broadly speaking) a “public benefit“. We guard that status zealously and the reason why is because the state, through the tax system, provides what you might best think of as a type of ‘matched-funding’ scheme.

Because of the cost to the rest of us of that ‘matched funding’, the Charity Commission won’t register a charity which exists for a political purpose. This is why the Taxpayers’ Alliance isn’t a charity. In principle, this is bad news for high income UK taxpayer backers. It means that every pound they give to the Taxpayers’ Alliance costs them (after tax) £1.82. Were it a charity, that same pound would cost those same backers £1.

Unless there was a wheeze.

What about if those wealthy backers gave money to a charity which passed that money on to the Taxpayers’ Alliance?


Here are the accounts for the year ending 31 December 2014 for the Politics and Economics Research Trust (“PERT“), which is registered as a charity. They show that it made 20 grants to the Taxpayers’ Alliance in that year:


Leaving aside £60,000 which was returned to it and £36,752 in Governance Costs this comprised the entirety of its activity for the year.

What about for the year ending 31 December 2013?

Capture.PNGAnd 31 December 2012?

CaptureAnd 31 December 2011 and 2010?

Capture.PNGSo over those five years PERT made 95 grants (including 18 in 2010) to the Taxpayers’ Alliance out of a total of 119 (80%). By value 79% of its grants were to the Taxpayers’ Alliance. An average grant of £319,000 per annum.

Perhaps this is a surprise. And then again, perhaps not. Companies House reveals PERT originally had a different name:



We don’t know who funds PERT. Regrettably its accounts are silent – and so is its website – on the subject. So we can’t know for a fact that they’re wealthy UK taxpayers. But the evidence points to that conclusion.

If you give to PERT you know the bulk of that money – after administrative costs – is going to find its way to the Taxpayers’ Alliance. That is, as I’ve shown, what invariably happens. So if you didn’t intend your money to go to the Taxpayers’ Alliance why would you give the money to PERT?

But, if you know the money is going to the Taxpayers’ Alliance, why do you give it to PERT instead of the Taxpayers’ Alliance? You know that giving it to PERT will cause it to accrue a further layer of administrative charges? And we know how much supporters of the Taxpayers’ Alliance hate ‘waste’.

There’s only one sensible answer to that question. You want the tax relief. If you didn’t you’d give it directly to the Taxpayers’ Alliance – its website does solicit donations after all – and save the administrative charges.


You might reasonably ask whether PERT performs any real function over and above simply channelling money to the Taxpayers’ Alliance. You might ask whether the reality of the situation is that the money is simply going to the Taxpayers’ Alliance and the Council is simply a mechanic to help its UK taxpayer backers avoid tax on the donations.

The Charity Commission looked at these questions over five years ago. You can see its report here. It looked at whether money had been channelled from a particular body – the “Midlands Industrial Council” – to the Taxpayers’ Alliance and concluded:


PERT mentions this on its website. But the website doesn’t mention why. However, the ‘why’ is apparent from paragraphs 19 and 20 of the report.

Paragraph 19 provides:

It was also confirmed to the investigation that the Midlands Industrial Council has not made any donations to the Charity…

And paragraph 20 provides


If the subject of a complaint to the Charity Commission is that donor x has channelled donations through a charity to obtain tax relief; and the facts show that donor x didn’t make donations and, even if it had, it wouldn’t get tax relief it’s not a great surprise if the complaint is dismissed.

Anyway, you’re bright.

Whatever the Charity Commission’s view as to the merits of a specific complaint about an abuse of the law of charities you can see with your own eyes the evidence that the overwhelming majority of the money given ever year to PERT is passed on every year to the Taxpayers’ Alliance .


Of course, this mechanic benefits the Taxpayers’ Alliance too.

Assume its wealthy backers wanted to spend £175,275 per annum supporting the Taxpayers’ Alliance. If they gave that money directly to the Taxpayers’ Alliance – which does collect donations – the Taxpayers’ Alliance would have £175,275. But if they funnelled it through PERT, the Taxpayers’ Alliance would have £319,000.

£319,000 is the average yearly amount the Taxpayers’ Alliance received from PERT over the last five years. The difference between it and the notional £175,275 – some £143,725 – comes from taxes paid by the rest of us.

On the evidence, it seems the Taxpayers’ Alliance is the beneficiary of an abuse of charitable tax reliefs. A willing beneficiary too – it applies to PERT for funding. You might find it odd – unattractive even – that an organisation apparently devoted to “protecting taxpayers” routinely puts itself in this position.