Tax Avoidance - MPs Only

The message that ZaNuLabour and various senior members of HMRC have been broadcasting is that tax avoidance (whilst not being illegal) is not OK in their eyes, and that they will move heaven and earth to stamp it out.

Why then did Shaun Woodward (cabinet member) choose to avoid paying capital gains of up to £1.5M?

Is this not a tad hypocritical?

The real message is that tax avoidance is OK if you are a member of the government, but not OK for anyone else.

Here's what Shaun did:

Source The Times.

SHAUN WOODWARD, the richest member of the cabinet, avoided a capital gains tax bill of up to £1.5m on one of his London homes, which he sold to Sting, the singer.

Woodward, the Northern Ireland secretary, who has a portfolio of properties stretching from London to the Caribbean, sold the townhouse in May 2003 for £5.7m.

He told the taxman this was his main home — and thus avoided a hefty tax on the sale.Capital gains tax (CGT) is imposed on second homes.

However, in 2001 he said that his family were based in Oxfordshire, where his children were schooled. All available records of his Commons claims also indicate that he was based in Oxfordshire.

Others have “flipped” their claims from one home to another, to maximise their allowances by ensuring their second home is the one needing the most maintenance or the highest mortgage payments. Woodward, who has a grace and favour residence at Hillsborough Castle in Northern Ireland has claimed more than £138,000 in MPs’ housing expenses since 2001. He last night issued a categorical denial that he had flipped his home or set out to avoid tax.

He also said that, far from saving himself money by avoiding capital gains tax, he lost money in the longer term when he sold off another, more valuable, property three years later.

He said he had to pay more capital gains tax when he sold off Sarsden House, a grade II-listed mansion set in 458 acres of Oxfordshire countryside. It went for approximately £25m in May 2006.

However, although questions were submitted to him by The Sunday Times last Wednesday afternoon, he failed to clarify whether he declared different “main” residences to the taxman and the Commons authorities in May 2003.

In a statement issued at 4.19pm on Saturday he strongly denied that his arrangements were an attempt to avoid capital gains tax and said there was no “inappropriate personal gain”.

He conceded in a statement that the Westminster townhouse was exempt from CGT. However, he said the sale of Sarsden was subject to CGT.

He provided a letter from the accountants Horwath Clark Whitehill which said: “Your tax liability would have been dramatically lower had you made different arrangements because the greater liability arises from the sale of Sarsden.”

However, he failed to disclose which specific property he was claiming Commons allowances on during this period, saying that he was having trouble finding the records.

Woodward, who once worked as a researcher on Esther Rantzen’s BBC television show That’s Life!, is regarded by many MPs with a mixture of suspicion and envy. He is married to the supermarket heiress Camilla Sainsbury and defected from the Tories to Labour in 1999.

Two years later, in June 2001, he was parachuted into the safe seat of St Helens South where he bought a small detached house without a mortgage for about £55,000.

After the election, he and Camilla went on a property spree in London, buying a £2.7m penthouse in a building with panoramic views of the Thames, and a one-bedroom flat in the same development.

The couple, who married in 1987 and have four children, also purchased two apartments on London’s South Bank at the end of 2001 for £2.25m. Woodward now claims expenses against one of these properties.

One of their best investments was the Westminster townhouse, reportedly bought in 1997. Lord Mandelson once stayed as a guest.

“At the time there was only one other house in 50 or 60 offices in a terraced row,” said Woodward in a 2006 interview. “They were remarkably well priced, yet it was a risk. By the time I sold it nearly half of the street had become residential. I made a lot of money from it.”

His profit on the sale was about £3.7m and a second residence would have been liable for CGT of up to 40%.

John Rosenheim, a lawyer acting for Woodward, said: “Woodward has no direct or personal dealings with the tax authorities or the fees office and always acted on professional advice.”

Tax does have to be taxing.

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