Guardian News and Media/London
The new Treasury Minister, Andrea Leadsom, has made use of offshore banking services, held properties in a company rather than in her own name and created trusts for her children - moves that could potentially lower her tax bill.
Her actions are perfectly legal but the opposition Labour party said she had serious questions to answer about the arrangements given the Chancellor (finance minister) George Osborne’s suggestion that complicated tax avoidance measures are morally unacceptable.
Leadsom, a former Barclays banker, created a property company called Bandal with her husband in 2003 to take ownership of two buy-to-let properties. This is a structure that means lower corporation tax, rather than income tax, is payable on profit coming from the properties, although she would also have to pay tax on any dividends.
Some of the shares in the company were registered to “children’s settlement” trusts in 2005, a year before a crackdown by Labour’s Gordon Brown - that meant any new assets put into trusts from then on would be subject to inheritance tax or high charges.
A debt charge on Bandal was registered to Jersey-based Kleinwort Benson (Channel Islands) Ltd, an offshore banking centre, according to documents from 2006. This appears to have been switched to the London branch of the bank late last year.
Leadsom, who was elected MP for South Northamptonshire in 2010, stepped down as a director of the family company in February this year to be replaced by her 18-year-old son.
This was shortly before she was made economic secretary to the Treasury with responsibility for the multi-billion-pound help-to-buy scheme for house buyers, in a reshuffle prompted by the resignation of Maria Miller as culture secretary over a scandal about parliamentary expenses.
A Treasury spokesman said: “This is a normal corporate situation and all tax that is due is being paid. None of the loans for the properties are based offshore.”
In a speech last week, Osborne, the chancellor, was very critical of offshore banking. He has previously worked on international efforts to bring transparency to tax havens.
“A very important part of our economic plan is that everyone makes a fair contribution. The message is very simple - if you’re hiding your money offshore, we are coming to get you,” he said.
Shabana Mahmood, Labour’s shadow exchequer secretary to the Treasury, said Leadsom “urgently needs to explain these arrangements and why they were put in place. Most importantly, she needs to explain whether she has benefited from a lower tax liability as a result.
“Families are £1,600 a year worse off since 2010 and the government’s top-rate tax cut has seen millionaires £100,000 a year better off. The amount of uncollected tax has increased by £1bn this year and whilst George Osborne claims to be tackling tax avoidance, his deal with Switzerland raised less than a third the amount he originally claimed it would.
“So the public are rightly angry when the tax system is manipulated by those with the money to do so. Ministers responsible for this state of affairs must themselves be above board and seen to be above board, so it would seem there are serious questions to answer here.”
Leadsom created a property company called Bandal with her husband in 2003 to take ownership of two buy-to-let properties. This is a structure that mea
