By Martin Kelly
The row over a controversial donation made to the official ‘No’ campaign has taken a new twist with claims that the Unionist alliance, Better Together, is benefiting from the proceeds of tax avoidance.
Speaking in advance of the publication by the Treasury of an anti-independence paper on currency policy, the Scottish National Party has today challenged the Chief Secretary to the Treasury, Danny Alexander, over a £500,000 donation given to the pro-Union campaign by the president and Chief Executive of Vitol, Mr Ian Taylor.
Controversy over the half million pound donation has raged after it emerged Mr Taylor’s company had paid $1 million to former Serbian war criminal Arkan. The company has also pled guilty to grand larceny after it emerged it had paid kickbacks to members of former dictator Saddam Hussein’s regime.
The attack by the SNP involves reports that Mr Taylor’s company used a controversial mechanism in order to avoid paying millions of pounds in tax in the UK. Employee Benefit Trusts [EBTs] allow companies to avoid paying National Insurance contributions and also allow employees to avoid paying income tax.
Last December, both the Daily Telegraph and Sunday Times newspapers reported that Vitol was “in talks” with Her Majesty’s Revenue & Customs (HMRC) “over a tax-avoidance bill”. The talks were designed “to settle a claim for millions of pounds in taxes its senior staff avoided through an offshore pay scheme.”
HMRC is chasing taxes which were avoided through EBT schemes “before they were categorically outlawed in 2011”. The Telegraph reported that Vitol “is thought to have operated an ’employee benefit trust’ (EBT) for more than a decade.”
Mr Taylor told the Sunday Times: “I suspect that once [the JP Morgan] agreement is finalised, to a certain extent that may become a template.”
He added: “We will have to pay something. We will work hard to do what is best for our employees, but we must abide by the legislation – and we will.”
According to the UK Treasury, JP Morgan owed half a billion pounds after using the controversial EBT scheme to avoid taxes.
The issue is particularly embarrassing for Danny Alexander who this year announced new rules that would see companies, who had used schemes resulting in out of court settlements with HMRC, being barred from tendering for public sector contracts.
Speaking in February, the Lib Dem MP said of the new regulations: “They will enable government departments to say no to firms bidding for government contracts where they have been involved in failed tax avoidance.”
The MP, whose party is part of the Better Together alliance, is being challenged to explain why it is unacceptable for tax avoidance businesses to bid for public sector contracts whilst Chairmen of such businesses are apparently handing cash to the anti-independence campaign.
SNP Westminster leader Mr Angus Robertson MP said:
“By Ian Taylor’s own admission, Vitol are owe the UK Treasury money because of the company’s tax avoidance arrangements.
“Danny Alexander has, rightly, made cracking down hard on tax avoidance a priority for the Treasury under his tenure – therefore, how can he possibly support the No campaign taking half-a-million pounds from Ian Taylor, when Vitol is reportedly owe the UK exchequer millions of pounds?
“With the Treasury due to step into the independence debate once again, it is time for Mr Alexander to set out where he stands on Mr Taylor’s donation. If he supports it, he will effectively be condoning the very tax avoidance practices that he purports to condemn.
“If he is genuine about cracking down on tax avoidance, Danny Alexander should support the No campaign returning this money pending an internal investigation. Most people would think Vitol should pay every penny they are owe the Revenue to help fund public services, before the company’s chief executive hands out £500,000 to become the principal donor of the No campaign.”
The controversial issue has divided the Labour party with former First Minister Henry McLeish questioning whether Labour should be endorsing such donations. Scottish Labour leader Johann Lamont has insisted she was happy for Better Together to accept the cash.
However, asked last week to comment on quotes given to a national newspaper by Labour MP John Mann who recently demanded the Conservative party return a similar donation it had received from the same businessman – labelling it “dirty money” – Ms Lamont claimed not to be aware of Mr Mann’s comments.
The latest move by the SNP coincides with a high profile attack on independence by Danny Alexander who has drafted a joint document with his UK coalition colleague, Conservative MP George Osborne, that seeks to undermine plans for a currency Union between an independent Scotland and the rest of the UK.
Yesterday, claims by the UK Treasury that Scottish notes would disappear in an independent Scotland were ridiculed by the SNP and other commentators including Prof David Blanchflower who served on the Bank of England Monetary Policy Committee.
First Minister Alex Salmond pointed out that every Scottish pound is already matched one on one against a Bank of England note, and a ‘ban’ on Scottish notes is therefore impossible.
Speaking on Newsnight Scotland BBC Scotland Business and Economy Editor Douglas Fraser was less critical of the UK Government claims describing them as a signal that Westminster will adopt a “very tough” negotiation stance post-independence and will be “fighting the corner of the people of England, Wales and Northern Ireland.”
BBC Scotland colleague Andrew Kerr went further by rather bizarrely described the claims by the UK Treasury Chief as a “difficult few days for the SNP”.
Today will see a visit to Scotland by UK Chancellor George Osborne to coincide with the publication of the report which will criticise plans for a post-independence currency union.
Commenting ahead of the visit, SNP MSP Annabelle Ewing, who sits on the Referendum Bill Committee, said:
“George Osborne is a thoroughly discredited Chancellor of a government Scotland didn’t vote for, and for him to have the gall to come here to lecture us about economic policy is a major blunder by the No campaign – it actually plays into the hands of the Yes campaign, so we should really welcome it.
“On Sunday, speaking on SKY News, the chair of the No campaign, Alistair Darling, said that: ‘at the moment nothing he [George Osborne] says has got much credibility’
“We couldn’t agree with Alistair Darling more – nothing George Osborne says has credibility – so why on earth does Mr Darling regurgitate the Chancellor’s absurd fears and smears about banknotes and economic policy in Scotland?
“When George Osborne came to Scotland in November 2011, his scaremongering claim that the referendum was deterring inward investment Scotland collapsed in a heap when he was unable to provide a stitch of evidence to support it – and when for the second year running Scotland gained more jobs from inward investment than any other part of the UK, including London.
“In Scotland, we have lower unemployment than the UK, higher employment, and the Scottish economy continues to grow while the UK as a whole continues to shrink.”