Hands up who knows what appropriate word Jeremy’s surname rhymes with…
Via The Telegraph:
The Culture Secretary was paid a dividend by the company he founded in the form of half its office building. The offices were then immediately leased back to the same company.
Accountants said that the deal allowed Mr Hunt to legally reduce his potential tax bill by more than £100,000 because it was completed just days before an announced 10 per cent rise in the tax on dividends in April 2010.
Earlier this week, David Cameron said he would not associate himself with anyone who carried out “aggressive tax avoidance”, while George Osborne, the Chancellor, previously said he was “shocked” by the scale of tax avoidance by some of Britain’s richest people.
The Culture Secretary and his business partner, Mike Elms, transferred ownership of their company’s office building in Hammersmith into their own names in April 2010, just before the tax rate for the transaction rose to 42.5 per cent. They then leased the property back to Hotcourses, their jointly owned education company, for 10 years.
By paying themselves the building as a dividend before the change in tax rules, the two men saved themselves an income tax bill of £202,000 on the £1.8 million deal, by paying tax on it at the rate of 32.5 per cent. The company now pays them £60,750 a year in rent. No stamp duty was payable on the property, which at the time would have been 4 per cent.
The disclosure came as Mr Hunt said he would hand over private emails exchanged with an adviser on the BSkyB takeover bid to the Leveson Inquiry. He faced calls to resign this week after the Murdoch family told of their interactions with his office in 2010 and 2011.
Mr Hunt and Mr Elms set up Hotcourses in 1991. Mr Hunt stood down as a director in 2009, but remains a major shareholder in the company.
A spokesman for Mr Hunt said that all the Culture Secretary’s interests were properly declared and approved by his department’s permanent secretary. “Mr Hunt is a shareholder of Hotcourses and has not been an employee since the end of December 2009. The only way he can receive income is as a dividend paid to shareholders. As a shareholder, Mr Hunt has no responsibility for the day-to-day running of Hotcourses, including any financial decisions.”
Mr Hunt owns 48.6 per cent of Hotcourses. In the previous financial year, it paid £2 million in dividends, meaning Mr Hunt would have received £972,000.
Mr Elms said: “A dividend in specie [the name of the transaction] is the correct way to pay a non-cash dividend and all appropriate taxes were paid.
“Mr Hunt has no responsibility for any financial decisions including the nature, amount and timing of dividend payments to shareholders.”
Hundreds of companies brought forward their dividend payments to beat the tax rise in April 2010.