MPs say 'offshore' is bad - but not for their own pensions

Wednesday 08 November 2017

As UK MPs line up to criticise offshore tax havens following the Paradise Papers revelations, it emerged that more than £6million of their own pension pot money is invested in Jersey.

The Papers constitute the world’s second largest leak, encompassing more than 13.4million documents naming around 120,000 individuals and companies.

So far, they’ve linked a number of high-profile individuals including royalty and political officials with legal offshore structures. Then yesterday it emerged that following global controversy over its tax affairs, two key Apple subsidiaries became resident in Jersey following a 'beauty parade' of offshore jurisdictions which included questions about their reducing their potential tax burden. 

The disclosure pushed Jersey into the global 'tax haven' spotlight, and various UK MPs were quick to renew their attacks on what they allege to be abusive tax avoidance schemes - the Labour Party’s Shadow Chancellor John McDonnell pushed for a public inquiry into tax avoidance both in the UK and offshore.

Pictured: Opposition Leader, Labour's Jeremy Corbyn, hinted that those who benefited from offshore investments - including the Queen - should apologise.

But the Financial Times revealed yesterday that MPs themselves could stand to benefit from a Jersey structure. The Parliamentary Contributory Pension Fund has £6.6million invested in the BlackRock UK Property Fund, which is based in Jersey.

The full list of MPs benefitting from this has not been disclosed, but Mr McDonnell himself was reported to benefit from the scheme. Labour declined to comment on whether Mr Corbyn was implicated. 

The Jersey element of the fund constitutes just a small part of the total, however, which stands at £621million according to a valuation earlier this year.

While perhaps an awkward revelation for UK politicians, the structure isn’t illegal – or unusual.

The BBC – the company behind two damning Panorama episodes on the Paradise Papers on Sunday and Monday this week – also holds some of its pension pot money offshore. Controversial Apple, meanwhile, was also named in the BBC's top 10 largest equity investments.

A House of Commons spokesperson commented: “Some funds are domiciled offshore to enable investors from different countries to invest in the same fund, and also to prevent double taxation,” he said. “Investors in these funds are responsible for paying any tax owed arising from either income or capital gains in the usual fashion, unless they are held within a pension fund or another lawful tax-exempt structure.”