Revealed: Rishi Sunak ‘listed in tax haven as beneficiary of trust’ while chancellor
According to documents seen by The Independent.
Trusts in the British Virgin Islands and the Cayman Islands, set up to help manage the tax and business affairs of his wife Akshata Murty’s family interests, list Mr Sunak as a beneficiary in 2020, according to people familiar with the financial affairs of Ms. Murty and the evidence reviewed by this publication. Mr Sunak became Chancellor in February of the same year and had previously served as Chief Secretary to the Treasury since 2019.
Documents seen by The Independent show trusts linked to Mrs. Murty, her family and companies linked to their activities. In a number of them, Mr. Sunak was on the list of beneficiaries.
Pat McFadden, Labour’s chief treasury secretary, said Mr Sunak being listed as a beneficiary of tax haven trusts is “extremely serious” and called for answers.
He said: ‘We need urgent answers from the Chancellor as to why he has been linked to a tax haven. We need full transparency on this and other stories about the Chancellor that have emerged in the last 24 hours.
Questions about Mr Sunak’s financial arrangements have come to the fore since The Independent revealed on Wednesday that Ms Murty has non-dom status, which means she does not have to pay UK tax on foreign income. Sources also say Ms Murty, whose family business is worth £3.5billion, had set up a trust that would continue some of those benefits of non-dom status beyond the 15-year limit.
In a U-turn on Friday, Ms Murty announced she would now pay UK tax on all her worldwide earnings, saying she did not want her financial arrangements to be a ‘distraction’ for her husband in his role as chancellor.
A spokesman for Mr Sunak said they ‘did not acknowledge’ the allegations of use of tax havens, while a spokesperson for Ms Murty declined to comment. They have previously claimed she is a non-dom due to being an Indian citizen, although experts have pointed out that using tax status is her choice.
On Friday, Mr Sunak admitted he had also held a US green card while living in Downing Street. Green card holders must pay taxes in America and declare their intention to make the United States their permanent residence.
A spokesperson for the Chancellor said he used his green card for travel purposes until October 2021 on his first trip to the United States in a government capacity, when he returned it after discussion with the authorities. They added, “Rishi Sunak has followed all guidelines and continued to file US tax returns, but specifically as a non-resident, in full compliance with the law. All laws and regulations have been complied with and all taxes have been paid, if applicable, for the duration of his green card ownership.
Last year she received dividends of £11.5m from her estimated £700m stake in Infosys, the IT company set up by her father, saving her around £4, £5million in UK tax thanks to his non-dom status. She has previously said that she “always has and will continue to pay UK tax on all her UK income”.
It comes as Mr Sunak’s popularity with voters hit an all-time high, polls show, as rising inflation and National Insurance (NIC) contributions, as well as energy bills , triggers a cost of living crisis. Mr Sunak’s spring declaration last month was criticized for not doing enough to help those most in need.
Sir Keir Starmer has accused Mr Sunak of being guilty of ‘breathtaking hypocrisy’ for raising taxes while his wife enjoys non-dom status. Labour, the Lib Dems and the SNP have all urged the Chancellor to give more details about their financial affairs and the extent to which he could personally benefit.
While the Treasury said Mr Sunak declared his wife’s tax status when he became minister in 2018 and again when he joined the department, officials said The Independent they had not been informed and felt “uncomfortable” with the implications. The Treasury and Cabinet Office did not respond to requests for comment regarding Mr Sunak’s deemed beneficiary status in the British Virgin Islands or Cayman Islands trusts.
Tax havens have no – or minimal – taxes on corporations and other corporate structures and entities. They also often offer a high degree of financial secrecy, often when companies are registered there or trusts are set up as beneficiaries of companies within their jurisdiction. Their use by UK residents is completely legal.
Ms Murty may be using a loophole left after Chancellor George Osborne tightened non-dom status in 2015. By creating a trust as a non-dom, that entity can continue to have non-dom status even if its beneficiaries can no longer choose to use the tax benefit option. The rules allowing this went into effect on April 6, 2017, and there is no suggestion of wrongdoing in this use of non-dom status.