The questions Richard Tice isn't answering about the £120k of tax that wasn't paid by his Quidnet REIT property company: Let's start with a "spot the difference" competition. Here's a dividend announcement from Quidnet. And here's one from another REIT, Glenstone.
There’s a telling difference. Glenstone says it’s declaring a “Property Income Distribution”. Quidnet says that it’s declaring a “dividend”. Why does this matter? Quidnet and Glenstone were REITs. Exempt from tax on property income. But the dividends they pay from that income are "property income distributions". The difference is critical. A normal dividend - paid by Tesco or Barclays - has no withholding tax. UK individual investors pay tax in the January of the following year, when their tax return is due. Top rate 39.35%. A property income dividend has 20% "withholding tax". Immediately. Then, when individual UK investors file their tax returns - up to 21 months later - they "top up" that tax to the 45% rate. So the rate is a bit higher and some of the tax is paid much earlier. Glenstone fully understands this. It looks like Quidnet and its advisers didn’t, and treated all their dividends as normal dividends. So Quidnet paid about £270k to Mr Tice and £330k to his offshore trust, without any withholding tax. This was a surprising error for a REIT and its advisers to make – it’s a very basic and fundamental REIT point. We don’t know how the error was made, but there are broadly two ways it could have played out: Scenario 1. The REIT got it wrong. Everyone else got it right. Mr Tice and his trust both paid tax at 45% – the correct treatment. Mr Tice's line: a mere technicality and HMRC isn't out of pocket. It is, however, more than that: Mr Tice obtained an unlawful tax benefit – tax was paid up to 21 months late. And Mr Tice’s payment didn’t fix the company’s failure to withhold tax – the tax remains due. (Is this an unfair result? It could be in the case of a normal REIT. But this was a REIT driven solely by tax considerations - Mr Tice has all but admitted that. When you play tax avoidance games, you need to stick to the letter of the law. If you don't, you win tax prizes) 2. Everyone got it wrong In this scenario, everyone acted consistently, and thought Quidnet was paying a normal dividend The REIT didn’t withhold. Mr Tice paid tax at 39.35%. The offshore trust either paid tax at 39.35%, or didn’t pay tax at all HMRC is out of pocket Which scenario are we in? Richard Tice isn’t saying. In his own statements and Reform UK’s they’re clear that Mr Tice paid tax, but they’re not saying anything about the rate he paid, and not mentioning the trust at all.
I asked Mr Tice's lawyer these questions yesterday, but didn't receive a response. These are very easy questions to answer: one look at the tax returns will show whether the dividends were correctly reported as "other income" or, incorrectly, as "dividend income".
More here: taxpolicy.org.uk Our original report: taxpolicy.org.uk The point was first identified by Gabriel Pogrund of The Sunday Times; we assisted with the story. The Sunday Times' report is here: thetimes.com Oh, and on a personal note, could the people who think I'm horribly biased against Mr Tice please have a word with the people who think I'm horribly biased in favour of Mr Farage? Ta.