Since becoming chancellor, Rishi Sunak has not delivered any of the tub-thumping speeches of his predecessors about going after tax avoiders. He has not criticised tax havens in the House of Commons. And his only mention of offshore has been in relation to wind power. On one level, this is not surprising. Sunak is a former hedge fund manager, whose previous employers – Theleme Partners and TCI – are both linked to the Cayman Islands. Before that, he worked for Goldman Sachs, masterminds of financial engineering. However, this has very much not been his image since taking over at the top of the Treasury. He was until recently in favour with the public for the furlough scheme, which saved jobs and livelihoods during the pandemic. He has also found himself in the difficult position for a self-proclaimed “low-tax” Tory of moving to put up taxes. And Sunak’s personal image has been more the California tech bro, working nerdily on his laptop in casual clothes, than the besuited hedge fund boss. This is perhaps why Tory MPs and the public alike have been taken by surprise by recent revelations about his family’s tax arrangements. It is widely known that he married into an exceptionally wealthy family, with Akshata Murty’s father an Indian IT billionaire.
But even Boris Johnson has admitted being unaware that Sunak’s wife was a non-dom, and able to take advantage of this status to legally avoid tax on millions of pounds in overseas earnings. Further revelations that Sunak held a US green card, denoting permanent residence in the States, also appear to have caught No 10 unawares. However, the clues about Sunak’s worldview were there all along. When he backed Brexit in 2016, his models for corporate success and trading partners were the US, India and Brazil. And when he was extolling the virtues of a “clean break” exit from Brussels in 2017, advocating with fellow Tory MPs in the Telegraph, he was praising the ability to sweep away regulation and create low-tax zones for businesses. He wants to turn the UK in a “global hub” for crypto, despite warnings from the Bank of England governor that the asset class is the “new frontline for scammers”. Sunak also brought in a new low-tax scheme that is partly designed to benefit some wealthy non-dom investors, just days before his national insurance rise hit millions of working people at the height of a cost of living crisis. The new scheme – the qualifying asset-holding company regime – specifically mentions fund manager non-doms as a category of people who can benefit by not having to pay tax on foreign earnings through the new vehicles.
The point of the whole scheme is to try to attract asset managers from low-tax jurisdictions such as Ireland and Luxembourg. In the view of Richard Murphy of Tax Research UK, this is a first step towards “Singapore-on-Thames” in a post-Brexit Britain, the goal being to “encourage the flow of funds through a jurisdiction with little or no tax being paid”. Furthermore, when confronted with the evidence of tax avoidance from reporting by the Guardian, the BBC and others on the huge leak of the offshore Pandora papers, Sunak has been dismissive. Last year, he argued it was “not a source of shame” that London had been called the tax avoidance capital of the world because the UK had a good track record and “led the world” on transparency. And now he is at the centre of calls for transparency about his own family’s financial affairs. It remains to be seen whether he will be able to hold off revealing what he owns and how much tax he pays on it, while in charge of UK tax policy at a time when many millions are struggling.