How Emma Harrison 'avoided £800,000 in higher rate tax'
Little wonder the 50p tax rate hasn't brought in the expected revenue: here's one way to avoid paying it
EMMA HARRISON, the boss of A4e, the government work agency, has dropped David Cameron in the brown stuff again on the eve of the Budget - this time by allegedly avoiding £800,000 in taxes.
Harrison, who resigned last month as Cameron's family champion and back-to-work adviser after a fraud investigation was launched into A4e (Action for Employment), apparently paid herself a dividend of more than £8 million in 2011 but brought forward the date of the payment to 2 April, neatly avoiding the 50p tax which came into being on 6 April, the start of the financial year.
It is estimated that by bringing forward the annual dividend payment by just a few days – in previous years, they were smaller and were paid on or after 6 April - Harrison, who has a stockholding of 87 per cent in her company, was able quite legally to avoid paying £800,000 in tax at the higher rate. Instead, she paid tax on her big fat windfall at the old 40 per cent rate.
All legal and above board, but condemned by Margaret Hodge, Labour chairman of the Public Accounts Committee, as "plain greedy".
The allegation was made on Channel 4 News last night by business editor Faisal Islam. It is hugely embarrassing for Cameron, and the Tory claim that we're "all in it together" (unless you have a good accountant).
It is more worrying for George Osborne because Emma Harrison was not the only one. One tax expert told C4 that a total of £20bn in dividends was brought forward in a similar fashion by other directors of companies, avoiding £2bn in tax at the higher rate.
In tomorrow's Budget, Osborne will tell the House of Commons that he is able to cut the 50p top tax rate – probably to 45p and probably not until 2013 - because it is failing to raise the expected revenue. Now we know why. He didn't need a Treasury investigation to tell him. He just needed to speak to some of Dave's friends. ·