The thing about tax is that it is so hard to understand, if you work for the British Council. It’s not just that the organisation expects to operate freely everywhere without facing the burden that everybody else does. Who could forget the British Council’s response to the Parliamentary question about whether the amount of tax demanded by the Russian authorities (£1.4 million) was correct? “We felt it was a figure we could understand.” Ah yes, understand. Their employees also have a distant relationship with the tax authorities. Stephen Kinnock no longer works for the British Council, and some might say that the tax scandal in which he is currently embroiled in Denmark dates only from the moment last year when he changed his job and started working for the World Economic Forum in Davos. It doesn’t.
Here’s the rub. In order for Mr Kinnock and his wife, Social Democrat Prime Minister hopeful Helle Thorning-Schmidt, to be able to have joint ownership of their house in Copenhagen (reportedly saving £40,000 in tax), Mr Kinnock must be resident in Denmark for 180 days a year. In order for Mr Kinnock to be able to avoid the high rate of income tax paid in Denmark, he has to be resident in Denmark for no more than 100 days a year. Can one simultaneously be resident for more than 180 days and for less than 100 days? The Danish tax authorities have spotted the flaw, and it looks as though the Kinnock household have, with regard to the Switzerland anomaly at least, put their hands up. They say it was a mistake, and we all know, especially in Britain, that politicians make mistakes over tax and expenses and where they live and that sort of thing, so that’s bound to be all right.
But this is not a new story. What follows is a quote from an interview with Mr Kinnock’s wife in 2007 (translation underneath).
Ja, han betaler skat i England. Han er ikke bosiddende i Danmark, men i Skt. Petersborg. Som udsendt diplomat for Storbritannien. Det er alt sammen lige efter bogen. Vi følger alle regler til punkt og prikke. Selv hvis han tiggede og bad om lov til at betale indkomstskat i Danmark, ville det ikke kunne lade sig gøre i hans tilfælde.
"Yes, he pays tax in England. He is not resident in Denmark, but in St Petersburg. As an emissary diplomat for Great Britain. It is all by the book. We follow all the rules to the letter. Even if he begged and asked permission to pay income tax in Denmark, it would not be possible in his case. "
So pretty clear then. As one of our nation’s “diplomats” (no mention here, note, of either the “charity” or the chancer tax-avoiding “business”), he was paying tax in Britain, and non-resident in Denmark. Except that he was evidently in Denmark for quite a lot of the time (although of course BC staff do not actually PAY tax while resident overseas, they just get paid a bit less as a notional tax, and then get quite a bit more in allowances – geddit?). See this from the Telegraph
The Daily Telegraph can disclose that, as far back as 2007, Miss Thorning-Schmidt stated in a biography that Mr Kinnock “comes home every week, either Thursday afternoon or Friday” and returns to work on “Monday morning after the children are sent to school”.
She repeated the comments in subsequent interviews. Mr Kinnock said in July last year that supermarket trips with his youngest daughter “every weekend” were renowned for their regularity.
What the Danes cannot – unlike the truly flexible British authorities - understand is that Mr Kinnock worked for the British Council, and so may not be made to fit into any category. British Council staff are diplomats when it suits them, resident where they choose to be, and have no problem holding down a full time job in Russia when arriving in Denmark on Thursday afternoon, making renowned weekend supermarket trips in the Danish capital, and leaving on Monday morning after the children go to school. So assuming Mr K was able to get his head down to work in St Petersburg from, say, Monday midday to Thursday midday, he was clearly working for three days a week (two of which apparently involved no travel arrangements), which in the BC no doubt passes for full time. His pater Lord Kinnock was of course British Council Chair at that time, so nobody inside the organisation would have dared to be critical, even if they thought there was something wrong with those hours. They wouldn't dare now either.
Tricky though, isn’t it? Their accountant says Mr K is in Denmark for 33 weekends in the year (and I bet that had more to do with a calculator than a diary). See if you can make the numbers work. It seems that Mr Kinnock has, after all, recently begged the Danish authorities to be allowed to pay tax, and that the Danes have relented and have graciously agreed to accept the money. But it ain’t over till the fat lady sings.