Paradise Papers: The gross hypocrisy of MPs and the BBC


Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.


These are a few further notes on the Paradise Papers following my earlier blog.

My initial feeling was that this was a load of old claptrap. I remain of that view that it is. However, it appears that, in addition, there is a huge amount of hypocrisy here.

I set out a few notes to explain why.

The Parliamentary Contributory Pension Fund (“PCPF”) –  the MPs pension fund

Following the release of the Paradise Papers, as you will one aware, the Queen was criticised for the Duchy of Lancaster’s use of offshore funds in its investment portfolio. I have just spent about 15 mins looking at the 2015/16 accounts for the PCPF and have picked three fund holdings:

  • The Morgan Stanley Global Property Fund – this is a SICAV domiciled in the Duchy of Luxembourg. We all know about the Public Accounts Committee’s views on Luxembourg;
  • The M&G European Loans Fund – is an OEIC domiciled in the Republic of Ireland, which is having a contretemps with the EU over its tax deals with Apple and Oxfam has branded as one of the world’s worst tax havens; and
  • BlackRock UK Property Fund – this one is a fund registered and domiciled in Jersey. Jersey being one of those infernal ‘Crown Dependencies’ that Labour are always wittering on about.

Of course, this isn’t tax avoidance. It is exactly the same as the Duchy’s investments. They are made through a structure that one accepts as part of the investment. Off the shelf.

However, if one is applying the same Paradise Papers framework (i.e. the one that the media and the likes of John McDonnell and Tom Watson have applied) to the Duchy’s investments then they must also look much closer to home.

Otherwise it smacks of gross hypocrisy.

It does not end there. The Duchy was also criticised for investing in Thresher’s that went pop. According to reports, it went bust with the loss of several thousand jobs as if the investment actually caused that. I am not sure how. Presumably, if anything, it propped it up. One assumes that the investment was lost.

However, the bigger issue appeared to be the investment in Bright House. A company by all accounts that, in a Wonga-stylee, made exorbitant credit available to those on low wages so that they could purchase TVs, fridges and other electrical appliances.

Apparently, the Duchy should not invest in companies with such unethical business practices.

Since 2016, the PCPF has published its Top 20 equity holdings.

In no particular order these holdings include:

You really couldn’t make this stuff up. MP’s seemingly have no problem with their pension scheme in investing in ethically dubious companies – some of whom many will have directly criticised.

Her Majesty really should be looking for the keys to the Tower of London…

BBC pension fund

One can also look at the top 20 equity holdings held by the BBC pension fund – of course, the BBC being behind the Panorama programme which aired on Sunday night on the Paradise Papers.

The scheme has substantial investments in the following:

One can also see the funds that the pension scheme invests in by reviewing the annual report for the pension scheme.

There are a lot of funds listed ripe for exploration, however, these two I did check out:

  • Hony Capital Fund LP: although not identifying the exact fund, Hony is a Chinese Private Equity company and its funds appear to be Cayman Island Limited Partnerships. So a bit like the criticised Dover Street Fund in to which the Duchy invested;
  • BlackRock Long Lease Fund – Another Jersey domiciled Private Unit Trust for BlackRock

More gross hypocrisy. Same comments as above.

An injection of reason?

Of course, registered pension schemes do not generally pay tax on income and gains by virtue of statutory exemption. So this means things are different?

Well, no. I think it reinforces the point. If an investor who does not pay tax on his investments uses offshore funds then there must be some other driver. My answer would be that it is because the best (and most) funds are domiciled outside of the UK.

And selecting a fund because you think it is the best cannot be tax avoidance, can it?

Furthermore, the murky offshore centre doesn’t care who it gets its money from. So if tax havens are evil, as the BBC and MPs would like us to think, then these schemes are allowing them to carry on as usual.


Do I think it is wrong to invest in non-UK funds? No, I do not. It is a simple fact that most investment funds are domiciled outside of the UK. My view is that I should be able to invest in the best funds, so should the BBC and MPs, and so should the Queen.

If it is the structure of the global fund industry that these tend to be domiciled out of particular jurisdiction then so be it. It isn’t tax avoidance to choose an overseas fund in this context.

Of course, there is some murky behaviour that goes on offshore. However, one cannot simply say that offshore = evil. Send in the battleships.

To plaster all media sources with such ‘revelations’ is really not helpful in developing sensible tax policy in this country – albeit it plays well with the lowest common denominator.

On Sunday night’s Panorama programme, Richard Bilton stated he had spent 12 months reading the leaks from the ICIJ. However, in reality, he could have spent and evening looking at his or his colleagues annual pension statement and half of his story would have been done and dusted.

It could have saved us two episodes of excruciating TV.


If you have any queries or any comments on the Paradise Papers or any tax matter in general please get in touch. We love a good debate!



  • In a nutshell!

  • At last, a voice of common sense and reason

  • Wonder what ‘News’paper and what TV channel will take this up to give Joe/Jo Public the chance to make a judgement. I am not a Facebook expert but suggest you spread the word there and keep at it hot and strong. I dread the thought of finally losing WW2 and when the realities of locked-in EU membership sink in, having civil disorder and street riots put down by UK Police supervised by the New E U Army, (led by German Officers they suggested.)

  • Dave Plunkett / Reply

    I am not sure the Queen ever said “Ooh Philip, we must invest in BrightHouse or Threshers”, as she probably does not use either.
    I also suspect that MPs or the BBC do not fully realise where their pensions are invested.
    But I do agree they all should know.
    More locally to you, what are your views on Warrington Council buying a Cheshire business centre, going off-shore, and avoiding £10million stamp duty taxation.

    • Hi Dave, the Warrington Council issue is an interesting one. However, my view is that if Warrington Council are presented with a choice to buy a building – buy the property and pay £1.6m in stamp duty or, alternatively, buy the shares and pay nothing. What should they do? Take a moral stand and burn council taxpayers money for no reason? As a Warrington Council taxpayer I would be disappointed if they chose the former. Is it tax avoidance? Well no. They have been presented with a commercial option (I am assuming they haven’t been involved in ‘enveloping’ the property which seems reasonable). I’m not even sure HMRC would compel someone to take the option that generates the maximum amount of tax in this type of scenario. Cheers Andy

      • Dave Plunkett / Reply

        Andy, Thank you. But you are condoning a race to the bottom.

        Councils, especially a Labour one like WBC, must take a moral stand on evasion and avoidance, especially as councils collect taxes, and prosecute those who do not pay Council Tax.

        Taxes for economic activity here in the UK is tax for a purpose, and if moved offshore is a loss to us all. That means reduced public services for us and our families, in health, crime, education, social care, housing, etc. Your clients and their families may not think they need these services just now, but one day they might, and the services may not exist.

        Just taking a pop at MPs and BBC pension funds is easy. You could have added that the Church of England funds found out a few years back it had money in WONGA. Mostly funds are managed by committees and trustees of often amateur and inexperienced representatives, who mostly take the easy option, and just hand investing decisions over to advisers and investment managers.

        These committees should control more and give clear guidelines on what is acceptable practice by investment managers. Currently most investment managers operate in a morality-free environment, and so they invest anywhere in anything, put the money off shore, or look for tax avoidance options.

        It means bigger fees and bonuses.

        But they have killed their golden goose. The good news for those of us who think we should pay proper taxes for UK prosperity, trade and services, is that the FCA have told the CMA to look into investment managers.


        Today the government have launched an Industrial Strategy to improve growth as we leave the EU. There must be tax relief for investing in the UK infrastructure, not going off-shore

  • Hi Dave,

    It won’t surprise you that I don’t agree

    There is of course an argument that there should be no (or a less stark) difference in two courses of action. A number of years ago (mid to late 2000’s?) there was some draft legislation that sough to catch property rich companies from a stamp duty perspective. Note sure what happened to that?

    What would be interesting with the Warrington story is whether the Council continued to pay for professional directors to sit out on whatever rock they were doing when the shares were acquired. I suppose, if they did, that would indicate an ongoing tax motive.

    I wasn’t actually taking a pop at the BBC or MPs investments (and, I must add, the Church would be just as easy a target). I don’t think there is anything wrong with buying units in investment funds run offshore. Most investment funds are run offshore – whether Cayman, Luxembourg, Ireland. What I was commenting on was the hypocrisy of those who cry about the tax avoidance bogeyman when (1) there is no tax avoidance; and (2) they are doing exactly the same themselves.


  • Dave Plunkett / Reply


    Many thanks.

    The Co-ops support paying tax properly, and have a campaign to highlight what they do. It is proving good for their business, and they are promoting their own fair tax mark, along with their fair trade commitment.


    I hope that paying tax will one day soon be seen as something we should all do. It will be the end of the industry of avoidance, but the effort going into that can be put to far better use in our communities and society. My grandchildren will see the benefits.

    We should not to try to avoid tax if we live, work and trade in this country. The countries of Scandinavia show the way with high tax, high welfare and a cohesive society.

    Most people are rightly horrified at the recent revelations of the rich and famous, and the corruption and hypocrisy that frequently goes with tax avoidance.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.