Support 100 years of independent journalism.

  1. Business
21 January 2022

The right-wing press is guilty of hypocrisy on Harry and Meghan’s “tax haven”

Anyone having a pop at the Sussexes for forming companies in Delaware might want to check their own accounts.

By The Chatterer

Many of the UK’s bestselling newspapers expressed concern this week that Harry and Meghan, the Duke and Duchess of Sussex, have set up a series of companies in the “tax haven” of Delaware in the US.

The story appears to have been broken by the Daily Mail and then picked up by the Times, the Sun, the Telegraph and the Spectator, all of which clutched their pearls at the idea that the Sussexes could be perpetrating a “tax wheeze” while also publicly having opinions about things like racism and climate change. Nigel Farage has held forth on the subject on GB News, but obviously the Chatterer hasn’t watched this because life’s too short to spend time on the televisual equivalent of an airport Wetherspoons.

But are Harry and Meghan really dodging their tax? Or are some publishers – themselves not shy of a spot of public moralising – taking still greater measures to keep their profits out of state coffers?

The Times and the Sun, for example – both of which wondered aloud why the Sussexes would incorporate in Delaware when they live and work in California – are owned by News Corporation. According to the US Securities and Exchange Commission, that’s incorporated in – oh, surely not Delaware?

The important thing to understand about Delaware, and tax havens in general, is that they only work for foreign money. For people living and earning their money in the US, such as Harry, Meghan or the good people at News Corporation, incorporating in Delaware does not get you out of paying tax. Reporting requirements differ by state, but America’s IRS will tax Harry and Meghan’s earnings just as it would if they incorporated in California. Delaware is where almost all small businesses and at least half of the larger businesses in America incorporate because it has laws, and a large professional services industry, that make incorporation easy. It is just the default choice for company formation in the US.

A more worrying indication of tax avoidance would be if the Sussexes lived in the US and incorporated their company offshore in, say, Bermuda or Jersey – both of which are, unlike Delaware, on the EU’s watch list for non-cooperation in tax reporting.

The Daily Mail – which worried that the “complicated structure” of the Sussex businesses showed that “Meghan planned to keep her and Harry’s business as opaque as possible” – is owned by Daily Mail General Trust, which was until 2020 owned by a holding company called Rothermere Continuation Limited, which was incorporated in Bermuda. This was renamed Rothermere Continuation (Old Co) Limited and bought by a new Rothermere Continuation Limited, which was incorporated in Jersey. Did someone say complicated structure?

Content from our partners
Is your business ready for corporate climate reporting?
How do we secure the hybrid office?
How materials innovation can help achieve net zero and level-up the UK

Anyone outraged by the idea of someone setting up 11 companies in Delaware will go into absolute conniptions when they read DMGT’s 2021 annual report, which lists holdings in 16 Delaware-incorporated companies, of which eight are 100 per cent-owned by DMGT.

Another little treat from DMGT’s 2021 annual report is a footnote on page 82, which notes how much tax DMGT saved through Group Financing Exemption, a rule introduced by the Conservative government in 2013 that allowed DMGT to finance its US operations through a Luxembourg-resident finance company up to 2018. This exemption was declared illegal state aid by the EU, and DMGT may have to pay back up to £7.4m in tax benefits (it is appealing the EU’s decision).

Finally, there are the Telegraph and the Spectator, both of which fretted over HazMeg’s Delaware incorporations. Both companies’ most recent full accounts give their ultimate owner as May Corporation, which is incorporated in sunny, tax-efficient Jersey. May Corporation is ultimately owned by Frederick Barclay, whose other businesses have included the Ritz hotel, which paid no corporation tax for 17 years while Barclay-owned. Barclay also bought Littlewoods with his brother in 2002 for £750m, then tried to extract £1.25bn from HMRC by claiming compound interest on historic overpaid VAT. Fred lives in a castle on the private island of Brecqhou, which he also owns and which imposes no direct taxes on residents.

If you do own your own tax haven and would still like to have a pop at the Sussexes, don’t let the Chatterer stop you – but maybe just stick to writing about their vapid podcast or Meghan’s awful book.

[See also: How the UK leads the world in tax abuse]

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

Topics in this article: , ,