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Together with Dale Vince, founder of Ecotricity, we are launching a legal challenge against HMRC to close the £600m ‘carried interest’ loophole in tax paid by private equity fund managers.
Despite Britain being in the midst of a brutal cost of living crisis, some of the richest in society are failing to hand over their fair share of tax, thanks to a sweetheart deal between HM Revenue and Customs and private equity fund managers.
In 1987, representatives of the private equity industry successfully lobbied the Inland Revenue, now HMRC, to pay less tax. As a result, instead of paying income tax rate of 47%, private equity fund managers pay 28%.
We think this loophole is not, and has never been, legal. We are supporting Dale Vince to take this case. Vince is an ecologist and a member of Patriotic Millionaires UK, a non-partisan network of British millionaires whose core mission is to ensure that those with wealth make their fair and proper tax contribution.
If private equity were to be taxed properly, HMRC could collect an estimated £600 million more in revenue each year from just a couple of thousand people.
Private equity also harms our public services in more direct ways.
In the last two decades, private equity firms have bought out more and more of the UK’s elderly care homes, children’s homes, and nurseries. By 2019, 50,000 UK care homes were owned by private equity-backed operators. Private equity firm managers primarily make their profits by engaging in ‘leverage buyouts’: they buy companies with borrowing, and then pay off the debt using the company’s assets and cash flow. Being bought in a leveraged by-out significantly increases a company’s risk of going bust.
The evidence also shows that private equity buy outs mean hugely increased prices for essential care – and often falling standards too – as the owners try to squeeze these vital public services for cash to repay the borrowing.
What is more, of the five largest private equity-owned or backed care providers, four have owners based in a tax haven, meaning they are able to withhold still more tax from HMRC.
Help us bring this case to close the loophole and to ensure everyone contributes the right amount into the public purse!
Over 70,000 people have already signed the petition to close the loophole.
Help us bring this case to close the loophole and to ensure everyone contributes the right amount into the public purse.Donate here