The Use of Foundations

Hmm, interesting question really, isn\’t it. Why would people use a Foundation? That is, an organisation which owns itself, and has a charitable purpose?

Businesses owned by one pay the same tax as businsses owned in other ways, so that\’s not it, no. It\’s actually all about the transfer of the ownership of the whole organisation. A new bod can be put into run it, to take advantage of the accumulated wealth, without there being any of that pesky inheritance tax, or CGT, or whatever, usually due on the transfer of the control of such assets. For, you see, ownership doesn\’t change: only who gets the CEO\’s desk and, of course, control of the moolah.

Richard Murphy:

That, of course, is hardly surprising. There is no reason at all why anyone in Jersey would make use of these foundations. They are just another vehicle for subverting the taxation system of the UK and the other populous states of the world to be provided by the tax haven lawyers, accountants and bankers of Jersey for the benefit of their good friends, the accountants lawyers and bankers of the UK and elsewhere.

I will admit that I\’m not quite sure why anyone would want to run such a thing from Jersey. Exactly the same protection of an asset is available onshore, right here in the UK. No, really, it is. The Scott Trust:

The Scott Trust is a British non-profit organisation which owns Guardian Media Group and thus The Guardian and The Observer as well as various local newspapers, Smooth FM (formerly Jazz FM) and other radio stations, and various other media businesses in the UK.

The Trust was established in 1936 by John Scott, owner of the Manchester Guardian (as it then was) and the Manchester Evening News. After the deaths in quick succession of his father C. P. Scott and brother Edward, and consequent death duties, John Scott wished to prevent future death duties forcing the closure or sale of the newspapers, and to protect the liberal editorial line of the Guardian from interference by future proprietors.

The Trust was dissolved and reformed in 1948, as it was thought that the Trust, under the terms of the original Trust Deed, had become liable to tax due to changes in the law. At this time John Scott also gave up his exclusive right to appoint trustees; the trustees would henceforth appoint new members themselves. Five months after the signing of the new Trust Deed, John Scott died. After three years of legal argument, the Inland Revenue gave up its claim for death duty.

Why bother to do it abroad when you can get away with it at home?