Is that the end of Lewis Hamilton's knighthood? - Spear's Magazine

Is that the end of Lewis Hamilton’s knighthood?

Is that the end of Lewis Hamilton’s knighthood?

Reputations are on the line following the ‘Paradise Papers’, and rightly so, writes Emelia Hamilton-Russell

The release of millions of hacked confidential documents to media outlets including the BBC — dubbed the ‘Paradise Papers’ – puts the reputations of celebrities, HNWs and major global corporations on the line. Some may not recover.

Take the case of racing driver Lewis Hamilton: after winning his fourth Formula One world title just weeks ago, the Brit said it would be ‘the greatest honour’ to be given a knighthood, amid speculation that this might now be coming his way. He can whistle for it now.

Using a string of offshore companies with various leasing arrangements, the Formula One champion, reported to be worth £131 million in the Sunday Times rich list, was able to avoid paying tax on his £16.5 million jet — in a shrewd move which now looks like it will leave his dreams of becoming ‘Sir Lewis’ in a decided tailspin.

The driver did however pay tax on the jet — though thanks to the offshore arrangements, received a £3.3 million ($4.4 million, €3.7 million) VAT refund in 2013 after his luxury plane was imported into the Isle of Man, according to the BBC and Guardian newspaper.

The reports allege that his tax advisers and Appleby — the Bermuda-based law firm at the centre of the leaks — assisted Hamilton and dozens of other clients in setting up leasing businesses to secure multi-million-pound VAT rebates.

And Lewis is not alone: Apple, the company that has become the sleek global symbol for progress and innovation, is another casualty of the Paradise Papers leak.

BBC Panorama claims that until 2014, Apple — the biggest company in the world by market capitalisation — had been exploiting a loophole in tax laws in the US and the Republic of Ireland to allow it to channel the proceeds of its sales outside of the Americas — currently about 55 per cent of its revenue — through Irish subsidiaries that incurred low tax. As a result instead of paying Irish corporation tax of 12.5 per cent, or the US rate of 35 per cent, its foreign tax payments rarely amounted to more than 5 per cent of its foreign profits — and dipped below 2 per cent in some years, according to reports.

When in 2013 the Irish government decided that firms incorporated there could no longer be stateless for tax purposes, Apple went looking for a new offshore location.

The Paradise papers, seen by the BBC, show that Apple (with the help of Appleby’s legal advise) chose Jersey, a UK Crown dependency that makes its own tax laws and has a 0 per cent corporate tax rate for foreign companies.

Apple said: ‘When Ireland changed its tax laws in 2015, we complied by changing the residency of our Irish subsidiaries and we informed Ireland, the European Commission and the US. The changes we made did not reduce our tax payments in any country.’

Whatever the outcome of these investigations, it’s doubtful that these companies or individuals will claw back all of the standing that they once enjoyed prior to the revelations. ‘There’s an assumption that you’ve done something wrong or are doing something wrong if it’s offshore’, the eminent media and reputation lawyer Mark Stephens told Spear’s in an interview earlier this year. ‘And there’s a reputational hit – and you have to justify why you’ve got the stuff offshore, if you’re going to.’

Today these words ring louder than ever: those named in the Paradise Papers are going to have to make good on their arrangements — and make peace with the increasing disquiet in the court of public opinion. If they don’t their reputations will inevitably suffer, and the consequences may well be in seen in lost knighthoods or falling share prices.

Emelia Hamilton-Russell is a researcher at Spear’s