‘Hypocrisy’: Ministers under fire as CalMac uses P&O tax dodge to save £46m

MINISTERS have come beneath fireplace for sanctioning tax avoidance as state-controlled ferry corporate CalMac used the similar loophole as P&O to flee paying National Insurance contributions price £46m.

The use of tax havens by way of delivery companies to make use of seafarers has come into better center of attention after it emerged P&O used an organization within the offshore tax haven of Jersey to make use of 800 workforce it axed with out understand to get replaced by way of reasonable company workforce.

It ended in criminal mavens debating whether or not workforce with offshore contracts have complete employment rights in the United Kingdom.

State-controlled ferry operator CalMac which gives lifeline island products and services principally on Scotland’s west coast via a fleet of over 30 growing old vessels makes use of a subsidiary corporate primarily based within the tax haven of Guernsey to make use of its 1000 seafarers, exempting it from National Insurance contributions.

Over the ultimate 16 years, CalMac has stored a median of £3m a yr at the offshore scheme.

Caledonian MacBrayne Crewing (Guernsey) was once established to chop greater than £1.5m in prices. That has now risen to round £5m a yr.

The shipping staff union TSSA says Scots ministers will have to “hang their heads in shame” in permitting tax avoidance to occur.

Seven years in the past in entrance of a University College London target market (see under) the First Minister, Nicola Sturgeon weighed into the rising political hurricane over criminal tax avoidance, branding it “obscene”, “immoral” and “despicable”, and promising a “zero tolerance” way in Scotland.   She mentioned she may just now not “think of words strong enough for it”.

She mentioned the “whole political establishment” had negligently allowed tax avoidance to turn into regimen, although it robbed public products and services of crucial investment.

Just ultimate month the SNP publicly condemned Westminster’s file in coping with tax evasion announcing powers to maintain it lie only with them and that UK Tories “simply continue ignoring Scotland”.

The birthday party mentioned Scotland loses over £3 billion a yr from unpaid tax – “money that could be spent on schools, hospitals and our NHS”.

“Along with UK Overseas Territories – such because the Cayman Islands – UK and its territories account for greater than 36% of world tax losses.

READ MORE: Sturgeon calls for 0 tolerance on obscene and despicable tax avoidance

“These are astronomical sums on a global scale, and yet Westminster is failing to take real action to tackle it.”

The birthday party went on: “The UK leads the world in tax evasion and abuse – and as a result of Westminster’s failure to clamp down on it, the UK loses £38 billion a year,” the birthday party mentioned.

Unions are pushing within the wake of the P&O debacle, for using offshore delivery corporations to be re-examined.

Sacked P&O seafarers hired via a Jersey corporate could have to take criminal motion over their contracts at the island.

Two years in the past the Tax Justice Network’s score of company tax havens scored Jersey and Guernsey 98 out of a conceivable 100, hanging them “up there with the worst”.



TSSA common secretary Manuel Cortes mentioned, “Sadly, the race to the ground within the maritime business is a long-standing downside. With P&O we noticed the fruits of what occurs when governments have allowed ferry corporations to make use of tax dodges and different manner to cut back their labour prices.

“CalMac, then again, is a state-owned corporate and it’s indefensible for CalMac to dodge taxes. £45million kilos is a large sum of money to take from the general public handbag, cash that will have been used for the good thing about the poorest amongst us.

“The Scottish executive are in the end chargeable for the selections CalMac make about their staffing and so they will have to cling their head in disgrace. This is not anything greater than state-sanctioned tax-avoidance!”

In 2020/21 CalMac mother or father corporate David MacBrayne Limited gained £22.8m in Covid toughen from the Scottish Government and £1.1m of furlough investment during the taxman (HMRC). That’s on most sensible of a £153m Scottish Government subsidy it will get to take care of products and services to a few of Scotland’s remotest islands – a £9m building up at the earlier yr.

The apply of permitting ferry corporations to steer clear of paying National Insurance contributions was once introduced in to stay them aggressive within the face of international festival.

Many of the foremost ferry operators on UK, Ireland, Isle of Man use offshore schemes, together with Serco NorthHyperlink Ferries which operates products and services to the Northern Isles of Orkney and Shetland. Outsourcing large Serco beat Calmac to the £450m, six-year contract to run the products and services in 2020.

Another union authentic mentioned: “I’ve by no means concept it was once ever the fitting factor to have seafarers introduced into those offshore schemes and the Scottish Government is hypocritical if it stands in opposition to tax avoidance however seems to simply accept this.

“You cannot escape the accusation that it is tax avoidance and while I am all for job security for our members, what has happened at P&O has changed the way everyone is thinking about how seafaring staff are dealt with.”


Nine years in the past, then leader secretary to the Treasury Danny Alexander, a Liberal Democrat within the coalition executive, mentioned a tax loophole permitting companies to dodge National Insurance can be closed beneath a brand new scheme focused on offshore payroll products and services.

He mentioned it could finish using offshore payroll products and services in tax havens corresponding to Jersey and Guernsey.

He mentioned those workforce may well be unknowingly ineligible for positive advantages.

The status quo of Caledonian MacBrayne Crewing (Guernsey) was once licensed by way of ex-Liberal Democrat Scottish shipping minister Nicol Stephen.

Seafarers union Nautilus mentioned that there was once a necessity for trade and mentioned it were campaigning to advertise the employment of UK-resident seafarers on routes between British ports together with the North Sea offshore sector for a few years.

“The actions of P&O Ferries now makes the need for minimum ‘local content’ requirements even stronger. We shall be working with the government to seek changes to manning/crewing requirements,” mentioned a spokesman.

“Under the United Nations Convention on the Law of the Sea (UNCLOS) ships are meant to have a ‘genuine link’ to the flag they fly. Which means among other things operating the trade out of the jurisdiction, with places of work and folks primarily based there now not only a brass plate corporate.

“PO Ferries admitted that it has places of work in Dover and Hull. It hired most commonly British citizens and operates in British ports. So why will have to it’s allowed to fly flags of comfort from different jurisdictions? There must be stricter UK regulations to put in force the ‘genuine link’ beneath UNCLOS.

CalMac defended the offshore apply announcing: “The National Insurance Exemption for Seafarers scheme is same old business apply in the United Kingdom. It is a scheme designed to allow UK flagged vessels to be aggressive, offer protection to UK maritime jobs and is licensed by way of the United Kingdom and Scottish governments, in addition to HMRC and the Treasury.


The SNP introduced a marketing campaign to forestall tax avoidance in 2017

“CalMac applies UK employment legislation and our vessels and staff are governed by the UK Maritime and Coastguard Agency.”

The Scottish Government would now not remark when requested why it had now not taken motion to forestall the offshore tax avoidance scheme operated by way of the ferry operator it controls.

A Scottish Government spokesman mentioned: “We toughen measures to make sure people and companies pay an even quantity of tax and feature known as for better tax transparency and more potent motion from the United Kingdom executive on avoidance and evasion.

“The Scottish Government’s capacity to tackle tax avoidance is constrained by the devolution settlement, as we have no power to legislate on reserved tax policy or in areas such as international affairs, which includes the ability to independently designate tax havens.”

New measures offered 4 years in the past put additional onus on companies to justify why they will have to take pleasure in the low or non-existent tax charges paid on their earnings in Crown Dependencies like Guernsey, Jersey and the Isle of Man which is house to almost 80,000 corporations.

In 2017, Guernsey had just below 18,000 corporations, with 89% now not using workforce in the community. The regulations had been offered after the European Union threatened the dependencies with inclusion on its 2019 tax blacklist, along side 62 different puts.

With it comes the likelihood of financial sanctions and main harm to the reputations of the islands’ monetary products and services sectors.

The dependencies mentioned the regulation trade addresses considerations – by way of introducing fines of as much as £100,000 for so-called brass plate corporations that can’t end up they’ve a enough bodily presence within the islands.

Depending on the kind of corporate, tax-resident companies must show they’re in the community controlled, generate source of revenue within the islands, and that they’ve a bodily presence relating to workforce, premises and native spending.

EU consideration at the islands sharpened after the 2017 liberate of the Paradise Papers, the place Jersey and Isle of Man had been the focal point of main revelations.

Nicola Sturgeon hits out at tax avoidance and evasion at First Minister’s Questions in November 2017. Source: SNP

By bringing within the new regulations, Britain’s dependencies was hoping to steer clear of discovering themselves at the 2019 EU tax blacklist.

But there stays considerations about transparency over the firms primarily based in Guernsey and Jersey.

In its condemnation of UK tax evasion, the SNP mentioned ultimate month: “The UK only has 0.86% of the world’s population – but the UK’s tax loss is equal to 14.2% of the world’s total tax loss.”

“Per person, this equates to around £570 a year – a figure that hits particularly hard amid a Tory cost of living crisis, for which we all pay the price.”


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