BVCA hits back at Alexander tax attack

Tim Hames, director general of the BVCA, dismissed Alexander's claims on private equity's alleged tax avoidance as "party conference politics, pure and simple."

Hames described Alexander's proposed crack down on tax avoidance concerning "straightforward commercial transactions" as "strange".

He asserted that the association's tax committee has been "in continuous dialogue with the Treasury and HMRC on this issue of loans made by private equity partnerships." He believes Alexander's so-called loopholes are actually "a well-established set of rules".

In a statement, Hames conceded that taxation and complex company structures are not black and white, "but are far more complicated... with implications that extend well beyond the private equity industry". He argued that current structures used by the asset class are not about avoidance, rather "legitimate commercial logic."

Yesterday, at the Liberal Democrat conference in Glasgow, Alexander quoted Benjamin Franklin's famous words: "Nothing is certain except death and taxes. And a conference announcement from Danny Alexander on tax avoidance." He admitted that he may have embellished the quotation but he is not sorry for "going after tax dodgers".

Alexander labelled those who avoid paying tax as "the immoral minority, who believe paying the proper amount of tax just isn't for them". In reference to the private equity community he said: "The vast majority of people in an industry are finding ways to exploit that difference, and that industry is the preserve of the very wealthy, I have no hesitation in acting." He went on to announce that the government will be "closing the loophole that allows private equity shareholders to siphon money out of their firms while dodging the intended income tax." Finally, Alexander called these practices wrong and unfair.

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