This week in tax: Ex-F1 boss Bernie Ecclestone guilty of tax fraud

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This week in tax: Ex-F1 boss Bernie Ecclestone guilty of tax fraud

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The ex-Formula One Group chief executive avoids a prison term despite the plea, while Ireland and Portugal announce investments in sovereign wealth funds

Former Formula One boss Bernie Ecclestone pleaded guilty yesterday, October 12, to misleading HM Revenue and Customs about overseas assets worth more than £400 million ($492 million).

Ecclestone, however, was able to avoid an immediate prison sentence.

He has also agreed a civil settlement with HMRC and will pay £652.6 million covering tax, interest and penalties for 18 tax years between 1994 and 2022.

The 92-year-old Ecclestone, appearing at Southwark Crown Court in London, pleaded guilty to one count of fraud by false representation, just over a month before he was set to stand trial.

Ecclestone admitted giving HMRC a misleading answer at a meeting in 2015 – he incorrectly said he established only a single trust in favour of his daughters and was not a beneficiary or settlor of any other trust.

However, he was actually the settlor and beneficiary of various trusts, including one which held a company that sent £416 million to a Singapore-based bank account in 2010.

Judge Simon Bryan handed Ecclestone a 17-month prison sentence suspended for two years, meaning he will only go to prison if he commits another crime during that period.

Ex-IRS worker pleads guilty to leaking Donald Trump’s tax returns

An ex-IRS worker has pleaded guilty to the unauthorised leaking of former US President Donald Trump’s personal tax records to news organisations.

Charles Littlejohn, who was a contractor for the IRS, also stole tax data from thousands of other wealthy Americans.

Donald Trump’s lawyers have opposed any plea deal.

They have called for the maximum penalty to be handed to Littlejohn, who faces up to five years in prison.

Littlejohn is set to be sentenced in January after admitting to one count of disclosing tax return information yesterday, October 12.

He admitted that he provided information about the ex-US president’s taxes to American media outlets, namely the New York Times and ProPublica. Neither publication is accused of any wrongdoing.

Ireland and Portugal to invest in sovereign wealth funds

Ireland is going to invest over half of its upcoming corporation tax windfall in two new sovereign wealth funds, it has been reported.

The announcement from Dublin came on Tuesday, October 10.

Portugal also this week said it would create a new fund with its 2023 budget surplus.

The Portuguese finance ministry confirmed the fund would initially be used to buy Portuguese bonds before channelling money into structural public investments.

Like Portugal, Ireland also has a surplus.

The Irish sovereign wealth funds would receive €6.3 billion ($6.6 billion) a year from annual corporate tax receipts, according to Irish Finance Minister Michael McGrath.

Side hustle platforms face HMRC rule change

HM Revenue and Customs has instructed popular ‘side hustle’ platforms to record and report how much money people are making through them, from January 1 2024.

Platforms impacted include popular apps and websites Airbnb, Fiverr, Upwork, Uber, Deliveroo and Etsy.

If someone makes more than £1,000 ($1,200) alongside a regular job in the tax year, they need to register themselves as self-employed and report the income to HMRC. They will then have to pay tax on that income.

HMRC is going to invest nearly £37 million in this initiative and employ 24 full-time staff to launch and enforce these measures, it has been reported.

Irish budget hands SMEs €250m boost

The Irish government announced a €250 million ($263 million) temporary support package for SMEs in its budget on Tuesday, October 10, to help ease inflationary pressures.

The scheme will offer one-off grants to up to 130,000 SMEs.

The Irish budget also included a tax break for angel investors, meaning they can benefit from a reduced capital gains tax rate when disposing of a qualifying investment, for gains up to twice the investment’s value.

Corporation tax for large companies was also raised from 12.5% to 15% in line with OECD guidelines.

Next week in ITR

ITR will be bringing you an analysis on the latest development for Brazil’s new transfer pricing law.

In other news, we will also cover boutique firm Escalante y Asociados joining law firm CMS Mexico and why it's significant.

We will also bring you a story from the The World Bank Group-International Monetary Fund Annual Meetings in Marrakech, where ministers have warned that capital flight due to public distrust of national tax regimes is bleeding billions of dollars of potential revenue from governments' coffers across Africa.

Readers can expect these stories and plenty more next week. Don’t miss out on the key developments. Sign up for a free trial to ITR.

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