A monarch avoiding tax payment is always a good hook for a news story. However, the latest "tax scandal" related to the Paradise Papers goes much deeper than whether HM is paying HMRC a fair amount.
The leaked papers show that approximately £10m of the Queen's private money was invested in offshore tax havens.
The documents reveal that money was put into funds in the Cayman Islands and Bermuda by the Duchy of Lancaster. The Duchy provides the Queen with an income and handles investments for her £500m private estate.
No doubt further disclosures relating to other high-profile figures "avoiding tax" will follow – like buses these stories tend to all come along at once.
Legal or not?
However, the term "scandal" is largely inaccurate – there is nothing illegal about tax avoidance. It might be considered unethical that those in the ultra-high-net-worth bracket reduce their tax bill massively by using an offshore investment vehicle, but it is entirely lawful.
The scandal, it can be reasonably argued, is that legislation is so loose as to allow this to happen in the first place.
Tax avoidance is legal - tax evasion is not. Whether investing in an offshore bond to defer tax or paying a builder through a company in Jersey to avoid VAT is tax avoidance and is legal. But paying the same builder cash for a job to avoid VAT is tax evasion. The end result might be the same but one is inside the law and the other is not.
Another obvious issue is the lack of transparency. Consider the previously unknown $450m offshore trust that has sheltered the wealth of Lord Ashcroft. Or the billions in tax refunds by the Isle of Man and Malta to the owners of private jets and luxury yachts. Then there is the aggressive tax avoidance by multi-national corporations, including Nike and Apple.
Consider how Apple has used various of offshore structures to shift billions of dollars from the US to Ireland. Rather than pay the US corporate tax rate, Apple, with a holding company in Ireland, negotiated a massively reduced corporate tax rate there.
Complexity and confusion
Schemes designed to reduce tax are not only numerous and difficult to track, they are often complex. Whether they remain the right side of the law will sometimes depend on how they are administered. In some instances wealthy individuals and celebrities are either badly advised or don’t ask enough questions.