Jungle Money

There’s been a lot of talk recently about what Nadine Dorries was paid for her appearances on I’m A Celebrity, Get Me Out Of Here and why she hasn’t declared that fee yet.

By following the trail laid down by Unity in this excellent blog post and listening carefully to what Dorries says in this interview with Andrew Neil (I expect that’ll be there for another week or so) it becomes pretty obvious what has happened.

She hasn’t received the money yet.

Of course, you wouldn’t usually expect to wait six months for payment for a media appearance, so what has happened?

Dorries has a service company called Averbrook and all of her media work is now undertaken by this company. Then Averbrook invoices media organisations for the work that Dorries does and the media companies pay the fees to Averbrook. The fees then sit in Averbrook’s bank account until needed.

At this point Dorries has received no money and therefore has no requirement to declare any income. In the Andrew Neil interview, she says “I have not personally benefited from going into the jungle”. She then explains that she has a company for her media work and although it isn’t made clear, it’s obvious that this company receives the money from this work.

Dorries goes on to say that when she benefits from that work, she will have to register the income. At some point in the future she will need to use this money and Averbrook will pay it to her. There are various ways for a director to take money out of a company. You might pay it as salary, you might pay it as dividends (if the director owns shares in the company) or, in extreme circumstances, you can close the company down and redistribute its assets. All of these will have varying tax implications and all of them will require Dorries to declare the income to parliament.

But here’s the interesting thing. The income that Dorries will receive from Averbrook will have no link back to its original source. The declaration will simply need to say “£X,000 dividend from Averbrook” or whatever is appropriate. There will be no way to say how much of the money comes from each individual source.

It’s a bit like money laundering. But, of course, this is all completely legal. Working through a service company is a really common way to manage tax affairs. It has tax benefits and (as we can see here) it has privacy benefits.

Of course, there’s a good argument that using a company like this goes against the spirit of the requirement for MPs to declare income. It would be hard to argue against that. But until the law is changed, you are very unlikely to see any MP stop using the system.

So what are the chances of the system changing? Rather slim I’d say. Why? Well because the people who would need to make the change are many of the people who are benefiting from this system.

But on this occasion, I’d have to say that Dorries isn’t the problem. She’s just taking advantage of a well-known system. And people aren’t asking her the right questions about it.