Lewis Hamilton has been in the news for his tax affairs as well as his racecraft, but does he deserve the criticism he has received?
I remember the sense of disappointment on learning from a story in one of the motoring weeklies that Jim Clark was taking up residence abroad, in order to avoid British taxes. It was 1966, and I was not quite out of my teens; the broader social implications of tax avoidance had yet to make themselves clear to me. But Clark had been my hero since a day at Mallory Park seven years earlier, when he won three races in a Lister-Jaguar and one in a Lotus Elite. I associated him with the modest, homespun life of a farmer in the Borders rather than the gilded existence of an tax exile.
Was he the first to take an accountant’s advice and leave the country in this interest of minimising his tax burden? His 1950s predecessors such as Stirling Moss, Mike Hawthorn and Tony Brooks retained their homes in London and the home counties, although Peter Collins lived for a while in Modena and was planning to make a life with his new wife, the actress Louise King, on a boat in the Monaco harbour. Rows in those days were less likely to be about avoiding tax than evading the requirement to do National Service; there was a full-blown rumpus in the popular press and questions were asked in the House of Commons when Hawthorn, having initially deferred his call-up while completing an engineering course in 1952, appeared to be staying out of the country on purpose three years later in order for his 26th birthday to render him no longer eligible for the compulsory two years in the armed forces.
Clark had been having a particularly hard time with the Inland Revenue (as HMRC was then known). In the words of his biographer Eric Dymock, his local lawyer and accountant had been “out of their depth”. At one point the tax authorities had sent him an assessment accompanied by a demand for a whopping £250,000, more than double his annual income at the time. Apart from the terrifying sum, Clark was infuriated by the idea of risking his life in order to receive less than the pre-decimal equivalent of 10p in every pound he earned, thanks to a top tax rate of 91.25 per cent. His original financial advisers had already set up a company in the Bahamas, which had not satisfied the tax inspectors. Now he consulted a more sophisticated accountant who sorted out the assessment and sent him, in April 1966, to a new residence in Bermuda. The Revenue complained that the arrangement was a sham, but eventually gave in. Thenceforward Clark’s appearances in Britain would be minimal.
He was certainly not the last world champion to reduce his tax obligation by moving abroad. In 1968, four days before he died, his compatriot and friend Jackie Stewart moved his family into a house on Lake Geneva, where they lived for the next three decades. Stewart was more adept at watching the pennies than Clark, and a great deal shrewder in his financial dealings with teams and sponsors, but he was no less resentful of the right of the UK government to take such a high percentage of his earnings.
Other British world champions – Graham Hill, John Surtees, James Hunt – submitted to the demands of the UK tax authorities without moving abroad. Nigel Mansell, however, lived for most of his F1 career on the Isle of Man, where the top rate of income tax is 20 per cent; after his retirement he moved to Jersey, which offers a similar benefit. Damon Hill moved his family to Dublin for a year or two. David Coulthard and Jenson Button relocated to Monaco almost as soon as they started earning decent F1 money, and remain there.
Lewis Hamilton has followed their example. Born and brought up in Stevenage, he moved to Lake Geneva even before becoming world champion for the first time in 2008. Scorn was heaped on his head when he erred by claiming that he was making the move in order to secure greater privacy; eventually he confessed to Michael Parkinson that tax had been a factor. In 2012 he moved to Monaco, and a year later bought a Bombardier Challenger 605 private jet worth £16.5m. This autumn a cache of confidential documents known as the Paradise Papers revealed a complicated scheme through which the jet had been registered on the Isle of Man, leased to a management company, and then leased back to Hamilton, enabling him to save £3.3m on VAT.
At a time when many UK citizens are questioning why the rich are allowed to get richer while the poor must submit to years of austerity, this is not a good look for Lewis, even though it puts him in the company of the Queen, some of whose investments also seem to have been channelled through offshore companies. But why should he uniquely be vilified for exploiting legal opportunities to reduce his tax payments?
I happen to believe that those who have benefited from a country’s infrastructure – from the schools, the health service, the roads and so on that are paid for by the taxes on ordinary people – should not avoid their own obligations.
But to single out Hamilton – and to suggest, as the historian Max Hastings wrote in the Daily Mail, that he should be barred from receiving further honours in his home country – is manifestly unfair and unjust.
Richard Williams is a former editor of Melody Maker, was The Guardian’s chief sports writer and is the author of several books on Formula 1