Fink U-turn: top Tory admits to ‘vanilla’ tax avoidance

David Cameron was today plunged into a fresh embarrassment over his party’s relations with wealthy tax avoiders after Lord Fink, the Tory treasurer, backed down from suing Ed Miliband and claimed that "everyone" engages in tax avoidance.

In an extraordinary U-turn, Lord Fink completely changed his story this morning. Yesterday, in a letter to Ed Miliband in which he threatened to sue the Labour leader if he repeated in public the allegations he made against him in the Commons, Fink insisted he had only opened an HSBC account in Switzerland because he was working there at the time and needed “to do simple things like receive my Swiss Franc salary and pay grocery bills”

But in an interview with the Evening Standard published this morning, Fink said the "expression 'tax avoidance' is so wide that everyone does tax avoidance at some level".

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He admitted to using “tax planning” at what he called the “vanilla” or “mild” end of the spectrum, but stressed that he had rejected expert advice that he could save a fortune in tax by adopting more “aggressive” measures.

On his feud with Miliband, he said: “I didn’t object to his use of the word ‘tax avoidance’. Because you are right: tax avoidance, everyone does it.”

This is what will stick in the craw of many ordinary voters, of course, and why Cameron will be deeply embarrassed. Fink argues that “everyone does it” - but most people wouldn’t know where to begin to avoid paying taxes: to them, the “vanilla” end of tax avoidance is buying an annual ISA.

Miliband said today it marked a "defining moment" for Cameron in the general election campaign. Speaking at his former state school in Camden, Miliband challenged Cameron to explain why he had appointed someone as the treasurer of the Conservative Party who "thinks that tax avoidance is something that everyone does".

Crucially, as I wrote earlier today, Fink had challenged Miliband to stand by - in public, unprotected by parliamentary privilege - the remarks he had made in the Commons. Miliband duly told his audience: “I do.”

However, Miliband did not repeat the word "dodgy" he had employed more than once in Wednesday’s Commons exchange with Cameron. And this encouraged Fink to issue a statement afterwards confirming that he would not be suing Miliband and indeed that it was the Labour leader – not he - who had backed down.

"Yesterday I challenged Ed Miliband to repeat the accusations he made in the Commons – that I used an HSBC bank account to avoid tax and that I was a 'dodgy donor'. He did not. This is a major climbdown by a man who is willing to smear without getting his facts straight."

But as Isabel Hardman writes for The Spectator, this is not correct: Milband never called Fink "dodgy" - he said the Tory party had "dodgy donors".

Talking to the Standard about his dealings at the “vanilla end” of tax avoidance, Fink said he had “used the opportunity... to set up some simple family trusts” while on a four-year posting to Switzerland. He transferred some shares to his children and his wife.

“Really what I was trying to do was, not like a living will, but to allocate a very small shareholding to each of my children so they could pay deposits on houses in London one day after we returned. There was nothing complex, and they weren’t aggressive tax planning.”

So, who won this battle of words? Even the Conservative-supporting papers will be hard-pressed to portray this as anything but an embarrassment for Cameron and the Tory campaign. The Sunday Telegraph’s Iain Martin told the Daily Politics at lunchtime that it was clearly a points win for Miliband.