By ‘Gammel Dansk’, assisted by ‘Stan‘

Before we turn to Stephen Kinnock’s latest attempt to set the record straight about his past, here by way of an overture to the main show is a handy chronological summary of the schools saga.

• Kinnock “rages” against private education, and the way it enables a privileged elite to buy its way into a better life makes him “extremely angry” (2009)
• Kinnock and his wife send their elder daughter to a private school in Copenhagen (2010)
• She later moves on to the even swankier Atlantic College (£28,600 a year) near Cardiff, partly paid for by the Danish taxpayer (2013-2015)
• “Stephen Kinnock slams ‘misleading claim’ that his daughter went to a private school” (Western Mail, February 2014), failing to mention that his daughter was a pupil at Atlantic College.
• “Stephen Kinnock ‘underestimated’ school fees for daughter” (Western Mail, March 2014). It’s all the fault of political opponents trying to undermine him, and oh yes, those fees were twice as much as he had previously said.
• 23 July 2016 – Kinnock issues a further “clarification”, saying that he has “always been open about, and proud of, the fact that a vital part of Johanna’s education took place in Wales”.

The ink had barely dried on that before Kinnock was busy banging out another “clarification” to Twitter users who were asking him about his tax affairs in Denmark.

According to Stephen, it was all old news, very simple and clear cut:

Ask anyone in the Danish media or bewildered members of the Danish public who tried to follow all the twists and turns of this byzantine tale over several years, and the picture that emerges is very far from simple.

A Google search on the words “Kinnock skat” (Danish for ‘tax’) returns 56,500 entries, and that is just the tip of the iceberg.

Why, for example, did Kinnock and his wife tell the press within days of the story breaking that he was about to file a tax return in Denmark, and would be paying back taxes as well as liabilities going forward? And why did the couple engage a top tax lawyer who fought tooth and nail to get him off the hook?

“I want to pay tax in Denmark”

Seven days after  the article Kinnock mentions on 23 June 2010, the Danish press was ablaze with the story. On that day, the Danish national news agency, Ritzau, carried a report quoting various reputable sources, including Berlingske Tidende, a leading quality daily, saying that Stephen Kinnock had agreed to pay tax in Denmark.

Here is one of the many press reports from the time.

“After a week of news headlines, the Social Democrats’ leader, Helle Thorning-Schmidt, is caving in: her husband wants to pay tax in Denmark with retrospective effect, says Berlingske Tidende.”

“He will pay tax in Denmark for the first time, and the couple promises that he will continue to do so in coming years.”

At the time Kinnock was working in Geneva, but the family home, his wife and children were in Copenhagen.

Thorning-Schmidt told the press that the couple believed that they had always acted correctly, and that they had contacted a tax lawyer who confirmed their interpretation, “but there are some grey zones in all of this, and we want to steer clear of grey zones. We have therefore chosen to go the whole hog and pay tax in both Denmark and Switzerland.”

On second thoughts…..

The lawyer, Frode Holm, told the press that the grey zone arose because Kinnock had not just regularly spent time at home in Denmark, but had also conducted business meetings there.

The larger than life Frode Holm was not just any old tax lawyer, but was reckoned to be the very best in the country, and famous for performing miracles for very rich clients who had run into a spot of bother with the taxman, as explained by Politiko, a part of the Berlingske media group, here.

One of his cases is said to have involved a businessman who was facing a tax bill of Dkr 1.9 billion (around £260 million). Holm turned it round and secured a rebate of nearly £900,000 for his client.

The sums involved in the Kinnock/Thorning-Schmidt case were peanuts by comparison, but Helle Thorning-Schmidt had her eyes set on becoming Prime Minister, and so Holm’s job was partly to ensure that no political damage was inflicted, with zero tax liability for Kinnock a bonus.

The taxman enters the bedroom

This was the beginning of a saga which was to run on for nearly four years, and Frode Holm was to hit the headlines spectacularly in the autumn of 2012 when it emerged that he had told the tax authorities two years earlier that Stephen Kinnock was gay or bisexual.

Holm claimed that he had done this to explain why Kinnock’s wife did not want to go to a meeting with the tax authorities, because “she (Helle Thorning-Schmidt, Ed.) does not want to sit here and have to explain their personal circumstances”.

Holm’s claim that it was he who set the rumour rolling was later disputed by others involved in the case, and this aspect of the story grew legs and became a convoluted saga in its own right. However, if Holm’s version of events was correct, several mysteries remain. Was he just making it up, and were his clients aware of what he was doing from the beginning? If not, when did they become aware of what their lawyer was saying?

When he was asked in October 2012 whether he believed that Kinnock was gay, as he had told the taxman, Holm replied “no comment”.

To be fair to the Danish press, journalists became aware of the rumours surrounding Kinnock’s sexuality early on, but decided that this was a private and personal matter. It was only towards the end of 2012 when it became clear that the issue was so closely bound up with his tax status that the floodgates opened.

The problem confronting the couple boiled down to precisely how many days Kinnock had spent in Denmark. If it was less than 180, Kinnock was not liable to Danish tax.

Family values

The trouble was that in order to stress their credentials as a normal, close family, the couple had previously given interviews to a whole series of newspapers, magazines and authors saying that Kinnock spent several days with his wife and children  each weekend at home in Copenhagen. If it was true that Kinnock had spent four days at home each weekend, Friday to Monday, he would be liable to tax.

On 16 September 2010, the Danish tax authorities concluded that Kinnock had not spent more than 180 days at home, and was therefore not liable to tax in Denmark. As we shall see, the decision was by no means straightforward.

But the affair had only just begun because leaks and attempts by political opponents to exploit the tax question later led to investigations and an inquiry, during the course of which various previously confidential documents became public.

A hair’s breadth

It emerged that Kinnock had only narrowly escaped having to pay tax, and that the tax office had reinterpreted its own rules when it reached its decision. Had the rules on matters such as responding to business e-mails and meetings while in Denmark not been relaxed, Kinnock would have clocked up more than 180 days.

The decision has since cost the Danish taxman dear.

In another high profile case, Camilla Vest, a Danish model, and her husband Peder Nielsen, boss of the Danish shipping conglomerate Maersk, were found guilty in November 2011 of tax evasion and sentenced to 21 months in prison and a fine of DKr 6.6 million (approximately £750,000). The verdict was  overturned a year later, with the tax authorities’ ruling on the Kinnock case playing a significant role in the court’s decision.

Thriller

Fans of  the Danish political thriller Borgen will probably be wondering where fiction ends and reality begins by now. When Kinnock himself was asked what he thought about the TV show, he said that he had enjoyed the first series, but had found the second too far-fetched.

In reality, the scriptwriters probably concluded that having a woman prime minister married to the “Socialist” non-domiciled scion of an ennobled British political dynasty embroiled in scandals about his tax affairs and private schools, with a maelstrom of rumours about his marriage and sexuality, would have been dismissed by viewers as too bizarre to be believed.

But if we are to believe Stephen Kinnock, who has probably calculated that Berlingske Tidende, Ekstra Bladet, BT and the rest of the Danish press are not widely read in Port Talbot, it’s all very simple and clear-cut.

We await the next clarification.