How Winston Churchill fought Inland Revenue on wartime 'second front'

By Chris Hastings and Gary Anderson

WINSTON Churchill waged a lifelong battle with the taxman that continued even at the height of the Second World War, according to government documents published for the first time last week.

Inland Revenue files reveal that the nation's wartime prime minister and his financial advisers went to extraordinary lengths to minimise the liabilities on his earnings from his work as an author and journalist.

David Irving comments: Once again, when journalist Chris Hastings needs a Churchill biographer to quote, he turns to that a**hole Andrew Roberts. I write to him: "Surely it is safe to pay reference to me again, now that your boss Conrad Black, the corrupt owner of Hollinger International, has been unmasked?"    I have been working since 1970 on my Churchill biography, the third and final volume will come out next year. That is thirty-five years.    In the first volume (1986) I went into considerable detail about his attempts to mitigate or avoid income tax, which I researched in 1976 in the files of his literary agent (in the University of Oregon at Eugene) and in 1977 in the papers of Daniel Longwell, publisher of Life magazine, in the Butler Library at Columbia University, New York.    Journalist Hastings might ask his "expert" Andrew R next time whether he bothered to travel to those two archives. I somehow ... doubt it. When I first published these somewhat unsavoury facts in the Evening Standard's Londoner's Diary in the 1970s -- wait till Hastings reach the postwar years and WSC's tax problems! -- Winston Churchill Jr publicly called me a lunatic. I'm still standing. Gradually the Real History of the period emerges however -- no thanks to the conformist historians. Incidentally, Adolf Hitler had similar tax problems: see the Introduction to the new edition of my "Hitler's War" (Millennium Edition, 2002)..

The papers, which cover a 20-year period, refer to Churchill's "latest attempt to minimise liability" and indicate that he used every lawful opportunity to avoid tax.

At one stage he even considered setting up an overseas company to ensure that his lucrative extra-parliamentary earnings would be exempt from income tax.

Even the outbreak of the Second World War, and his role in masterminding Britain's defence, failed to distract him from his efforts to reduce his tax bill.

In October 1942, at the height of the conflict, the Inland Revenue documents disclose that he managed to find time to fight a successful appeal against a tax demand for more than £6,000 (the equivalent to about £175,000 now).

Tax inspectors claimed that he owed the money because of the substantial amount he had earned from two different newspaper serialisations of his earlier writings.

The documents, which have been released for public inspection by the National Archive in Kew, indicate that he first argued that the money was paid in random instalments and could not be classed as regular income.

When that tactic failed, he successfully appealed to the tax commissioners, claiming that the money should be classed as a capital payment rather than income, thereby cutting his tax liability.

In a concession to his wartime role, Churchill was allowed to submit written evidence to the appeal, rather than appear in person. The Inland Revenue's inspectors later registered their disappointment with the decision reached by the commissioners.

In October 1942 Britain and its allies had begun to turn the tide of war against Germany, with the Russians inflicting heavy losses on the Germans at Stalingrad and the British Army achieving its first significant victory against Rommel at El Alamein in north Africa. The prime minister said at the time: "This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

THE files also indicate that Churchill was conscious that his tax affairs might one day be public. In correspondence with his advisers, he refers to himself in the third person as "AB".

Other documents show that Churchill's battles with the taxman began as early as 1931, when the then backbencher cancelled a lecture tour of the United States after advisers warned him that his earnings from the tour would increase his overall liability for tax.

In a letter to his financial advisers, he bemoans the treatment of "AB", whom he regards as a man of outstanding abilities and jokes about the idea of a legal challenge.

He wrote:

"In the circumstances I think AB would be ill advised to undertake the lectures owing to the fact that his receipts would raise the rate of tax on the rest of his income and he would receive little more than two fifths himself.

"A lecture tour is a physical and psychic exertion of which most literary men or journalists would be incapable. A certain standard of quality being essential."

He concludes: "Poor AB! If however he decided to run the risk he might become involved in a cause celebre against the Crown."

Another file headed "trouble in high places", dated 1947, deals with information passed on to the Inland Revenue by a member of the public who had suspicions about a book deal that Churchill was about to sign.

The correspondent wrote the letter after overhearing claims that the London-based publishing company Cassell & Co was about to pay Churchill £250,000 (worth about £6 million now) for his memoirs of the Second World War. He was alarmed to hear that the money was to be handed over "for services to the nation", as a means of minimising the tax demand.

The Inland Revenue seems to have decided, after an initial investigation, that the complaint was without foundation. Inspectors, however, remained convinced that "some curious work was going on in this connection".

Officials believed that a family trust had been set up specifically to handle the money so that it could be classed as capital rather than income.

Andrew Roberts, a historian who has written extensively about Churchill, said: "I do not think these disclosures will make people think any less of Churchill. I think if people had to choose between the Inland Revenue and the man who saved Western civilisation they would opt for the latter."

He added: "He was always short of money, at least until he published A History of the English-Speaking Peoples in the 1950s. His determination to live like an 18th-century grandee meant that his expenditure often exceeded his income. People assumed that because he was the grandson of a duke he was very wealthy, but that was not the case."

... on this website:

Our new website dossier on Churchill

Wall Street Journal's opinion on this article (and Mr Irving) | Abe Foxman (ADL) is outraged

David Irving: "Churchill's War", free download

 

Website note: Churchill's monthly desk calendars for the war years September 1939-1945 are available as a service to historians on CD Rom in pdf format for $50 from Focal Point Publications, 36 Hertford St, London W1J 7SE