From: JONNY@ROBBIE.COM   
      
   Telegraph   
      
   How dying Orwell avoided the clutches of the taxman   
   Ben Fenton   
   (Filed: 30/09/2005)   
   George Orwell, author and lifelong socialist, entered into a tax avoidance   
   scheme on his deathbed as money began to flood in from the success of his   
   final two books, Animal Farm and Nineteen Eighty-Four.   
   He was seeking to escape the full weight of the Labour government's   
   punishing surtax regime as all his royalties arrived in a short period and   
   he feared leaving his widow and six-year-old son with a gigantic bill for   
   death duties.   
      
   The dying author tried to preserve the riches from his novels   
   After Orwell died, his accountants underplayed the copyright value of those   
   two great works, which between them have sold millions of copies in dozens   
   of languages, by telling the Inland Revenue they were mere "topical   
   bestsellers" with short sales lives.   
   They also diminished the taxman's expectations of the Orwell estate   
   benefiting from the sale of film rights to both books with the bizarre   
   reasoning that Hollywood might find them too anti-communist in tone and not   
   want to offend the Soviet Union.   
   Papers relating to Orwell's tax records have only now come to light with the   
   release at the National Archives in Kew of the Inland Revenue file for Eric   
   Arthur Blair, the author's real name.   
   The file includes the document setting out the "service agreement", made   
   while Orwell was dying of tuberculosis in a small sanatorium at Cranham,   
   near Gloucester, that was intended to protect him and his estate from the   
   crippling surtax regime of the time.   
   It takes the form of the "minutes" of the first meeting of a company called   
   George Orwell Productions Limited held on April 19, 1949, nine months before   
   his death.   
   Listed as present is only one name, "E. A. Blair" - Orwell himself.   
   The minutes have only one item on the agenda, the service agreement, which   
   says: "In consideration of Mr Blair agreeing that all Fees, Royalties etc.   
   received by him as Journalist, Author, Lecturer, Broadcaster etc. and that   
   all the copyrights of all Books, Articles, Plays etc. written by him during   
   the term of his employment are to be the property of the Company, IT WAS   
   RESOLVED that the Company should employ Mr Blair for a period of Fifteen   
   Years from the 6th April 1949 at a salary of Two thousand pounds (£2,000)   
   per annum plus such Bonus as may be voted each year at the discretion of the   
   Board."   
   After consulting Jack Harrison, his accountant, Orwell paid himself the   
   equivalent of a salary of about £126,000 at today's prices because it would   
   attract relatively less tax than the lump sum expected from the royalties of   
   Nineteen Eighty-Four, which turned out to be six times greater in the   
   following tax year. He had ignored Harrison's advice to do this after the   
   publication of Animal Farm in 1945 and paid crippling taxes in 1947 as a   
   result. Now, with the success of Nineteen Eighty-Four assured, he seemed to   
   have determined not to make the same mistake again.   
   The scheme was drawn up with the knowledge of both men that Orwell was   
   unlikely to draw much more than a year's salary before his death.   
   Orwell noted ironically at the bottom of the "minutes" that "the Assistant   
   Secretary was instructed to write to Mr Blair confirming the above   
   arrangement".   
   Orwell referred to the riches that he earned only at the end of his life as   
   "fairy gold" because he knew he could never spend it.   
   After Orwell's death at the University College Hospital in January 1950, Mr   
   Harrison took on the Inland Revenue, which was keen to tax every penny from   
   the estate.   
   The file shows a detailed correspondence between the taxman and Orwell's   
   lawyers.   
   In one question, the Revenue asks why the American copyright on Animal Farm   
   has been valued at £500, relatively lower than a collection of essays   
   Dickens, Dali and Others.   
   "Your point is appreciated but its strength is somewhat diminished by reason   
   of the fact that the demand for Animal Farm as a topical best-seller may,   
   apart from any unexpected boost as a result of the deceased's death, be   
   expected to be now exhausted."   
   In fact, American sales of the book topped eight million by 1970, about the   
   same as Nineteen Eighty-Four.   
   Of that masterpiece, the solicitors said that a professional copyright   
   valuer believed sales would "dwindle fairly rapidly".   
   "The fall from 4,528 sales in the six months ending 30.6.50 to 821 in the   
   three months ending 31.10.50 supports his view and indicates that future   
   sales will very rapidly decline," they told the taxman. The Revenue was also   
   licking its lips about the film rights to the books, the files show,   
   pointing out that Orwell must have recognised their value because he   
   specifically mentioned them as a bequest in his will.   
   But the solicitors bent all logic to try to play down the value of the   
   rights, the new documents show.   
   "It should also be borne in mind here that the only books worthy of filming   
   are Nineteen Eighty-Four and Animal Farm and are in a strongly   
   anti-communist tone and would be regarded by film companies as an extremely   
   risky proposition as, by the time that these films could be made and put on   
   the market (which would take 2 or 3 years from the date of contract)   
   friendly relations may have been established with the USSR and it would then   
   be extremely difficult if not impossible to secure a showing of the films."   
   Both books were filmed twice in the 20th century and commercially   
   successful.   
   DJ Taylor, a biographer of Orwell, said of the newly-discovered files: "It   
   is very poignant that he only earned this money when he knew he was dying.   
   "I would defend the man to the death, but I think in this case he was being   
   quite naïve because I don't think if he had really understood what was going   
   on that he would have really approved of a scheme that cheated the state of   
   income."   
   But Prof Peter Davison, the editor of the 20-volume Complete Works Of George   
   Orwell, said that the author's motivation was easy to understand.   
   "He was very worried about providing for his son, Richard, a boy who he   
   could not even see for his last few months such was the fear of passing on   
   the tuberculosis.   
   "I think this shows that he was doing what he could to provide for his son."   
      
   c/o ROBBIE   
      
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