According to a trove of leaked documents, Tony and Cherie Blair avoided paying £312,000 in tax on the purchase of a London property by acquiring an offshore company.
The former British prime minister and his wife bought the £6.45m townhouse on Harcourt Street in Marylebone in 2017 as the office for their legal advisory firm Omnia and their foundation for women.
The manner of the deal allowed Blair to avoid paying stamp duty, as the tax is not paid when the holding company of the property is directly acquired instead of the building. There is no suggestion that Blair actively tried to avoid paying taxes and that the transaction was not illegal.
In a statement, the couple insisted that they had purchased the property “in the usual manner through reputable property agents” and had “nothing to do with the parent company nor those behind it”. He added that he “never used offshore schemes to hide transactions or evade tax”.
Details of the deal were revealed as part of an investigation into the Pandora Papers by a consortium of nearly 600 journalists from dozens of global media outlets, including Guardian and bbc panorama program. A vast repository of leaked financial documents reveals the secret offshore financial affairs of 35 world leaders, more than 100 billionaires and a range of influential figures in the worlds of politics and business.
According to leaked documents, the four-floor building purchased by Blair was previously owned by an offshore company based in the British Virgin Islands. At the time of the deal, Romanstone International Limited was partly owned by Bahraini’s Minister of Industry, Commerce and Tourism, Zayed Rashid Al Zayani.
Leaked documents claim that Blairs bought the building by setting up a British company named Harcourt Ventures to acquire shares in Romanstone. Each of them had a 50 per cent individual stake in the firm which was also registered for VAT.
Stamp duty is paid by any person purchasing commercial or residential property of value in excess of £150,000 and £125,000 respectively.
Ms Blair said the sellers had insisted that the property was sold as such. “It is not uncommon for sellers of such property in a corporate vehicle to dispose of the property separately or in a commercial office building,” he said.
The couple said that “acquisition of a company comes with various tax consequences” and that they “will certainly be liable for capital gains tax on resale”. Both Blair and al-Zaynis said they were not initially aware of each other’s involvement in the deal.
Mr Blair has previously been critical of tax loopholes. In his campaign for Labor leadership in 1994, he said: “We must tackle the abuse of the tax system. For those who can hire the right accountants, the tax system is a haven for scandals, perks, city deals and profits. “
Blairs has amassed a multi-million-pound portfolio of properties since leaving Downing Street in 2007. He had already spent over £30m on 38 residential properties before buying the office on Harcourt Street. Daily Mail.
Robert Palmer of Tax Justice UK told the BBC panorama The deal’s schedule: “It doesn’t sound great partly because most people can’t do the same thing… even though what Blair did was perfectly legal, perfectly legal in the business world, it Intuitively feels really unfair because giving them an advantage, a potential advantage that the rest of us don’t have.”
Several other world leaders were also named in the Pandora Papers.
Czech Prime Minister Lady Babis was revealed to have injected €19 million into several shell companies to buy a large estate in a mountainous village in Mougins, France, known as Chateau Bigod.
According to the International Consortium of Investigative Journalists (ICIJ) involved in the Pandora Papers investigation, Mr Babis did not disclose shell companies and chateaus in the asset declarations he was obliged to file as a public official. He did not respond to requests for comment.
Leaked documents also claim that the Jordanian king secretly spent more than £70m on a property empire in Britain and the US. Abdullah II bin al-Hussein is accused of using a network of firms secretly owned in the BVI to buy 15 homes, including properties in California and London, since coming to power in 1999.
King Abdullah’s lawyers denied any wrongdoing and told the BBC he had used his personal wealth to buy the property. He said it was common for wealthy individuals to buy assets through offshore companies for security reasons.
The documents behind the “Pandora Papers” investigation are sourced from financial services companies including those in the British Virgin Islands, Panama, Belize, Cyprus and the United Arab Emirates.
Credit: www.independent.co.uk /