QUEEN DRAGGED INTO £10M OFFSHORE TAX ROW
MORE than £10million of the Queen’s fortune has been invested in offshore tax havens.
A huge data leak reveals the cash was secretly funnelled to the Caymans and Bermuda. Royal officials insisted last night they were ‘not aware of any tax advantages’ and the Queen had no direct involvement.
U2 star Bono, members of Donald Trump’s cabinet and some of the world’s biggest firms including Facebook are also named among the 13.4million confidential documents. Dubbed the ‘ Paradise Papers’, the leak is second only to last year’s Panama Papers and again exposes how the rich and powerful shield wealth offshore.
The financial documents, which will be released throughout this week, show that:
The Queen’s money was invested in BrightHouse, a hire-purchase
retail company accused of exploiting poorer households;
Her cash also helped prop up Threshers, the now-defunct off-licence chain;
Bono used a firm in tax-haven Malta to buy a shopping centre in Lithuania;
Kremlin- controlled firms invested in Facebook and Twitter via a business contact of President Trump’s son-in-law;
Mr Trump’s commerce secretary Wilbur Ross has a stake in a firm with ties to Vladimir Putin’s son-in-law.
The Queen’s income comes from the Duchy of Lancaster, a private estate which was set up in 1399 to generate a financial return for the reigning monarch. It manages land and investments held in trust for the monarch and the assets are worth £519million according to its latest accounts.
According to the leak, the Duchy has used offshore private equity funds designed to shield UK investors from having to pay US tax on their holdings.
Leaked to a global consortium of media organisations including the BBC and the Guardian, the Paradise Papers show that £10.7million of the Queen’s private money was invested in funds in the Cayman Islands and Bermuda.
A sum of £5.7million was invested through a Cayman Islands fund named Dover Street VI Cayman Fund LP. The Dover Street fund invested about £3,000 of the Queen’s money in BrightHouse, which has 270 stores.
It has been accused of exploiting the poor, by offering them hire-purchase deals to buy goods such as washing machines but effectively charging them double the shop price when loan interest is included.
The firm has been under investigation by the Financial Conduct Authority, which last month said it was not a responsible lender.
The Dover Street fund also invested in Threshers, the chain of wine shops which went bust in 2009 owing £17.5million in tax and costing almost 6,000 workers their jobs. Another £5million was invested by the Duchy of Lancaster in the Jubilee Absolute Return Fund, which invests in hedge funds.
At the time of the investment in June 2004, the fund was based in Bermuda. The Duchy sold its stake in 2010. There is nothing illegal in the investments and no suggestion that the Queen is not paying tax, or had any knowledge of the specific investments.
The Duchy said it was not involved in decisions made by funds. But questions will be asked as to whether the monarch should be investing offshore. Buckingham Palace declined to comment last night and referred all inquiries to the Duchy.
A Duchy spokesman said: ‘We operate a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimate.
‘The Queen voluntarily pays tax on any income she receives from the Duchy.’
The Duchy’s chief finance officer, Chris Adcock, told the Guardian it had been unaware of the indirect holding in BrightHouse.
He said: ‘Investors commit to a fund for a given period and are not party to its ongoing investment decisions.’
He added: ‘We are not aware of any tax advantages to the Duchy in investing in offshore funds. The Duchy’s investment policy is based on advice and recommendations from our investment consultants and asset allocation, rather than tax strategy.’
But Labour MP Meg Hillier, chairman of the public accounts committee, told the BBC’s Panorama: ‘We need to see what’s going offshore. If offshore was not secret then some of this stuff just couldn’t happen. We need transparency.’
The Paradise Papers also prompted questions for Tory donor Lord Ashcroft. The BBC said the papers showed he had retained his non-dom status while in the House of Lords, despite reports he had become a permanent tax resident in the UK.
The Guardian said the peer, 71, had a previously unknown trust ‘sheltering his vast overseas wealth’. Lord Ashcroft’s spokesman Alan Kilkenny said the peer had never engaged in tax evasion, abusive tax avoidance or tax avoidance using artificial structures, and ‘any suggestion or implication that he has will be vigorously challenged’.
The Panama Papers revealed last year how Vladimir Putin’s inner circle and other world leaders used tax havens.
‘We need to see what’s going offshore’