Baroness Bra’s (equally flashy) husband made £300m from dubious tax-avoidance schemes that ruined thousands and led to two suicides
Aroly-poly Scottish businessman who ‘loves fine art, fast cars and the better things in life’ was the breakout star of Channel 4’ s 2017 documentary Million pound Mega yachts For Sale.
Dressed in wraparound sunglasses, with a champagne glass between his cocktail- sausage fingers, he was introduced as Doug Barrowman, a former chartered accountant who had allegedly ‘built an empire after setting up his own private equity company’.
Viewers were invited to cross the threshold of this flash 50- something’s mega-mansion on the Isle of Man. Inside was a bar, games room, swimming pool and spa. outside, they saw a fleet of supercars parked on the gravel drive, not far from the tennis court and helipad.
‘I’ve got five homes around the world, and this is the biggest,’ he boasted. ‘Not bad for a rougharsed Scots git from Glasgow!’
Soon cameras were being welcomed aboard Barrowman’s 55-metre yacht, Turquoise, where he modestly revealed: ‘Everything you look at is expensive.’ The boat was moored in Monaco where he hoped to sell it for £20 million then upgrade to a 67-metre model.
Asked why he wanted to buy an even bigger floating gin palace, the portly millionaire flashed a set of recently bleached teeth. ‘ The flippant answer is: “Because I can!”’ Fast forward seven years, and things look different. Today the Doug Barrowman who took Channel 4 viewers into his turbocharged world is no longer jazzing up vulgar TV documentaries about million pound mega yachts.
Neither does he still flaunt that collection of fine art and fast cars. Instead, this once-brassy Scottish businessman is keeping a very low profile indeed.
To blame is an ongoing scandal that has turned his name into a byword for greed and dishonesty.
At the centre of this spectacular fall from grace is a ppE firm he set up at the height of the Covid pandemic, with high-profile wife Michelle Mone, a Tory peer,
Infamously, it sold £203 millionworth of kit to the NHS using an emergency Government ‘VIp’ lane, via which ministers’ contacts could bypass normal public sector procurement protocols. And while the firm made £60 million in profits from its deals, millions of the surgical gowns it supplied were never used because they failed to meet regulatory approval.
The National Crime Agency is now investigating ‘allegations of conspiracy to defraud, fraud by false representation, and bribery’ related to the deal, which both Barrowman and Mone deny.
police have raided their aforementioned nine-bedroom Manx pile, along with a string of residential and business addresses in london. In December, about £75 million of the couple’s assets were frozen or restrained by a court order, including that home, a six-bedroom Belgravia townhouse and no fewer than 15 bank accounts, including those with luxury private bankers Coutts and C Hoare & Co.
Around the same time, Barrowman and Mone confessed to having repeatedly lied about their connection to the scandal- hit company, called PPE Medpro.
In previous statements issued via lawyers, multiple news outlets (including this one) were told the couple had no connection whatsoever to the firm. In fact, they later
admitted Barrowman owned and ran it, while Mone helped broker the lucrative supply deals.
The NCA investigation is still ongoing. Meanwhile Mone, a headline-prone former lingerie entrepreneur nicknamed ‘Baroness Bra’ after she was ennobled by David Cameron, took a ‘leave of absence’ from the House of lords just over a year ago, saying she intended to ‘clear her name’.
Where that all leads is, of course, anyone’s guess. But in recent days, a second set of perhaps even darker storm clouds have loomed on Barrowman’s horizon.
THIS new scandal concerns the exact manner in which this ‘ roug-harsed Scots git’ made his fortune in the first place. The story revolves around an important fact: for all that talk of being a ‘private equity’ tycoon, a significant portion of Barrowman’s wealth actually derives from the questionable business of tax avoidance. Specifically, he’s behind a company that, for most of the 2010s, sold flawed tax schemes to mostly middle-class workers.
These people were told that his firm could help them legally avoid paying hundreds of millions of pounds to the Inland revenue. In fact, that turned out to be untrue. When Barrowman’s schemes eventually unravelled, clients were left facing huge tax bills. Many have been financially ruined and at least two former customers of his firms have since committed suicide.
To understand how this came to pass, we must wind the clock back to 2016, when he began stepping out with Mone. Back then, confusion surrounded the source of his wealth. Newspaper reports variously described him as a ‘businessman’, ‘accountant’, ‘private equity guru’ and ‘tax adviser’.
When the couple invited Hello! Magazine into their home to discuss their romance a year later, they told the publication he was simply a ‘wealthy Glaswegian entrepreneur’. In reality, much of his money came from the Knox Group, a conglomeration of firms headquartered in Douglas, capital of the Isle of Man, the tax haven where he lives.
And last week BBC’s Newsnight revealed the group has made tens and perhaps hundreds of millions of pounds selling products that are now at the centre of the so-called ‘loan charge scandal’.
These now-notorious products were marketed to self- employed workers during the 2010s. They purported to enable them to legally minimise their income tax and national insurance contributions by distributing their pay via loans instead of traditional wages.
For example, under a typical scheme, a contractor earning £75,000 a year would not be paid directly. Instead, monthly earnings would be transferred directly from their employer to an intermediary company, usually based offshore.
The worker would then receive
the minimum wage — which equated to around £10,000 of their salary — from the intermediary. the remainder of the money, minus a fee of around 18 per cent which went to the provider, would be given back to them as cash, as a loan. Unlike normal loans, it was advanced on the understanding it would never have to be repaid.
Because loans are not taxable, the theory was the structure would benefit anyone earning more than around £40,000. In exchange for the fee, the firm behind it would also handle their tax returns.
A brochure circulated by AML tax, a company described by HMRC as being ‘part of Doug Barrowman’s Isle of Man-based Knox Group’, carried graphs showing how a worker on £75,000-a-year, who signed up to AML’S loan scheme, would take home £60,915. that’s roughly £10,000 more annually than they’d get if they were paying taxes the normal way, via PAYE. For a worker earning £100,000 per year, the take-home was £82,243, as opposed to £65,310.
By the mid-2010s, about 65,000 workers had signed up to such schemes. Barrowman’s company was probably the biggest player in this lucrative market, with an estimated 7,000- 8,000 clients, many of them teachers, agency nurses, It contractors and other self-employed professionals.
EACH of between course, of paying these 16 was and customers, simultaneously fees 18 per of cent of their pay to Barrowman’s outfit. tax Policy associates, a think-tank investigating this ugly affair, believes Barrowman’s Knox Group firms may have profited to the tune of around £300 million in the years they were handling these workers’ affairs.
There was, however, one big problem — HMRC did not believe the loan structures were remotely legal. It instead regarded them as ‘disguised remuneration schemes’ and — after several years warning about an impending clampdown — in 2017 announced former clients would be required to pay taxes on all money they had been loaned.
In 2019, this move, called the ‘loan charge’, was formally introduced. the 65,000 workers it affected have since been hit with huge tax demands amounting to tens (and in some cases hundreds) of thousands of pounds.
Many have been thrown into significant financial hardship. to cite the example of a £75,000-a-year employee who signed up to AML’S scheme for five years, they would typically now be facing a bill of between £100,000 and £150,000.
around ten suicides are linked to the HMRC clampdown, according to evidence shared in a recent house of Commons debate. two were former clients of Barrowman.
Sammy Wilson, the DUP MP, said the affair had ‘frightening parallels’ with the Post Office scandal, arguing that over-zealous enforcement by HMRC officials has left people facing ‘ unaffordable demands’ which lead to a ‘risk of
further prominent Parliamentary public inquiry suicides’. member group into of the Wilson calling an affair. all-party for is In a a responsible 2022 it disclosed for 189 that of aML the 1,006 was schemes reported to it.
One victim, Deborah, told me this week how she has been financially ruined after becoming a client of aML in 2010. the married mother- of-two from Kent had taken a job as a contractor, working as a business analyst for a ‘Big Four’ bank, earning about £90,000 per year. the agency that placed her in the role advised her to sign with Barrowman’s firm.
‘they told me aML provided an alternative mechanism by which I would be paid,’ she said. ‘the firm would manage payroll and tax, and communicate with hMRC. I was told it was legal and I’d take home a little more each week.’
DEBORAH was a client for five years, during which she received around £350,000 via loans. A couple of years later, HMRC wrote to tell her it believed the scheme was illegal and she contacted AML. 'Their response was "don't worry, we'll sort it out and look after everything, and you'll be fine". Then a few months later they stopped responding to my messages.'
HMRC has since forced Deborah to pay tens of thousands of pounds and is chasing her for more than £200,00. 'It's horrendous for me and my family. You go to bed wondering if you are going to be woken by a knock on the door by people who will come and take the furniture. It sometimes feels like the only way I can make it go away would be to die.
'AML created this scheme, they signed me up on the basis it was legal and would work, and it didn't. HMRC have suggested I sell things to pay them. But what? my children? It's not like I have diamonds or yachts like Mr. Barrowman.'
Another victim retired offshore oil safety consultant David Johnstone, 70, told aa newspaper that he used a loan company connected to Barrowman during 2014 and 2015. He paid £88,000 to the firm and received £56,000 back via loans. He now owes HRMC £24,000 but is refusing yo pay until the tax-man also starts pursuing the promoters behind the dubious schemes. 'They've chased us hard, but seem to be ignoring the purveyors of this snake oil,' he said.
What then of Barrowman? Well, here’s where things get interesting In March 2022, AML was fined £150,000 after a tribunal found it had failed to comply with a tax investigation.
The tribunal was highly critical of AML’S director, arthur Lancaster, who it dubbed ‘evasive’, saying he provided ‘as little evidence as possible’ and describing that evidence as ‘ confused, lacking in candour, in some respects incorrect and littered with inconsistencies’.
Lancaster, a chartered accountant, is one of Barrowman’s most senior lieutenants. In May, he was named the sole person with ‘ significant control’ over
PPE Medpro in its listing at Companies started HMRC, new after company clients they getting house. were of called Barrowman’s large contacted Vanquish. bills from by firm It a offered retrospective to help tax them charges. sidestep Specifically, the contractors were told to pay Vanquish 5 per cent of the overall value of loans they’d received.
In exchange, Vanquish would get a different firm to take on the liability for the remainder of the loan. the clients would then be given letters to send to HMRC claiming the loans had been repaid in full, suggesting no tax was due.
Unfortunately, the scheme didn’t actually work, because any claim that the loan had been fully repaid was, self-evidently, untrue. Clients of Vanquish were therefore handing over cash for no good reason.
Ray McCann, the former president of the Chartered Institute of taxation, said last week that the letters the company issued ‘misrepresent the position’ about a client’s tax affairs, ‘ raising concerns that a criminal offence has been committed’ by the firm.
Vanquish first came to public attention in 2019. at the time, Barrowman’s lawyers told the Sunday times, which was investigating the dubious scheme, that he denied having ‘any involvement or interest in Vanquish’.
a year later, the lawyers also told BBC Radio 4’s File On Four that neither Barrowman nor his Knox group of companies have at any time owned or controlled Vanquish. however, electronic records obtained by the BBC, and made public last week, cast doubt on that statement.
they show, among other things, that AML and Vanquish shared several directors, while data from emails sent by the two firms reveal they were sent from the same IP address, suggesting the messages were sent from the same computer, at Barrowman’s company HQ on the Isle of Man.
BARROWMAN issued allegations he ‘denies a statement of dishonesty, all has and since saying any telling misconduct ‘ever done which me or none could participated and of be wrongdoing’, his construed firms in anything has as criminal reported or fraudulent, in recent as media’. was recklessly
a spokesman for Barrowman also insists: ‘Doug Barrowman was neither a director, a shareholder nor a decision maker in Vanquish. he had no personal involvement in the company.’ however, the same PR man seems to be also representing Vanquish.
It’s all most confusing. and whatever is really going on with this self- confessed liar’s affairs, it seems there are now other things on his agenda. this month, it emerged he’s about to acquire a new yacht, the 87-metre Vento. It has a swimming pool, helipad, plus a beauty salon and ‘beach club’.
Why is he making this extravagant purchase, when so many former clients are facing ruin? Perhaps, as Doug Barrowman might put it, the ‘flippant answer’ is because he can.