World’s big­gest dat­ing site Badoo sideswiped by HMRC in­ves­ti­ga­tion

Match­mak­ing em­pire of Rus­sian-born An­drey An­dreev faces in­quiry, writes Matthew Field

The Daily Telegraph - Business - - Technology Intelligence -

The London-based com­pany be­hind the world’s big­gest dat­ing app, known for its lav­ish par­ties fea­tur­ing scant­ily clad dancers, is fac­ing an in­ves­ti­ga­tion by HMRC over its cor­po­rate tax bill. Badoo, part of the match­mak­ing em­pire con­trolled by Rus­sian-born ty­coon An­drey An­dreev, is un­der in­ves­ti­ga­tion for its tax pay­ments for the years 2013 to 2016, The Daily

Tele­graph can re­veal.

The news comes as An­dreev, whose for­tune has been es­ti­mated at £1bn, talks up plans to take the com­pany pub­lic in a New York list­ing that could value it at sev­eral bil­lion dol­lars.

Badoo’s London-based founder, 44, has been de­scribed as “the most mys­te­ri­ous busi­ness­man in the West”.

Born in Moscow, the bulk of his for­tune comes from the dat­ing app he founded when he was 32.

Today, Badoo claims to have far more users than Tin­der and is avail­able in 190 coun­tries.

Ac­cord­ing to an anal­y­sis of com­pany fil­ings, Badoo is struc­tured with more than a dozen sub­sidiaries as well as other in­vest­ments. Its par­ent com­pany is listed as World Vi­sion, a com­pany in­cor­po­rated in Ber­muda, which in turn is con­trolled by Rim­burg In­ter­na­tional, a com­pany domi­ciled in the Bri­tish Vir­gin Is­lands.

Badoo Trad­ing Lim­ited ex­ec­u­tives ad­mit­ted that the com­pany ex­pected the in­ves­ti­ga­tion would “more likely than not” in­cur a fi­nan­cial ad­just­ment over its tax af­fairs. A sep­a­rate en­tity, Badoo Lim­ited, also said it was un­der in­ves­ti­ga­tion.

The com­pany re­ported turnover of £144m for the year end­ing De­cem­ber 2017, up from £107m in the pre­vi­ous 12 months, for a re­ported loss of £5.6m. Badoo said the loss was “pri­mar­ily due to the mar­ket­ing fo­cus of the busi­ness”.

Mul­ti­ple Badoo spokes­men and a spokesman for HMRC de­clined to com­ment. EY, the com­pany’s au­di­tors, de­clined to com­ment. The com­pany’s ac­counts said its au­di­tors re­ceived £195,000 in 2017 and £145,000 in 2016.

Badoo’s pre­vi­ous ac­counts stated it owed £52,000 in tax in 2016 and £195,000 in in­come tax in 2015.

Sev­eral tech com­pa­nies have been forced into ad­just­ments by HMRC in re­cent years. “HMRC has been ramp­ing up its ef­forts in di­verted prof­its tax and trans­fer pric­ing,” said Graham Poole, di­rec­tor of tax at the law firm Ho­gan Lovells. “It has made it quite clear there will be a re­newed fo­cus go­ing for­ward.”

Badoo’s dat­ing app is par­tic­u­larly pop­u­lar as a ri­val to Tin­der in coun­tries like Rus­sia, Brazil, Mex­ico and France. But its rise has been fol­lowed by ac­counts of he­do­nis­tic par­ties, said to have left some staff un­com­fort­able, and that may have con­trib­uted to res­ig­na­tions. The app is part of a “swipe left/swipe right” dat­ing em­pire con­trolled by An­dreev. His dat­ing busi­nesses in­clude a ma­jor­ity stake in fe­male-fo­cused dat­ing app Bum­ble, it­self es­ti­mated to be worth $1bn (£760m). Bum­ble’s founder Whit­ney Wolfe Herd has pre­vi­ously pro­claimed Bum­ble to be a “fem­i­nist com­pany”. Other ven­tures in­clude gay dat­ing app Chappy and over-50s app Lu­men.

Bum­ble and Badoo make a some­what un­likely al­liance. One source close to the com­pa­nies de­scribed the deal as “hyp­o­crit­i­cal”. An­dreev is a 79pc share­holder in Bum­ble, which has ex­ploded in pop­u­lar­ity as an app where women can make the first move to mes­sage po­ten­tial matches to take them on dates. The sites are said to share many en­gi­neer­ing func­tions in­ter­nally.

Badoo is on the record as hav­ing a lav­ish, perk-heavy cor­po­rate cul­ture. A re­cent pro­file with three Badoo em­ploy­ees in Elle ex­tolled a “drool-wor­thy buf­fet … laid out three times a day … ta­bles filled with all-you-can-eat sweets, sta­tionery and branded swag”.

But it is also un­der­stood to have a heav­ily sex­u­alised en­vi­ron­ment, par­tic­u­larly at its par­ties. Ac­cord­ing to one ac­count, mem­bers of the en­gi­neer­ing team at the com­pany named prod­uct

‘HMRC has been ramp­ing up its ef­forts in di­verted prof­its tax and trans­fer pric­ing’

re­leases af­ter porn ac­tresses. A source with knowl­edge of the in­ci­dent de­scribed the cul­ture as “toxic”.

The tax in­ves­ti­ga­tion into comes as Badoo draws closer to an ini­tial pub­lic of­fer­ing in New York. An­dreev has talked up the pos­si­bil­ity of a pub­lic list­ing for Badoo for sev­eral years, and last month said he had spo­ken to JP Mor­gan about a deal. While Badoo is, ac­cord­ing to the com­pany, the world’s largest dat­ing app with more than 400m users, An­dreev said that Bum­ble would be the “um­brella brand” for any list­ing.

Bum­ble, mean­while, has been drawn into a le­gal dis­pute over patents with Match-owned Tin­der over the “swipe” func­tion­al­ity of the apps. Tin­der sued Bum­ble, which then coun­ter­sued for $400m in dam­ages. The case is still on­go­ing.

Badoo has spent re­cent months flood­ing jour­nal­ists’ in­boxes with light-hearted sto­ries – such as putting an end to an epi­demic of “ghost­ing”, or ig­nor­ing po­ten­tial dates, and in­clud­ing live-stream­ing chats “Badoo Live”.

“We’re younger and faster than Match,” said An­dreev in an in­ter­view with Bloomberg. “We de­serve a bet­ter mar­ket cap.”

While it may feel young, fast and free-spir­ited, even in­no­va­tive at times, Badoo will have to con­vince in­vestors it has changed for the bet­ter – or risk be­ing left be­hind.

Badoo’s Lon­don­based founder An­drey An­dreev, 44, has been de­scribed as ‘the most mys­te­ri­ous busi­ness­man in the West’

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