Pandora Papers: Tony and Cherie Blair avoided paying £312,000 in tax on London property by acquiring offshore firm

Deal meant couple did not pay stamp duty on London townhouse bought in 2017 as an office for Ms Blair’s legal advisory firm

Daniel Keane
Monday 04 October 2021 08:21 BST
<p>Tony and Cherie Blair acquired the property in Marylebone in 2017 </p>

Tony and Cherie Blair acquired the property in Marylebone in 2017

Tony and Cherie Blair avoided paying £312,000 in tax on the purchase of a London property by acquiring an offshore company, according to a trove of leaked documents.

The former British prime minister and his wife bought the £6.45m townhouse on Harcourt Street, Marylebone, in 2017 as an office for her legal advisory firm Omnia and her foundation for women.

The manner of the deal allowed the Blairs to avoid having to pay stamp duty, as the tax is not paid when the holding company of a property is acquired rather than the building directly. There is no suggestion the Blairs actively tried to avoid paying the tax and the transaction was not illegal.

In a statement, the couple stressed they had purchased the property “in a normal way through reputable estate agents” and had “nothing whatever to do with the original company nor those behind it”. They said they had “never used offshore schemes either to hide transactions or avoid tax”.

Details of the deal emerged as part of the Pandora Papers investigation by a consortium of some 600 journalists from dozens of global media outlets, including The Guardian and the BBC’s Panorama. The huge cache of leaked financial documents reveal the secret offshore financial affairs of 35 world leaders, more than 100 billionaires and a string of influential figures in the world of politics and business.

According to the leaked documents, the four-floor building purchased by the Blairs was previously owned by an offshore company based in the British Virgin Islands. At the time of the deal the firm, named Romanstone International Limited, was partially owned by Zayed Rashid Al Zayani, Bahrain's minister for industry, commerce and tourism.

The Blairs bought the building by establishing a British company named Harcourt Ventures to acquire the shares in Romanstone, the leaked documents claim. They each held a 50 per cent individual stake in the firm which was also registered for VAT.

Stamp duty is paid by anyone purchasing a commercial or residential property valued above £150,000 and £125,000 respectively.

Ms Blair said the sellers had insisted the property was sold in this fashion. “It is not unusual for a commercial office building to be held in a corporate vehicle or for vendors of such property not to want to dispose of the property separately,” she added.

The couple said that “the acquisition of a company comes with different tax consequences” and they “will of course be liable for capital gains tax on resale”. Both the Blairs and the al-Zayanis said they did not initially know about each other’s involvement in the deal.

Mr Blair has previously been critical of tax loopholes. In his campaign for the Labour leadership in 1994, he said: “We must tackle abuse of the tax system. For those who can employ the right accountants, the tax system is a haven of scams, perks, City deals and profits."

The Blairs have amassed a multimillion-pound portfolio of properties since leaving Downing Street in 2007. They had already spent over £30m on 38 residential properties prior to buying the office on Harcourt Street, according to the Daily Mail.

Robert Palmer, of Tax Justice UK, told the BBC's Panorama programme of the deal: “It partly doesn't look great because most people cannot do the same thing… even if what the Blairs did was perfectly legal, perfectly legitimate in the business world, it feels instinctively really unfair because they got access to an advantage, a potential advantage that the rest of us don't have."

A number of other world leaders were also named in the Pandora Papers.

Czech prime minister Andrej Babis was revealed to have injected €19m into several shell companies to buy a large property, known as Chateau Bigaud, in a hilltop village in Mougins, France.

According to the International Consortium of Investigative Journalists (ICIJ), who were involved in the Pandora Papers investigation, Mr Babis did not disclose the shell companies and the chateau in the asset declarations he is obligated to file as a public official. He did not respond to requests for comment.

The leaked documents also claim that the King of Jordan secretly spent more than £70m on a property empire in the UK and US. Abdullah II bin Al-Hussein is alleged to have used a network of secretly-owned firms in the British Virgin Islands to purchase 15 homes since coming to power in 1999, including properties in California and London.

Lawyers for King Abdullah denied any wrongdoing and told the BBC that he had used his personal wealth to buy the properties. They added that it was common practice for wealthy individuals to purchase properties via offshore companies for security reasons.

The documents behind the Pandora Papers investigation are drawn from financial services companies including the British Virgin Islands, Panama, Belize, Cyprus and the United Arab Emirates.

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