£300 million of Brighton and Hove property owned by tax haven firms

Care homes, pubs, supermarkets, doctors’ surgeries, petrol stations and shops are all among almost 300 properties owned by firms based in foreign climes with beneficial tax arrangements.

Millions of pounds in tax revenue are likely to have been lost from the country's coffers through these land and property purchases made over the past 15 years.

The figures have led the city's MPs to raise concerns about the current system and call for an urgent tightening up on the rules on foreign ownership of property in the UK.

Some of the city’s most expensive retail property is owned by firms based in tax havens including Churchill Square and Sainsbury’s at Vogue Gyratory which is valued at almost £30 million, according to extensive research and mapping carried out by Private Eye.

High-street companies including Caffe Nero, Costa Coffee, Gap, Wagamama, Clinton Cards, Sports Direct and Strada are all tenants to tax haven-based owners along with some of city's best-loved including Resident, Taj and MyHotel.

Other well-known city buildings listed include the "Wedding Cake" Amex House, the converted Co-op department store in London Road and The Pines Care Home in Hove - where D-Day war hero Bernard Jordan lived before his death.

As well as commercial properties, scores of houses and flats are owned by tax haven-based firms including architectural gems such as the 18th century listed Old House in Preston Road and desirable addresses in Brunswick and Regency squares, Clifton Hill and Chichester Terrace.

While the offshore companies are not acting illegally, the status could have helped them to significantly reduce their stamp duty, inheritance tax, capital gains tax and income tax liabilities.

There are also concerns that a lack of oversight by tax haven countries make them a target for criminal organisations to launder money through the UK property market.

Brighton Pavilion MP Caroline Lucas said: “It’s deeply concerning to see such a large number of properties in Brighton and Hove owned by these shadowy companies based in tax havens.

“Given the level of housing need in our city it’s particularly obscene to see so many properties being bought up by international companies – rather than being used as homes for local people.

“To protect and strengthen our local economy, and to crack down on tax avoidance, we urgently need tighter rules to govern foreign ownership of properties in the UK.”

Hove MP Peter Kyle said: "This is about fairness and those seeking to use their wealth to find loopholes that the rest of us couldn’t use and wouldn’t use is simply wrong and therefore I support those calling for the rules governing this to be tightened up.”

MyHotel, Sainsbury’s and Amex House at the Vogue Gyratory are owned by firms based in tax havens such as the British Virgin Islands

TAX HAVEN BILLIONAIRES SHOULD BE FIRST TARGETS IN CORBYN CRACKDOWN

LABOUR leader Jeremy Corbyn vowed to chase down tax havens and tax evasion during this week’s party conference in Brighton.

One place to start could be the country’s property market with billions of pounds worth ultimately traced to owners on palm-leaf covered islands.

Hastings Borough Council knows only too well the problems that arise from property owned by firms based in tax havens.

The authority spent years trying to contact Hastings Pier owners Ravenclaw in the hope they would carry out repairs to the fire-damaged structure and then ultimately to compulsory purchase the property from the Panama-based firm in 2012.

Councillor Peter Chowney, Hastings Borough Council leader, said that Ravenclaw’s tax haven status added a lot of additional costs to the authority’s compulsory purchase order bid and estimates it delayed the whole process by up to a year.

He said: “We always suspected that Ian Stuart was the owner but you can’t get any information on companies based in Panama, not the people behind it or how much money the company has got.

“All we knew was an address which was a postbox in a tower block which we could see on Google Earth.

“I remember it being a convoluted process to air freight out documents to be served on this address. 

“I think we had to get a solicitor to fly over there with them and get a solicitor in Panama to serve them to the address.

“I think Panama lawyers probably make a good living out of doing that.”

Phil Graves, managing director of Graves Jenkins estate agents, said that off-shore based firms were a common occurrence in the city’s property market and were likely to become more so as more and more foreign investors buy into the UK housing market.

He said: “Off-shore ownership is something that is relatively commonplace in any major town or city.

“Most will have somebody managing their estate in the UK for these investment firms.

“That is how these firms operate and we as estate agents are not in a position to ask about their tax position, that is for their tax advisors to do, we just give advice as we would with any UK-based company.

“There is a lot of foreign ownership of UK property, Russian and Chinese investment in particular, and I can only see that growing as the UK is a sustainable place to invest in property and is part of a global market.”

Of the 300 tax-haven based properties in the city, three are care homes – The Pines in Furze Hill, the Four Seasons Health Care owned Dane House in Dyke Road and Lindridge care home in Laburnham Avenue in Hove run by Sussex Partnership Foundation Trust.

They match a similar business model to Southern Cross Healthcare which channelled £9 million in rents to overseas tax havens before collapsing in 2011. leaving 31,000 residents at 750 care homes, including Orchid View in Copthorne, across the country in limbo.

A Four Seasons Health Care Group said: “The group structure is not kept in place to avoid taxes. There has been no tax saving in recent years as a result of having an offshore registered parent. In fact, if all the group’s companies had been registered in the UK, the group would have paid slightly less UK tax in recent years.”

A Sussex Partnership Foundation Trust spokeswoman added: “A Sussex Partnership Foundation Trust has a 25 year underlease granted in October 2011 from Gatelodge Estates. The cost of the lease is commercially sensitive but it satisfies the trust’s value for money test.”

A spokeswoman for wealth management firm Kleinwort Benson, listed by Private Eye as ultimate freehold owner of Churchill Square from land registry documents, said: “We do not believe that your information is entirely accurate but in any event, and for reasons of confidentiality, we cannot confirm or deny who is a client of Kleinwort Benson and will not therefore be able to help you further.”

HOW "FOREIGN" FIRMS OWN OUR LAND...

WHY are so many properties in Brighton and Hove bought by companies based in exotic locations?
Typically, the offshore company will be set up in a tax haven such as the Seychelles, the Channel Islands or the British Virgin Islands chiefly as an inheritance tax planning tool for non-UK domiciliaries. They also have the benefit of providing anonymity to the ultimate owner as often these tax havens have fewer requirements for disclosure than the UK.

What are the tax benefits afforded to property-owning companies based in tax havens?
Off-shore arrangements allow companies to reduce the amount of stamp duty, inheritance tax and capital gains tax they are liable to pay. Debt-heavy companies can also avoid income tax on properties to let through another loophole.

What has changed to the rules in recent years?
The investigation by Private Eye focused on property bought over the last 15 years. In recent years, the government has taken steps to reduce the benefits that tax haven-based companies enjoyed over UK-based companies and individuals. From April 2013, an offshore company owning a UK residential property valued above £2 million had to pay an annual residential property tax of up to £140,000 a year. New offshore company purchasers now have to stump up for stamp duty at 15 per cent. The rules were again tightened at the start of this financial year meaning stamp duty is now up to 12 per cent for personal ownership and non-resident trustees through an off-shore company – the same as purchased by a UK-based company or resident. Non-resident companies can be liable for up to 15 per cent. In his latest budget, Chancellor George Osborne promised that non-doms would pay inheritance tax on UK residential property but inheritance tax breaks remain for land and commercial property.

Is there still an attraction to owning through off-shore companies?
Despite the changes, one of the key benefits remains: secrecy. Scotland Yard announced last year that hundreds of millions of pounds of UK properties held in secretive offshore companies have been used to launder the proceeds of international corruption. Private Eye has unearthed property sales with severely over-inflated prices which could indicate money laundering or tax evasion on a large scale. 

What is the scale of the problem?
Private Eye investigations have revealed that 490,000 acres across the UK worth a combined £200 billion have been bought by off-shore companies since 1999. The British Virgin Islands is the world’s biggest provider of offshore entities with more than one million incorporated companies on an island of just 153 square kilometres.