Aston Martins, personal shoppers and fine wine: How millionaires avoid tax by 'giving' their wealth to offshore trusts that they then brazenly 'advise' to pay for their luxury lifestyles

  • Millionaires transfer money offshore and are appointed 'investment advisers'
  • They avoid huge tax bills because their possessions are paid for by the trusts
  • In one case a couple 'advised' trust to spend £2million on a fine art collection
  • Another client is said to have have taken several luxury holidays disguised as 'investment trips' - including a £20,000 fortnight visit to a resort in Barbados

Millionaire tax avoiders are using a complicated scheme where they 'give' their wealth to offshore trusts which then pay for their luxury lifestyles.

They transfer their money to the companies and are then appointed 'investment advisers' and can keep control of the cash while technically not owning the money. 

It means the wealthy clients avoid enormous tax bills because their possessions are paid for by the trusts - which are based in financial havens such as Bermuda and Mauritius.

The revelations were broadcast by the BBC's Panorama programme as part of its investigation into the 'Paradise Papers'.

Wealthy clients avoid enormous tax bills since their possessions are paid for by the trusts - which are based in financial havens such as Bermuda and Mauritius (stock photo)

Wealthy clients avoid enormous tax bills since their possessions are paid for by the trusts - which are based in financial havens such as Bermuda and Mauritius (stock photo)

The millions of leaked documents reveal the ways the rich and powerful shelter their wealth in offshore tax havens.

In one case banker Mark Faulkner and his photographer wife Harriet Logan 'advised' their offshore trust to spend £2million on a collection of fine art as well as £200,000 on fine wines which they admitted they 'might have to sample'.

They had transferred assets including a yacht, stocks and shares as well as a large portfolio of photography to Babington PCC -  their offshore trust based in Mauritius.

In an email suggesting 'investment opportunities' they also advised the company to spend hundreds of thousands of pounds on a classic car to 'compliment [sic]' their trust's 'existing investment in the classic yacht Leonore'

Meanwhile call centre boss Greville Crowder is said to have taken several luxury holidays disguised as 'investment trips' - including a £20,000 fortnight visit to a resort in Barbados and a weekend in St Tropez by private jet.

Call centre boss Greville Crowder, pictured, is said to have taken several luxury holidays disguised as 'investment trips'

Call centre boss Greville Crowder, pictured, is said to have taken several luxury holidays disguised as 'investment trips'

Although dozens of companies offering such arrangements exist, one of the most prolific operators is tax lawyer James O'Toole who runs a firm called Aston Court Chambers.

According to BBC Panorama, he owns a large mansion on the Isle of Man with its own orchard and vineyard as well as acres of land.

In his spare time he can be seen driving around in his two Aston Martins, Range Rover or on the back of a Harley Davidson - all while flashing his Rolex watch.

He also has his own personal shopper who picks up birthday cards and suggests Mothers' Day presents at a cost of thousands of pounds. 

Although dozens of companies offering such arrangements exist, one of the most prolific operators is lawyer James O'Toole, pictured, who runs a firm called Aston Court Chambers

Although dozens of companies offering such arrangements exist, one of the most prolific operators is lawyer James O'Toole, pictured, who runs a firm called Aston Court Chambers

But as far as the taxman is concerned he does not actually own any of it.

Mr O'Toole is said to have advised dozens of clients on how to pay as little tax as possible using his schemes.

A lawyer for Faulkner and Logan told the Guardian: 'Our clients have now commenced dialogue with HMRC to review the arrangements that their previous advisers had recommended.

'If any financial arrangement that concerns our clients does not align with changes in law or the interpretation by the courts of the law, our clients, upon obtaining professional advice, will correct the position, including any required payment of tax following an assessment by HMRC.'

The Paradise Papers reveal that the Queen's cash was secretly funnelled to the Cayman Islands and Bermuda.

It also shows that Bono, members of Donald Trump’s cabinet and businesses including Apple and Facebook also invested in tax havens.

Meanwhile today it also emerged that F1 champion Lewis Hamilton 'avoided' paying VAT on his £16.5million private jet.

The 32-year-old, who won his fourth world title last week, received a £3.3million refund for the Bombardier Challenger 605, which was imported into the Isle of Man.

Today it also emerged that F1 champion Lewis Hamilton 'avoided' paying VAT on his £16.5million private jet, pictured

Today it also emerged that F1 champion Lewis Hamilton 'avoided' paying VAT on his £16.5million private jet, pictured

Any private jet purchased outside the European Union is subject to 20% VAT, in order to move freely around the continent.

The stars of BBC show Mrs Brown's Boys also stand accused of piling £2million into an offshore fund in Mauritius.

The trust would then 'loan' the money back meaning that it was not subject to UK income tax. 

Paddy Houlihan, who plays Agnes Brown's son Dermot, said he had to Google 'tax avoidance' after a Panorama reporter called him in October over his investment.

Mr Houlihan claims he joined the Mauritius scheme after advice from his accountant but said he 'never knew what the f*** was going on' with his money.

Paradise Papers Q&A: Explosive documents reveal how the rich and powerful protect their wealth

What are the Paradise Papers?

More than 13 million leaked secret corporate files, about half of which belong to offshore law and corporate services provider Appleby, which has ten offices around the globe.

There also documents from corporate registries in 19 tax havens. These are mostly Caribbean and Atlantic islands such as Bermuda, Grenada and the Bahamas, but also include Malta, Lebanon, Labuan (an island territory in Malaysia), Samoa, Vanuatu, the Cook Islands and the Marshall Islands. They cover the period between 1950 and 2016.

Is this the same as the Panama Papers?

The Panama Papers involved millions of files leaked from Panamanian law firm Mossack Fonseca, showing how some of their clients laundered money, dodged sanctions and avoided tax.

This is a separate leak, although will raise many of the same questions.

Who got the documents, and how?

The German newspaper Suddeutsche Zeitung obtained the files and shared them with 95 other media organisations around the world.

In all, 381 journalists in 67 countries have been analysing the material for one year. Suddeutsche Zeitung has not revealed its source.

What do the leaks contain?

Documents outlining the tax and financial affairs of hundreds of people and companies connected to Appleby and the 19 tax havens, with many appearing to have invested or sheltered huge amounts of cash in offshore tax havens.

Who do they involve?

Multinational companies, wealthy individuals, heads of state, politicians and sports stars from around the world, including many from the UK.

Some of the biggest names to emerge so far include the Queen, Facebook and Donald Trump’s cabinet members and advisers.

Why is it controversial to put money offshore?

Offshore tax havens typically offer low or zero tax rates to non-residents who keep money there.

Experts estimate that around $10 trillion (£7.6 trillion) is held offshore around the world.

That money would potentially otherwise be taxed in the owner’s home country, meaning governments are potentially missing out on billions in revenue.

Critics also say the secrecy makes it easy for companies to hide wrongdoing.

Will this cause a row about tax avoidance?

Further evidence of the extent of cash being held in tax havens is certain to spur anger and calls for a crackdown on tax avoidance practices.

However, recent leaks including the Panama Papers may have created a certain level of ‘leak fatigue’, denting the documents’ impact.

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