More than 100 UK millionaires have been identified as tax dodgers after hiding their wealth using offshore schemes.
Documents in the Paradise Papers leak show the identities of taxpayers who moved assets worth tens of millions of pounds into companies in Mauritius.
The tax avoidance schemes involve them claiming to no longer own property, cash and investments in order to keep their fortunes out of reach of HMRC.
It appears many of them use the companies like personal bank accounts.
This allows them to continue to enjoy the benefit of their hidden riches.
‘Gave away fortune’
Mark Faulkner and his partner Harriet Logan moved more than £28m in cash and assets to a Mauritian company called Babington PCC.
Officially they have given away their fortune, but the Paradise Papers documents show they could still control how cash was spent because they acted as “investment advisers” to Babington.
They have advised the offshore company to buy a £3.25m country mansion, properties in London, a brand new Aston Martin, an art collection, a collection of classic photographs and a cellar of vintage wines.
It also owned their holiday home in Florida, funded the upkeep of another holiday home in the south of France, paid for trips to New York and Miami, and spent more than £100,000 a year funding Mr Faulkner’s hobby of classic yacht racing.
Mr Faulkner, a former banker, and ex-war photographer Ms Logan contributed £1.6m of the offshore money to the “Education Purpose Trust” – which would then fund their four children’s entire private education.
Mr Faulkner initially denied putting any money into the Mauritian company, but his lawyers later told BBC Panorama that while they did not accept our assertions, they have “now commenced dialogue with HMRC to review the arrangements that their previous advisers had recommended”.
The tax avoidance schemes were administered by Appleby, the law firm at the centre of the Paradise Papers leak.
They were set up by James O’Toole, a British lawyer who has made his own fortune by advising the wealthy how to dodge tax.
The documents show that Mr O’Toole has personally used a similar type of tax avoidance scheme to his clients.
He was an “investment advisor” to a Mauritian company which owns his mansion in Northumberland.
He has also not owned two Aston Martins, a BMW, a Range Rover, luxury watches including a Rolex, and a Harley Davidson motorbike – which were all kept at his home.
Mr O’Toole even advised his offshore company to use his tax-free cash to pay for his own personal shopper.
She was paid tens of thousands of dollars to buy his clothes, shop for groceries, pick up nappies, order limos and suggest Mother’s Day presents.
Some of the cash came from the huge fees he charges clients.
One British couple were charged £960,000 for tax advice by Mr O’Toole’s company – £827,000 of that cash was paid straight into the offshore bank account connected to Mr O’Toole’s company.
Panorama asked Mr O’Toole whether he had declared this income to HMRC.
Mr O’Toole’s lawyer said the allegations are “ill-judged and unsupported by any relevant evidence”.
He said Mr O’Toole “prepared a detailed and rigorous rebuttal” but could not comment further.
In a statement on the Paradise Papers, Appleby said it was a law firm which operates in jurisdictions regulated to the highest international standards and “advises clients on legitimate and lawful ways to conduct their business”.
The papers are a huge batch of leaked documents mostly from offshore law firm Appleby, along with corporate registries in 19 tax jurisdictions, which reveal the financial dealings of politicians, celebrities, corporate giants and business leaders.
The 13.4 million records were passed to German newspaper Süddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists (ICIJ). Panorama has led research for the BBC as part of a global investigation involving nearly 100 other media organisations, including the Guardian, in 67 countries. The BBC does not know the identity of the source.
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