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Revealed: scheme that let Gary Lineker avoid tax on Barbados home

Revealed: scheme that let Gary Lineker avoid tax on Barbados home

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A number of British celebrities have bought holiday homes in Barbados using offshore companies that allow them to avoid paying local taxes when they sell their property, the Paradise Papers reveal.

The documents show a host of Britons own property on the island via companies set up in the British Virgin Islands (BVI) – a method that has legal tax advantages.

One of those who appears to have used the arrangement is the Match of the Day host and former England football captain, Gary Lineker.

Stamp duty is only payable in Barbados when a home is sold, but using this structure, it is possible to avoid paying the tax.

The issue of giving tax breaks to foreigners is provoking concern in Barbados, with the country in the midst of an economic crisis. Ballooning debt has led to steep and highly divisive tax rises across the board.

“We plan to institute a system where tax avoidance will be challenging, very, very difficult,” said Grenville Phillips, the founder of Solutions Barbados, a political action group which will field candidates in all 30 parliamentary constituencies in next year’s general election. It has made tax reform a central plank of its election manifesto.

“We are not persecuting anyone, that should be very clear. We’re not saying you have to pack your bags and go, or you pay all sorts of fees to live in Barbados. But we will look at things and see if they are fair.”

Barbados has long been a favourite holiday destination for the world’s elite, with villa-style homes in popular estates selling for up to $10m (£7.5m).

The Paradise Papers shed new light on a technique that helps buyers avoid paying some taxes when they come to sell homes on the island. 

The leak includes the country’s company register, which contains the names of about 1,000 property firms originally set up in the BVI. The BVI companies are allowed to do business in Barbados – and their past and current directors include a number of famous Britons.

Lineker was a director of a company called Goalhanger Inc – an apparent reference to his football career, when he was a prolific striker for clubs including Barcelona, Tottenham and Leicester.

The potential advantage to Lineker and others comes at the point they decide to sell. Under Barbados law, if a home has been bought by an individual or a local company, when it is sold they are liable to pay 1% stamp duty and 2.5% in transfer taxes – amounting to hundreds of thousands of pounds for the most expensive properties.

Until 2007, there were also restrictions on how much money from a property sale could be taken out of the country in one go.

But if the home had been bought and sold by a company in the BVI, the sale could be tax free, and any profits could be transferred out of the country immediately. Details of some of the companies and directorships are set out in the Paradise Papers.

The register shows Lineker co-owned a Barbados home through Goalhanger that was sold on to new owners in 2010. Lineker’s representatives said there had been “no tax irregularity”.

They said the sale had been declared to HMRC and all taxes due in the UK and abroad on the sale of the company had been paid in full.

Other Britons who have BVI companies registered to own property in Barbados in the same way include Mike Gatting. The former cricketer owns a BVI company with his wife, Elaine. 

Gatting told the Guardian the arrangements had been put in place by a family solicitor at a time when BVI companies were less contentious. He said he was currently trying to sell his property.

“The indications are that any profit on sale will be modest. If a taxable profit is made, the tax due will be paid,” he said.

In 2007 the rate of transfer tax was cut from 7.5% and the rules were changed to allow those from outside Barbados to repatriate their takings without controls.

The then prime minister of Barbados, Owen Arthur, said the adjustments were designed to “stop the leakage of revenue that occurred when transactions involving the sale of property were done offshore”.

Since then, the economic situation in Barbados has deteriorated.

“We are in a dire situation. We know how much debt we are in and we know how we got into this amount of debt. It’s a matter of gently, gingerly coming back from the brink,” said Phillips.

Phillips stressed he did not want to put off anybody planning to buy land or property on the island, and that there were “two sides to the coin”. “You have to listen to both sides. You can’t make a determination based on just one side; that is not a good way to govern.”

Rose-Marie Belle Antoine, a professor of offshore financial law and dean of the faculty of law at the University of the West Indies, added: “There’s no doubt that people who are wealthy pay the least amount of tax. You and I, who pay a lot of taxes, might feel very upset about it.”

Regulators such as the Organisation for Economic Co-operation and Development have been looking into offshore tax rules throughout the Caribbean and beyond, she said.

https://www.theguardian.com/ne...

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