Since the British Revenue & Customs Authority started to get from the banks the details of their customers’ accounts in offshore jurisdictions, many offshore schemes have been revealed. Probably these schemes were planned and used illegally to avoid taxation. In the cases with real estate objects registered on offshore companies, mostly based in BVI and Channel Islands, most offences uncovered concerned evasion of inheritance taxes.
One of the last noted stories concerns Bob Geldof, the rock star and Third World debt campaigner, who has been recently accused by newspapers of claiming Irish residency to avoid Inheritance Tax. Bob Geldof is an Irish citizen who is living in two properties in England. One of these properties, a luxury apartment in South London, is reported to be owned by a company called Quiet Ventures, the second one, located in Kent, is owned by Bandol Holdings. Both are offshore companies, registered in the British Virgin Islands but having London contact addresses.
Geldof is accused of avoiding payment of £2.25m, by saying that he lives in Ireland. Geldof being a non-domiciled taxpayer, the houses, which are together worth an estimated £4million, would avoid the normal inheritance tax of 40%, or £1.6million. Geldof himself declined to comment the situation.
It was stated by tax expert Mike Warburton that owning property through companies based in tax havens (namely, in BVI), was a classic scheme that allows non-domiciled citizens to escape taxation. By his words, this provides for non-paying inheritance tax, and avoiding capital gains tax if the owner sells a property where he does not reside. Moreover, stamp duty on purchasing the UK property that costs more than £500,000 can be reduced from 4% to 0.5% by complicated deals between the holding companies.