It has been revealed that former Prime Minister Tony Blair and his wife Cherie saved hundreds of thousands of pounds in property taxes by purchasing a London office building from an offshore corporation that is part-owned by a Bahrani businessman.
After purchasing a firm in the British Virgin Islands held by the family of HE Zayed bin Rashid Alzayani, Bahrain’s minister for industry, commerce, and tourism, the Blairs bought an office building for £6.5 million in 2017.
The Pandora files, a massive collection of leaked offshore documents, outline the agreement.
According to the Guardian, Mr Alzayani is a shareholder of another offshore corporation that has invested more than £60 million in UK commercial property over the last nine years, including the Marylebone address sold to the Blairs.
Because they bought the property’s holding company rather than the building itself, the Blairs were able to avoid paying £312,000 in stamp duty.
The transaction was completely lawful, and there is no evidence that the Blairs were attempting to avoid paying stamp duty in any way.
Nonetheless, the agreement highlights a loophole that allows wealthy landowners to avoid paying fees that less well-off persons must pay.
“It is unfair that if you buy a company that owns a property, then you don’t have to pay stamp duty,” said Robert Palmer, executive director of Tax Justice UK.
“These are loopholes that are available to wealthy people but not available to others.”
“Politicians need to fix the tax system so that everyone pays their fair share.”
Commercial and residential buildings sold for more than £150,000 and £125,000, respectively, are subject to stamp duty.
According to the Nationwide building society, the average price of a house in the UK was £244,229 in July.
There was “nothing unusual or underhand in any of this,” Cherie Blair told the Guardian.
“I did not want to be the owner of a BVI company and so instructed my accountants, BDO, and solicitors, Blake Morgan, to ensure that I could repatriate the company and the building to the UK,” she said, adding that the Alzayanis did not want to sell the building separately from their BVI company.
“All the arrangements were made for the express purpose of bringing the company and the building back into the UK tax and regulatory regime, where it has remained ever since.”
“All taxes have been paid ever since, and all accounts openly filed in accordance with the law.”
“The Blairs should not have been dragged into a story about ‘hidden’ secrets of Prime Ministers etc,” a representative for the Tony Blair Institute for Global Change stated.
“The Blairs bought the premises mentioned for the legal business and Foundation of Cherie Blair in a normal way through reputable estate agents.”
All of the transactions are open to the public. “The transactions are all registered publicly. The vendor was an offshore company.”
“The Blairs had nothing whatever to do with the original company nor those behind it,” they continued.
“The vendor sold the company, not the property – again a decision the Blairs had nothing to with.”
“For the record, the Blairs pay full tax on all their earnings.”
“And have never used offshore schemes either to hide transactions or avoid tax.”
The Pandora Papers, named after the Greek mythology’s Pandora’s Box, disclose how 35 current and former international leaders, as well as more than 300 public officials, used accounts in tax havens to hide riches and conduct transactions.
In what is the largest investigation ever organised by the International Consortium of Investigative Journalists, more than 650 reporters are scrutinising the files (ICIJ).