Millions of pounds could be flowing out of UK every week as a result of private equity firms’ reliance on tax havens
Millions of pounds could be flowing out of the UK every week as a result of private equity firms’ reliance on tax havens, analysis shows.
The top ten largest private equity groups operating in Britain all have links to offshore financial hubs, research by the Labour Party found.
Cinven, Paperchase-rescuer Permira, Apax and the recently listed Bridgepoint, which was spun out of Natwest Bank in 2000, all use complicated corporate structures that involves them having funds or holding companies in the likes of Guernsey and Luxembourg.
Offshore: Firms use complicated corporate structures that involves them having funds or holding companies in the likes of Guernsey (pictured) and Luxembourg
Private equity firms claim they use them because it is an easier way to manage the array of companies they often own or fund around the world.
But campaigners and politicians say the structures make it difficult to know how much tax revenue the Treasury is missing out on.
These missing revenues could be used to fund the UK’s recovery from Covid, which has seen the Government plough billions into support programmes to keep the country and businesses functioning.
James Murray, shadow financial secretary to the Treasury, said: ‘The Treasury are standing by when they should be cracking down on millions leaving their coffers.
‘The Chancellor has been turning a blind eye as British businesses face being undermined by tech giants who don’t pay their tax, or being taken over by risky private equity companies.
‘We want the Government to change course.’
HG and former Rolls-Royce investor Invest Industrial both have links with Luxembourg, BC Partners with Guernsey, and Triton, Vitruvian and IK Invest with Jersey.
Robert Palmer, executive director of campaign group Tax Justice UK, said: ‘Private equity companies often asset strip when they buy British businesses, while at the same time finding very clever ways of paying little or no tax.
‘This reduces money flowing into the Treasury and can often destroy good companies,’ he said.
‘The Government should be closing tax loopholes that allow this behaviour.
‘Right now the Government is working out how to build back from the pandemic and it seems to me that private equity is ripe to be paying more in tax.’