Ritz pays no corporation tax for 17 years
Filed under: Tax
Skillful - and legal - tax relief measures play their part. But now the Barclay Brothers want more cash from the British taxpayer.
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That's because the Barclays are gunning for a VAT refund that could be worth as much as £1bn. The Barclays claim this money represents the total compounded interest on a tax rebate relating to the Littlewoods catalogue group which they bought in 2002. This rebate dates back 30 years.
However the Barclay brothers have already been paid a VAT rebate plus interest worth £472m from the British taxpayer for payments dating back to the 1970s. If they win their demand for a further £1bn in compound interest, this test case could open the floodgates for other claimants.
Meanwhile Sir David and Frederick Barclay claim they have had very little to do with the running of the companies like the Ritz - whose room rates can top more than £3,000 per night - since leaving the UK, living in the Channel Islands and Monaco.
No power?"We have not attended office, management or board meetings in the UK since leaving the country," Sir David said in a statement, responding to the allegations. "My brother and I have no editorial, political or economic power in the UK."
Sir David Barclay's son Aidan Barclay told the BBC Panorama programme the extra VAT claim by Littlewoods was put into action before the company was bought by his father and Uncle. Ritz profits, he added, have been reinvested with few dividends paid.
InconsistentThe problem with tax avoidance is that such measures may not be illegal in themselves. Yet getting around the law is generally seen by most as cheating. This is the gap that many accountancy firms and lawyers ruthlessly exploit.
Though the Government claims it is giving HMRC the funds to tackle tax avoidance, there remain mixed messages. Such as the appointment of Google exec chairman Eric Schmidt - he claims he's proud of Google's complex tax structures - on David Cameron's business adviser panel.
More detail will be revealed tonight on Panorama, a programme delayed by the ex BBC Director-General, George Entwistle.