Pandora Papers: Tony and Cherie Blair avoid paying £312,000 in tax on London property by acquiring an offshore company

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Tony and Cherie Blair have avoided paying £312,000 in tax on the purchase of a property in London by acquiring an offshore company, according to a batch of leaked documents.

The former British prime minister and his wife bought the £6.45 million cottage in Harcourt Street, Marylebone, in 2017 as the office for her legal advisory firm Omnia and her foundation for women.

The transaction method allowed Blair to avoid having to pay stamp duty, as the tax is not paid when the property is acquired by the holding company rather than the building directly. There is no indication that Blair tried so hard to avoid paying the tax that the transaction was not illegal.

The couple stressed in a statement that they purchased the property “in the normal way through reputable real estate agents” and had “no relationship whatsoever with the original company or those behind it”. They said they “never used offshore schemes to either hide transactions or avoid taxes.”

Details of the deal emerged as part of an investigation of Pandora’s Papers by a consortium of about 600 journalists from dozens of global media outlets, including The Guardian and Panorama’s BBC. A massive cache of leaked financial documents reveals the secret foreign financial affairs of 35 world leaders, more than 100 billionaires, and a string of influential figures in the world of politics and business.

According to the leaked documents, the four-story building purchased by the Blair family was formerly owned by an offshore company based in the British Virgin Islands. At the time of the deal, the company, named Romanston International Limited, was partly owned by Bahrain’s Minister of Industry, Commerce and Tourism Zayed Rashid Al Zayani.

The Blairs family purchased the building by setting up a British company called Harcourt Ventures to acquire shares in Romanstone, according to the leaked documents. Each of them owns an individual 50 percent stake in the company which has also been registered for VAT.

Stamp duty is paid by anyone who purchases commercial or residential property valued at over £150,000 and £125,000 respectively.

Ms Blair said the sellers insisted on selling the property in this way. “It is not unusual for a commercial office building to be held in a company vehicle or for sellers of such properties not wanting to dispose of the property separately,” she added.

The couple said that “acquisition of a company has different tax consequences” and “they will of course be liable for capital gains tax upon resale.” Both the Blairs and Al Zayani said they did not initially know about each other’s involvement in the deal.

Blair has previously criticized tax loopholes. In his 1994 campaign for Labor leadership, he said: “We must stand up to the abuse of the tax system. For those who can hire the right accountants, the tax system is a haven for frauds, concessions, city deals and profits.”

The Blairs family have amassed a portfolio of properties worth millions of pounds since leaving Downing Street in 2007. They have already spent more than 30 million pounds on 38 residential properties before buying the office on Harcourt Street, according to the Daily Mail.

Robert Palmer, of Tax Justice UK, told BBC’s Panorama program of the deal: “It doesn’t look great in part because most people can’t do the same…even if what the Blairs did was perfectly legal, perfectly legitimate in the world of Business, it just instinctively seems really unfair because they got an advantage, which is a potential advantage that the rest of us don’t have.”

A number of other world leaders have also been named in Pandora’s Papers.

It has been revealed that Czech Prime Minister Andrej Babis has pumped 19 million euros into several shell companies to buy a large property, known as Chateau Begud, in a hilltop village in Mougins, France.

According to the International Consortium of Investigative Journalists (ICIJ), which was involved in the investigation of the Pandora Papers, Mr. Babis did not disclose the shell companies and minors in the asset returns he is obligated to file as a public official. He did not respond to requests for comment.

The leaked documents also claim that the King of Jordan secretly spent more than £70 million on a property empire in the United Kingdom and the United States. Abdullah II bin Al Hussein is alleged to have used a network of secretly owned businesses in the British Virgin Islands to buy 15 homes since taking power in 1999, including properties in California and London.

King Abdullah’s lawyers denied any wrongdoing and told the BBC that he had used his personal wealth to buy real estate. They added that it is a common practice for wealthy individuals to purchase real estate through offshore companies for security reasons.

The documents behind the Pandora Papers investigation are from financial services firms including the British Virgin Islands, Panama, Belize, Cyprus and the United Arab Emirates.

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