Qatar’s government has been hit with a higher tax bill on its Chelsea Barracks site in London after a tribunal ruled that an affiliate had attempted to avoid paying any stamp duty land taxes.
The decision by the First Tier Tribunal means that the site’s owner Project Blue must now pay £50m ($75m) in stamp duty, rather than £38m had it not sought to avoid all due land taxes, a statement from HM Revenue and Customs said.
Project Blue, which is fully owned by wealth fund Qatari Diar, originally acquired the site in 2008 for £959m. It plans to build a luxury residential development on the site, although work has yet to begin.
Project Blue said it had entered into the stamp duty sub-sale and alternative finance scheme for commercial reasons and not to avoid tax. That legislation is intended to remove obstacles to alternative property finance transactions, but HM Revenue and Customs said in this case Project Blue had combined these transactions with others in a “complex tax avoidance scheme designed to ensure that no tax was payable at all”.
“Entering into a tax-avoidance scheme can cost more than paying the original tax bill,” said David Gauke, a Treasury minister. “Avoidance is complex, expensive and self-defeating.”
HM Revenue and Customs said the decision would affect 24 similar cases and about 900 mass market residential cases, protecting about £85m in tax revenues.
“We will be reviewing the tribunal’s decision in detail with our advisers and considering our next steps,” Qatari Diar said in a statement. “Project Blue has always tried to fully comply with all UK taxation matters evidenced by a pre-payment made on account to HMRC of the full amount of the tax originally claimed prior to the hearing. Project Blue will continue to meet all of its tax obligations.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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