Paradise Papers: Deloitte helped Blackstone avoid millions of pounds of UK taxes on St Enoch Centre takeover
In the latest disclosure to emerge from the so-called Paradise Papers, international private equity giant Blackstone, one of the world’s biggest private equity groups, has been exposed as avoiding millions of pounds in UK tax on the property deal that saw it take control of Glasgow city centre’s St Enoch shopping centre.
The contents of the leaked documents, hacked from Bermuda-based legal firm Appleby and reported by the BBC this week, also show the Blackstone avoided millions of pounds more in tax liabilities on a similar deal in London.
The files seen by the broadcaster show Blackstone used offshore companies to purchase and operate the St Enoch Shopping Centre in Glasgow and the Chiswick Business Park in London.
Blackstone yesterday said its investments were “wholly compliant with UK tax laws”.
Despite being technically legal, the leaked papers show that top accountancy firms – Deloitte, in the case of the St Enoch purchase, and PwC for the Chiswick deal – were hired to help Blackstone avoid tax by mapping out strategies to minimise or avoid every significant tax.
Each firm issued long documents to Blackstone outlining how it could use trusts in the tax haven of Jersey and a complex structure of companies in Luxembourg for the purchase of both Chiswick Park and the St Enoch Centre.
Blackstone bought the St Enoch Centre, a large city centre shopping complex housing almost 100 stores, for about £190m in 2013.
Documents show it would have avoided stamp duty of £7.6m and corporate tax on up to £10m annual rental income.
Both the St Enoch Centre, which Blackstone still owns, and Chiswick Park were already held in property trusts known as JPUTs, in the tax haven of Jersey, when it bought them.
This allowed the firm to purchase the properties without paying millions of pounds in UK stamp duty.
US tax expert Reuven Avi-Yonah, from the University of Michigan law school, said the leaked documents gave a “rare” insight into company structures that even tax authorities did not often see.
And the Tax Justice Network described the structures Blackstone used as an “economic fiction”.
They told the BBC it was clear from the data in the papers that the principal purpose of the structures, which are virtually identical, was to avoid tax.
Deloitte has declined to comment on its role in the St Enoch deal.
PwC, in relation to its role in the Chiswick Park purchase, said: “The advice we provide is given in accordance with all applicable laws, rules and regulations, including proper disclosure to tax authorities.”