Chancellor Rishi Sunak says HM Revenue & Customs will probe any alleged wrongdoing in property purchases included in the so-called Pandora Papers.
Some 600 journalists around the world have seen some of 11.9m leaked documents claiming to show the financial and tax arrangements of the super rich and political elite, as well as some celebrities and business chiefs.
In the UK, the BBC has reported that amongst many others, Jordan’s King Abdullah II had purchased property in London through offshore companies located in the British Virgin Islands – not believed to have been illegal.
The Queen’s crown estate has launched an internal review over a £67m London property it appears to have bought from Azerbaijan’s multimillionaire ruling family – which has repeatedly been accused of corruption.
Other leaked papers show property purchases including one building acquired for £33.5m in 2009 by an offshore company beneficially owned by President Aliyev’s son, Heydar, who was then only 11 years old.
Owning real estate through an offshore firm is legal, and there is no suggestion of wrongdoing in simply using a foreign company to purchase property.
As has been widely reported, Tony and Cherie Blair saved £312,000 in stamp duty when acquiring a £6.45m townhouse in London, revealed in the leak. The former Labour prime minister and his barrister wife purchased the property as an office for her business in 2017 by buying the offshore firm that owned it. Cherie Blair told the press that the vendor, based in Bahrain, had insisted the building was sold in this way but they had brought it under UK control.
Once again the revelations shine a spotlight on apparent loopholes in the UK’s property registration system, and whether they prevent proper due diligence – even by a body such as the crown estate, owned by the Royal Family.
As long ago as spring 2014 a group campaigning for the reform of money laundering and other accountability laws claimed that billions of pounds worth of investment – “much of it driven by overseas corruption” – flowed into London’s property market.
Transparency International looked in detail at 14 new landmark London developments, worth at the time some £1.6 billion; it claimed around 40 per cent of the homes in these schemes had been sold “to investors from high corruption risk countries or those hiding behind anonymous companies” with less than a quarter of the units purchased by people based in the UK.
Specifically the group claimed that over 40 per cent of apartments in a tower on the Southbank Place development, next to the London Eye, had been bought by companies registered in the British Virgin Islands. Meanwhile 60 per cent of the new homes in one of the blocks of the Westminster Quarter development had been bought by investors from high corruption risk countries, compared to just over 10 per cent bought by UK buyers.
Sunak himself, considered to be one of the UK’s richest MPs, has denied ever benefitting from an offshore arrangement, and in response to the leaked papers he says: “It’s always tough for me to comment on them specifically given [the leaks have] only just emerged, and of course HMRC will look through those to see if there’s anything we can learn.”