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Joel Muckett 8 Nov 2017 05:07pm

Blackstone avoided tax on property deals, say reports

Private equity firm Blackstone has allegedly used offshore companies and complex loans to avoid millions of pounds in taxes on property deals

Leaked documents from Appleby – the law firm at the centre of the ‘Paradise Papers’ – revealed that Blackstone consulted Big Four firms PwC and Deloitte for tax advice on the property deals in question, The Guardian reported.

Blackstone, a client of Appleby, bought Chiswick Park in London and St. Enoch Shopping Centre in Glasgow through offshore companies.

Before purchasing the 32-acre business park for £480m, the firm commissioned tax advice from PwC, who provided it with a 60-page document that offered guidance on tax restructuring, the report said.

The Big Four firm was said to have recommended the creation of seven companies based in Luxembourg, which money for the purchase of Chiswick Park could then be passed through in the form of loans.

Blackstone were able to set up the companies for €525, reducing their tax liability.

The private equity firm’s tax bill on rental income was reduced by £30m per year, and it also avoided paying capital gains tax when selling most of the park to the Chinese sovereign wealth fund for £780m in 2014, according a report in The Scotsman.

The year before, Blackstone purchased St. Enoch Shopping Centre in Glasgow for £190m – a deal Appleby was also involved with.

It received advice from Deloitte regarding the purchase, which allegedly provided a 67-page report with a similar tax-restructuring scheme to that recommended by PwC.

Blackstone allegedly avoided £7.6m in stamp duty tax and saved up to £10m in annual rental income through the use of the scheme.

A spokesperson for Blackstone said its investments were wholly compliant with UK and international tax laws and regulations. “The property investment structures in question were acquired from institutional investors and are of a type commonly used for decades for investments in UK real estate, including by listed companies and a variety of institutional investors, and were adopted after appropriate advice was taken from leading tax and legal advisers.”

In response to the report, PwC said, “The advice we provide is given in accordance with all applicable laws, rules and regulations, including proper disclosure to tax authorities, and adheres to the highest professional standards and our own tax global code of conduct.”

Deloitte said it was unable to comment.

Released on Sunday, the Paradise Papers have revealed how the world’s elite avoids paying taxes through the use of offshore funds.

Appleby, who was targeted by the leak, insists there has been no wrongdoing on their part and believes they were the target of an “illegal computer act” rather than a leak.
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