Friday, 8 April 2016

the wiggly tail of Blairmore Holdings

Ages ago I downloaded the prospectus for Blairmore Holdings. I stashed a part written post about it in my notes. Patience has its rewards because it is now in the mainstream news.

There are a couple of points that don't stack up with the chorus of secondary politicians defending their leader right now in the saga about who held what.

Firstly, the reported £30,000 holding cashed in? A minimum holding stipulated with the fund is USD100,000. This would imply that the total holding by a single entity would need to be at least USD100,000. Either this condition was waived, or there was a joint holding, which would then be closer to $100,000 - split 2 ways? Could it be that Sam and Dave each cashed in £30k? Not what Dave implied. Someone should really ask...

Then the statements about this being a regular trust mechanism and not one particularly designed to avoid UK tax. That's quietly contradicted in the original prospectus, which made s specific point of saying it is designed to avoid UK taxation.

As a clue, the banking arrangements were via Nassau, Bahamas. Payment into the fund was via Société Généralé in New York.

Intriguingly, the investment managers are Smith and Williamson, 25 Moorgate, London. That's really the working part of the Fund, having to decide what it invests in. One could say that the financial factory was based in London. I wonder if any of the beneficial holders of the trust had links with that firm (wink)?

Then there was an English legal firm, Simmonds and Simmonds from Ropemaker Street EC1, as well as the Mossack Fonseca in Panama. Add some Deloitte and Touche auditors from Nassau, a few more advisors and banks and it makes a complete structure.

But that was then.

The trust has since relocated to Ireland, which also claims that funds are not subject to any taxes on their income (profits) or gains arising on their underlying investments. Furthermore, with Irish regulations, the treatment of foreign investments can reduce or eliminate withholding taxes under Ireland’s network of tax treaties.

I notice that the current Blairmore fund is currently rated at around USD30 million. Some of its top ten holdings are also well-known tax optimisers. Top holding is Google (Alphabet), 2nd is Walt Disney (tax via Luxembourg) and 8th holding is Amazon.

There's probably another story in that?

And here's those Prospectus extracts (SEOs rev your engines)...

Blairmore Holdings

Minimum Investment
The Directors are entitled (in their sole and absolute discretion) to determine the minimum initial investment amount and the minimum amount for subsequent subscriptions from time to time. As at the date of this Prospectus, the minimum initial investment per subscriber is US$100,000. Shareholders must maintain this minimum level of subscription in the Fund...

Taxation, United Kingdom

(a) The Fund
The Directors intend that the affairs of the Fund should be managed and conducted so that it does not become resident in the United Kingdom for United Kingdom taxation purposes.

Accordingly, and provided that the Fund is not trading in the United Kingdom through a fixed place of business or agent situated in the United Kingdom that constitutes a “permanent establishment” for United Kingdom taxation purposes and that all their trading transactions in the United Kingdom are carried out through a broker or investment manager acting as an agent of independent status in the ordinary course of business, the Fund will not be subject to United Kingdom corporation tax or income tax on its profits... "

1 comment:

Pat said...

I am rubbish with finance but I think the changing of names should not be allowed. I am a Shell widow, I have had Shell shares for years and now a part of the Trust Fund has changed to Shell. Then there is Equiniti which seems to get everywhere and confuse me further. And the paper work! Mustn't grumble!