Health trust rent funnelled offshore

Two County Antrim property developers were involved in a tax dodging scheme.

George and Russell Simpson sent tens of thousands of pounds of rent from a health trust offshore. Their lawyers say they work “in accordance with the law”.

The information was revealed as part of the Paradise Papers leak.

The papers are a huge batch of leaked documents which reveal the financial dealings of politicians, celebrities, corporate giants and business leaders.

But that’s not all they had in common; they too had companies in Mauritius. The brothers had control of three Mauritian companies – one each and one they controlled together.

The South Eastern Health and Social Services Trust rented a building from Russell Simpson’s May Estates Ltd company in east Belfast. The trust paid rent of about £50,000 a year for the premises.

But that rent money was being sent by the property consultants to a third-party offshore company. The money was split between the brothers’ Mauritian companies.

Rent factoring can serve an important, commercial purpose if a landlord would rather have rent upfront rather than wait for it and risk the tenant defaulting. The landlord permits a factoring company to collect and keep all the rent in return for a lump sum upfront.

But Mark Orr QC doesn’t see the justification for it in this scenario. “The rent factoring took the money out of NI and into Mauritius and that seems to have been part of this scheme.

“The logic… seems to be that money can be moved, funds can be moved from Northern Ireland into various Mauritian companies with a consequent reduction in liability for tax.”

Neither George or Russell Simpson wanted to speak to the BBC about these matters. In a statement, their lawyers told us that “these schemes were set up in good faith on the basis of professional tax advice a number of years ago”.

They added that they operated “in accordance with the law and the UK tax authorities have full visibility of this process.” They deny any allegations of wrongdoing.

Like David Chick and Jim Davis, the Simpson brothers put money offshore in an employee benefit trust (EBT) – meaning if that money came back – it could be liable for tax.

George Simpson wanted money put into his company in Northern Ireland – Radius Architectural Roofing & Developments Ltd. He had cash in a company he controlled in Mauritius.

George Simpson took a £700,000 loan from his offshore company in 2013.

Mark Orr QC has looked at the loans in this scheme. “A loan infers a liability to repay. On the documentation which I have seen to date, it’s just difficult to ascertain where the liability to repay arises and when. In my opinion, I think it might be difficult to justify that these are commercial loans to a tax tribunal.”

We asked George Simpson if he’d declared that the money originally came from an EBT – and whether he’d paid all the tax due to HMRC. His lawyers did not address the loan at all in their responses.

They referred instead to the original trust saying: “The truth of the matter is that [the Mauritian Companies] originated from an Employee Benefit and Retirement Planning Structure (the trust)”, adding “to date, based on advice given, no taxable benefits have been drawn from the trust”.

We also asked if he’d declared his involvement in a tax avoidance scheme to HMRC. They didn’t answer the question directly, instead referring again to the trust and not the company in Mauritius.

They said “HMRC are perfectly well aware of the trust’s existence and our client has fully complied with HMRC’s requests for information concerning the trust”.