The chair of HM Revenue & Customs has confirmed that he gave advice of a “general business nature” to the property tycoons behind One Hyde Park, London’s most expensive luxury flats development, while working at accountancy firm KPMG.
Ian Barlow, who ran the UK tax department at KPMG for eight years before becoming a senior partner, was a close associate of Nicholas and Christian Candy, whose tax affairs are in the spotlight after the leak of a controversial video.
Before becoming chair of the board of HMRC in 2012, Barlow spent three years as a director of Candy & Candy Ltd and its holding company. Now Private Eye has unearthed a CV which shows that he was paid to advise the brothers during his time at KPMG.
There have been calls for an investigation into the tax structure behind One Hyde Park since the Guardian published details of an unedited promotional video about the building of the Knightsbridge apartment complex, along with a memo written by a senior adviser to the Candys asking for a series of cuts that would “hugely improve the tax profile”.
It can now be revealed that HMRC has asked for a copy of the evidence. In line with a policy to protect sources, the Guardian has not shared the video or the memo with the tax office.
On Tuesday, Barlow confirmed he had advised the brothers, but denied any involvement in their tax affairs.
“Whilst I was a partner at KPMG neither I nor my firm provided tax advice to Candy & Candy,” the HMRC chair said in an emailed statement. “The advice I provided was not about taxation but was of a general business nature built on my experience of dealing with many companies at board level over the years.”
In addition to providing high level consulting, KPMG audited company accounts for the Candys until the year to July 2006. Barlow said: “KPMG were auditors of C&C but I had no direct role in the audit which was led by an audit partner who signed the audit reports.”
Barlow’s appointment to chair HMRC was greeted with surprise by tax campaigners three years ago. He was UK head of tax and legal at KPMG from 1993 until 2001, and critics pointed out that during that time the firm was responsible for helping set up a number of tax avoidance schemes which have been challenged in the courts.
Barlow said his past relationship with the Candys would not influence HMRC’s work: “The notion that HMRC would hold back from investigating a company because one of its non-executive directors had once provided business advice to that company is patent nonsense and I would not wish to serve as a [non executive director] to any organisation that behaved in that way.
“I think it’s also important to make the point that my role with HMRC means I play no part whatsoever in the affairs of any particular taxpayer and have no privileged knowledge or influence over the relationship between any taxpayer and HMRC.”
The Candys moved an important part of their business offshore just before acquiring the land to build One Hyde Park in 2005. The apartments, which overlook Harrods and the royal park, boast iris scanning security, hidden servants quarters and price tags of up to £140m. The developers claim to have raised £2bn in sales.
But profits on the sales were booked offshore thanks to a corporate structure which involved the Candy brothers dividing their UK based business in two. Interior decoration and project management remained in Britain, headed by Nick Candy, while the riskier but more profitable work of buying and developing properties moved to the tax haven of Guernsey, where it is controlled by younger brother Christian Candy.
Moments in the video could be seen as suggesting the brothers continued to work closely together. The Candys, who are Conservative party donors, reject any suggestion that the structure they used was “artificial”. The division of their business into UK and Guernsey entities was “real”, “legitimate” and designed to “minimise risk”.
But a tax barrister has said the video could prompt scrutiny by tax inspectors and the Labour MP Karen Buck, whose constituency includes One Hyde Park, has called on the tax office to ensure the structure is legal.
Buck said last month: “HMRC need to satisfy themselves that these are robust, and all the tax affairs relating to the development of this landmark luxury housing scheme have been properly discharged.”
A spokesman for HMRC said: “Ian Barlow was appointed as someone with extensive experience of tax and business management, which brings huge value as well as challenge to HMRC’s Board and executive management. HMRC was aware of his previous role as a senior partner of KPMG and was satisfied there was no impediment to his appointment as lead non-executive, given the nature of his involvement and the length of time that has passed. He has also demonstrated a clear commitment in recent years to promoting corporate responsibility in tax planning as an issue for board-level oversight, which HMRC believes is an important initiative in tackling corporate tax avoidance.”
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