F1 champion and international popstar latest named in Paradise Paper leak

07/11/2017 News Team

Formula 1 world champion Lewis Hamilton and global popstar and do-gooder Bono are the latest high profile names to be named as part of the ‘Paradise Papers’ leak following the data ‘leak’ from offshore jursidictions.

Mr Hamilton – who won his fourth world championship last week to become the UK’s most successful driver – was given a £3.3 million VAT refund for business use for the £16.5 million Bombardier Challenger 605 he purchased and was imported into the Isle of Man in 2013, according to the Paradise Papers, with some 50 such similar arrangements made in the isle of Man. 

Bono – real name Paul Hewson – has faced criticism after the Paradise Papers revealed that the popstar had owned a stake in a Maltese company that had bought a shopping mall in Lithuania in 2007 and allegedly avoided around £41,5000 in local taxes. Mr Hewson said in a statement that he had been “assured by those running the company that it is fully tax compliant”.

Following the latest revelation Miles Dean, managing partner of international tax lawyers, Milestone International Tax, has argued that Mr Hamilton himself “did not avoid VAT.” Instead, Mr Dean explained, Mr Hamilton had set up a corporate structure owned by him for the purpose of acquiring the plane and operating it as a commercial venture.

“If properly implemented,” Mr Dean explained, “the arrangements would amount to conducting a trade and would therefore be entitled to a refund from the Isle of Man’s tax authorities, under the relevant VAT rules.

“VAT would have to have been paid if the plane was flying in EU airspace, but the VAT rules are clear: if the owner and importer of the plane is a business then VAT paid on import into the EU is refundable.”

However, Mr Dean added that in such circumstance, one would expect to see Mr Hamilton paying charter fees to the company at commercial rates and that when he is not using it then it is available to be chartered (and indeed was) by third parties.

“One might ask the question as to why any individual would expose themselves to a £3.3 million VAT bill, if the law did not require them to. One might also ask why such a structure was put in place if there was no likelihood of it being operated in such a way to legitimately reclaim the VAT. His personal use of the plane puts the arrangements in jeopardy and he can expect HMRC to scrutinise the arrangements closely."

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