Conservative
Stephen Hammond reportedly avoided capital gains tax by using firm to buy his
holiday villa in Portugal
theguardian.com,
Conal Urquhart, Saturday 2 November 2013
Conservative minister Stephen Hammond is accused of using a Gibraltar-based company to buy his villa in Algarve. Photograph: Rex Features |
A Tory
minister avoided paying tax by using an offshore company to buy his holiday
home, the Daily Telegraph has claimed.
Stephen
Hammond, a junior transport minister, used a company based in Gibraltar to buy
his family's £500,000 villa in Portugal.
By not
owning the villa directly, he reduced his tax bill in both Britain and
Portugal.
A tax
specialist told the Daily Telegraph that Hammond would have been able to avoid
a "big hit of capital gains tax".
The prime
minister has attacked tax avoidance and George Osborne, the chancellor,
described the practice as "morally repugnant".
The
Telegraph said Hammond bought a villa in Algarve through a company called Peal
Gas Ltd. The minister told the paper he was behind the offshore firm that owns
the family's second home.
A spokesman
for Hammond said in a statement: "Mr Hammond has always paid the correct
amount of tax in the UK. Mr Hammond has had no personal tax liability
overseas."
Peal Gas
was set up in Gibraltar in April 1997. Hammond bought the company, which
already owned the property, in 2002. In 2005, Portugal changed its tax rules so
that the annual property tax for homes owned through companies registered in
Gibraltar rose to 5%.
If Hammond
has transferred the property into his own name at this point he would have been
liable for capital gains tax on the increase on the value of the property since
it would technically have been classed as a sale.
Instead, in
December 2005, he moved the company to Delaware, a US state not covered by the
Portuguese rules.
Experts
estimate this decision could have saved him about £20,000 in British tax
because such villas rose in value by about £100,000 during this period.
Peal Gas
was registered in Gibraltar until the new company was set up in Delaware. The
company's registered agent is the Corporation Trust Company in Wilmington,
where more than 285,000 separate businesses are registered. The Telegraph
believes this allowed Hammond to avoid capital gains tax in Britain, which
would be levied at 28%.
Hammond was
elected MP for Wimbledon in 2005 and became a minister last year. His villa in
Vale de Lobo has four bedrooms and a swimming pool. It can be rented out for up
to £,2425 per month.
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