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The Bristol Cable

The bankers & offshore companies behind Easton housing development


From Wall Street to Greenbank

Photo: Alanah McKillen

REVCAP, the financiers behind the controversial development of the Greenbank Chocolate Factory, are connected to entities in low tax jurisdictions such as Jersey, the Isle of Man and the Cayman Islands.

Whilst this is all within the bounds of the law, Dr Mary Alice Young, senior Law Lecturer at UWE and expert in offshore finance said  “These offshore entities, could potentially enable tax avoidance as they encompass the establishment of multiple opaque firms.”

REVCAP (Real Estate Venture Capital) was founded by former senior executives of Lehman Brothers, the investment banking giant whose collapse heralded the 2008 financial crash. Two of REVCAP’s directors are also directors of Generator Group, the property developers that have attracted criticism for not including any affordable housing in a major planning application due to be decided by Bristol council on Wednesday.

***update on decision here***

Generator Group claims that anything less than a 20% profit margin will make the project financially “unviable”, and therefore the council’s policy of requiring 40% affordable housing (units at 80% of market rate, capped at housing benefit levels) should be dropped. However, these claims have now been thrown into doubt following revelations in the Cable yesterday.

This further information detailing the offshore activities of companies related to Generator Group may add to local campaigners’ dismay and anger.

Offshore in Greenbank

According to company accounts, REVCAP Advisors Limited – the finance partner of Generator Group – is based in London but its main activity is advising its own companies based in Jersey and the Isle of Man. Both territories are widely seen as centres of financial secrecy and low tax.

Of £11 million worth of turnover last year, just £310,000 was generated in the UK with the rest accounted for in Luxembourg, Jersey and the Isle of Man. Dr Young added “simply put, it is a very real possibility that we are looking at a classic case of big business using the tried and tested method of layering to avoid paying taxes.”

The REVCAP directors that sit on Generator Group’s board also head up a company called Real Estate Venture Capital Partners LLP, which conducts business all over Europe. Combined 2014 and 2015 profits for the company was £7.9 Million (excluding tax).

However, as the company is registered as a Limited Liability Partnership, it is the partnership’s members rather than the company who are liable to pay any tax due.

One such member is SG Hambros, a private bank and wealth manager based in low tax Guernsey. In 2013, HMRC recovered £190 Million from a tax avoidance scheme involving SG Hambros.

Another member is Tomahawk Holdings Limited, registered in the Cayman Islands where corporation and personal tax is zero. Due to Cayman Island corporate secrecy, it is not possible to see who owns and benefits from its untaxed share of the £7.9 million profit.

However, through an intricate web of companies, the same directors who sit on both REVCAP and Generator Group are connected to this Cayman Island based company. (See below)*

Tax avoidance is legal whilst tax evasion is not. However, Dr Young went on to add how the net is closing on such tax schemes, saying “new rules introduced by HMRC in July 2016 seek to impose tax on profit from dealing in or developing property in the UK. Although not yet in force, they are retrospective in effect, and of notable significance is the ‘anti-fragmentation rule’ which is ‘intended to preserve the UK tax base by consolidating the position of the relevant connected entities insofar as their activities amount in substance to a UK property trade and are not otherwise charged to UK tax.’ (HMRC March 2016).

This means that in the future, it should be increasingly difficult for property companies registered abroad to avoid UK tax. At the moment, companies which are not wholly UK based are able to arrange their financial affairs so that profits generated through UK property trading and development, escape UK taxes and charges. As demonstrated by the affairs of REVCAP, setting up multiple subsidiaries in secrecy jurisdictions and tax havens is one of the ways to do this.”

REVCAP did not respond to a request for comment.

Councillors are set to decide on Generator Group’s application to redevelop the Chocolate Factory on Wednesday 30th November

*A company based in the UK named Tomahawk Founder LLP counts two directors of REVCAP  as members, who are also on the board of housing developer Generator Group. Tomahawk Founders LLP is one of two corporate members of a third company, Tomahawk Capital Partners I LLP.  The other member is the Cayman Islands based Tomahawk Holdings Limited.



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