Richard Branson – claims to be a UK patriot but moved abroad 7 years ago to avoid UK tax. Morality?
Date added: October 14, 2013
Richard Branson, who takes pride in dressing himself in the Union Jack to display his ‘Britishness,’ has saved millions of pounds in tax from his earnings in Virgin Group by surrendering his residency status and accepting limitations on visits to the UK. He is someone who has been obsessed with money since his teenage years. He says he has been a tax exile for 7 years and claims it has nothing to do with avoiding UK tax. But the net effect is that he does indeed avoid UK tax. Branson says: “Seven years ago we decided to move permanently to Necker [Caribbean] as we feel it gives me and my wife Joan the best chance to live another productive few decades. We can also look after our health (Joan is approaching 70 and I’m not far behind).” Heaven help us if he lives decades more. One senior aide said: “He probably spends more time flying around the world than he does on Necker.” One comment about Branson and his hypocrisy said: “This is also the man who exhorts us all to ‘save the planet’ by reducing our CO2 emissions…… whilst flying to/from his private Caribbean resort. He may have money but he lacks morals.” . Tweet
I’ve been a tax exile for seven years, says Branson
Virgin chief confesses to love affair with his Caribbean home
Sir Richard who takes pride in dressing himself in the Union Jack to display his ‘Britishness’ has saved millions of pounds in tax from his earnings in Virgin Group by surrendering his residency status and accepting limitations on visits to the UK.
Sir Richard Branson admitted yesterday he had been a tax exile for seven years but denied the move had been influenced by money, rather a love affair with Necker, the Caribbean island he has owned for 34 years.
Reports that he had sold his property interests, including his Oxfordshire estate and London home to sever links with Britain thrust Sir Richard into an unwelcome and unfamiliar limelight and prompted a blog from his island retreat.
In the blog, Sir Richard said: “I have not left Britain for tax reasons but for my love of the beautiful British Virgin Islands and in particular Necker Island which I bought when I was 29 years old, 34 years ago as an uninhabited island on the edges of the BVI. Over that time we have built our home there, a place where my family and I are able to truly relax.
“Seven years ago we decided to move permanently to Necker as we feel it gives me and my wife Joan the best chance to live another productive few decades. We can also look after our health (Joan is approaching 70 and I’m not far behind).
“I still work day and night now focusing on not for profit venturers but on Necker I can also look after my health.
“I spent 40 years working day and night in Great Britain building companies and creating competition and choice for consumers across a whole range of industries. The companies we created from scratch have created tens of thousands of jobs and paid hundred of millions in tax (and will continue to do so).
“Now in my 60s I’m proud of what we’ve achieved and contributed and now spend the vast majority of my time building not for profit ventures, raising awareness around important issues and earning money for charity. I have been very fortunate to accumulate so much wealth in my career, more than I need in my lifetime and would not live somewhere I don’t want to do for tax reasons.”
Sir Richard discussed the blog with senior Virgin associates, conscious that he could be damaged by the tax exile claims at a time when the issue has become politically sensitive. They estimate that his not for profit ventures and other fund raising activities raise more than £10m a year for good causes ranging from climate change to the global drugs problem.
One senior aide said: “He probably spends more time flying around the world than he does on Necker.”
Sir Richard who takes pride in dressing himself in the Union Jack to display his ‘Britishness’ has saved millions of pounds in tax from his earnings in Virgin Group by surrendering his residency status and accepting limitations on visits to the UK. He will continue to pay tax on any UK income.
He has been quoted as saying “I don’t think people should be leaving the UK because of our tax system” – though Virgin executives say he was misquoted. Ten years ago he wrote to newspaper saying “I live in England and choose to pay my not inconsiderable taxes here.”
Sir Richard, regarded as a role model for budding entrepreneurs, has surrendered executive control of the myriad of Virgin companies but remains chairman. He is estimated to be worth £3.4bn.
He made his entry into the world of business with a magazine called Student at the age of 16 but he found selling records in the crypt of a church and undercutting High Street prices more profitable.
The Virgin name has given birth to more than 400 companies from airlines to trains, from cable to broadband, from comics to animation that have embraced failure as well as success and controversy.
He has rebuilt his home on Necker after lightning started a fire that burned for three days. The actress Kate Winslet helped rescue Sir Richard’s mother.
Career: Sir Richard Branson’s biographer Tom Bower says the millionaire has been obsessed with money since he was 19 years old
Throughout his life, Richard Branson has never liked paying taxes. That’s not surprising for someone who – ever since he started in business at the age of 19 – has been obsessed with money.
The tycoon is not shy of admitting as much. He has said that since his late teens, his life ‘was always 99.5 per cent business’.
Just 20, he launched his business career with a company that pretended to export records that were, in fact, being sold in Britain. Flogging records through mail order, he successfully undercut the prices of established retailers by avoiding the payment of purchase tax – worth £500,000 in today’s money.
After this was exposed by a Customs & Excise investigation, Branson sought legitimate ways to avoid paying taxes.
In 1973, the huge profits from his Virgin Music company’s first hit, Mike Oldfield’s Tubular Bells, were paid into a company registered by the budding businessman’s ‘trustees’ in the tax-free Channel Islands. The album made Branson a millionaire. Ever since, he has paid advisers to construct his Virgin empire through a bewildering series of off-shore companies.
As a result, for 40 years, Branson and the Virgin empire have – albeit legally – limited their payment of British taxes to a minimal amount. Although these tax arrangements have been openly declared in his companies’ annual statements, he continues to minimise his payment of British taxes.
Their success has allowed Branson to portray himself as a devoted patriot – posing for photos while wrapped in the Union flag, trumpeting his achievements as the country’s most popular entrepreneur and associating himself with national successes, such as the London Olympics.
All the while, though, despite his pleasure at featuring high in various Rich Lists (in the Top 20 in this year’s Sunday Times Rich List with an estimated £3.5billion fortune), he has always refused to confirm any details about his wealth.
Disguising the true extent of his fortune is very important to him. Indeed, Branson’s appearance of personal austerity – his well-worn jumpers, old cars and houseboat – were ideal props to divert attention.
He follows similar tactics with regard to his business empire. He once told his staff in London that Virgin was ‘virtually bust’. But, at the same time, his off-shore trusts appeared to be flush with money from his records business.
This served a double purpose: helping him to legally avoid paying taxes as well as convincing his employees that their under-pressure boss was suffering financially, too. Meanwhile, many colleagues have complained that while Branson himself accumulated large sums in his off-shore bank accounts, they did not get a share of the profits which they had created.
In accounting terms, Branson’s stroke of genius was the purchase (for £180,000) of Necker, an island in the British Virgin Islands, in 1978. Then an isolated lump of barren rock, it allowed him to legitimise his off-shore status by setting up home in a tax-free state where he could lawfully avoid paying British taxes.
Luxury: The millionaire’s home in Holland Park, London, went on the market for £17.5 million in 2006
The tycoon’s obsession with avoiding having to pay too many British taxes paid off in 1992.
By selling Virgin Music to EMI for £560million, he overnight became one of Britain’s richest businessmen. In order to avoid paying £84million in taxes on his huge profits, the sale was directed through the Branson trusts in the Channel Islands.
As the canny tycoon’s enemies began to investigate his empire, they discovered an almost impenetrable collection of corporations, inter-company debts and tax avoidance structures involving several countries. Finding the truth among the hundreds of different Virgin companies (many now registered in the British Virgin Islands), defeated the Inland Revenue.
By the mid-1990s, Branson’s advisers had astutely anticipated that the British Government would want to close various tax loopholes. To counter this, Virgin held its board meetings in Necker, the Channel Islands and Switzerland. The purpose was to show that Britain was not Virgin’s headquarters and that the firm’s management was making all its decisions off-shore.
Fearing that the Inland Revenue might challenge those meetings as a clever ploy, key Virgin companies were moved in the late-1990s from Britain and the Channel Islands and registered in low-tax Switzerland.
Branson’s close associate and Virgin finance director Stephen Murphy himself moved to Geneva. Even that was considered insufficient to protect Branson personally from British taxes. Thus Virgin switched some of its headquarters from Switzerland to Singapore, a new tax haven. At the time, Branson owned two adjacent houses in London’s mega-rich Holland Park as well as a farm in Kidlington, Oxford.
To avoid any suggestion that he lived in these properties or any challenge to his off-shore tax status, he sold one house (which had been registered as his home) and established that the other was merely his personal office.
Until six years ago, he used his Kidlington farm as his actual British home. Regularly, he commuted in his private jet from Necker to a nearby Oxfordshire airport. But then, to remove any trace of his domicile or residency in Britain, Branson transferred ownership of the Kidlington estate to his two children. Last year, to confirm the transfer, the house was registered in his children’s names.
Now, Branson has no homes in Britain but a large number of homes scattered across the globe. As he travels in his private jet from one continent to another, any future investigation by tax inspectors to try to identify the location of his permanent domicile would be hampered by an impenetrable diary of countless global journeys.
As ever, this is yet more proof that Richard Branson has not only been brilliant at business – but equally, he has been a genius at reducing his tax bill.