HM Revenue and Customs has struck a deal to relocate tax officials into a new office complex in Newcastle owned by major Conservative party donors through an offshore company based in a tax haven, the Guardian can reveal.
The department’s planned new home in the north-east of England is part of a regeneration scheme developed by a British Virgin Islands (BVI) entity controlled by the billionaire property tycoons David and Simon Reuben.
The deal will see officials at the government department responsible for preventing tax avoidance working from a site owned by a subsidiary of a company based in a secretive offshore tax jurisdiction.
The Reuben brothers, their family members and businesses have donated a combined £1.9m to the Tories. Earlier this week, the brothers are reported to have shared a table with Boris Johnson at an exclusive Tory party fundraising dinner.
On Tuesday, officials including the Cabinet Office minister Steve Barclay announced HMRC had agreed the 25-year lease with one of the Reuben brothers’ companies.
The brothers are the second richest family in the UK, according to the Sunday Times’s rich list. David Reuben’s son, Jamie, is a close ally of the prime minister and has served as a Tory party treasurer. He has donated more than £750,000 to the party since Johnson entered Downing Street.
The Reuben family has built a significant presence in Newcastle in recent years and is part of the controversial Saudi Arabia-led consortium that acquired Newcastle United football club in October.
Company filings show the family has frequently used BVI companies to hold its UK business interests, which include a luxury London property portfolio and a string of racecourses.
A spokesperson for HMRC said the office complex in Newcastle is owned and will be developed by a UK company, Reuben Brothers (Newcastle) Limited. However, Companies House filings show the company’s sole shareholder when it was incorporated earlier this year was Taras Properties Limited in the BVI.
Taras Properties first acquired the site in 2013 and transferred ownership of the land to the UK company in June this year for £10m, according to Land Registry records. The BVI company owns multiple large plots of land in central Newcastle in the area surrounding HMRC’s planned offices.
A spokesperson for the Reuben brothers confirmed the UK company is held by Taras Properties, but insisted the subsidiary “operates and pays taxes as a UK company”.
HMRC’s spokesperson insisted the Reuben brothers’ company would be subject to normal UK tax regulation. “The lease payments and any gains on the sale are subject to UK tax,” they said. “HMRC is satisfied the deal represents the best value for money for the taxpayer.”
There is no suggestion of any wrongdoing by the Reuben brothers and owning UK property through offshore companies is perfectly legal.
But the government’s decision to move 9,000 HMRC staff to the site comes as it faces calls to honour a commitment to introduce a register of overseas companies owning UK properties. The draft bill, first published in 2018, is designed to crack down on the use of offshore companies to obscure owners’ identities and their source of funds.
Combatting offshore tax evasion and avoidance is described as one of HMRC’s priorities and earlier this year the department unveiled plans to crack down on offshore tax avoidance by targeting UK-based entities facilitating the sale of avoidance schemes using tax havens.
Responding to the move, Dame Margaret Hodge, a Labour MP and chair of the cross-party parliamentary group on anti-corruption and responsible tax, said: “It’s outrageous that HMRC should be using taxpayers’ money to benefit somebody that relies on offshore structures based in tax havens.”