Hotel suite defence challenged in tax case

Photo: Mikey
Photo: Mikey

As Sir Philip Green continues to face a storm of criticism in the wake of the collapse of UK high street chain BHS, another British businessman has been accused of not playing fair, this time for not paying taxes.

John Hargreaves, founder of the hugely successful Matalan fashion chain, is facing allegations at a tax tribunal that he failed to pay almost €100 million in tax by claiming that he was living in Monaco, which does not impose income tax.

As has happened in previous cases, the UK tax authorities appear to be trying to move the goalposts by enforcing their own definition of “ordinarily resident”, rather than counting days.

HM Revenue & Customs has claimed that Hargreaves. now 72, spent so much time in the UK that income and other benefits he gained from Matalan should be taxed in Britain.

The allegations date back to May 2001 when the businessman and his partner made £200 million by selling shares in the company.

Mr Hargreaves says that when the deal was finalised he was living in a hotel suite in Monaco. Mr Hargreaves claims he moved from the UK for a “settled purpose to live abroad permanently”, and over the years has lived in a hotel suite in Monaco, a yacht in the harbour and a rented apartment.

During the tax year in question, Mr Hargreaves travelled back to the UK more than 40 times in his role as executive chairman of Matalan, but did not exceed the number of days allowed in the UK under HMRC guidelines at the time.

READ MORE: MP report finds Sir Philip Green left BHS on “life support”