Written by: Keith Tully
Published: 30th April 2014
A BBC Panorama transcript has documented how Formula 1 boss Bernie Ecclestone avoided a £1.2bn tax bill by reaching a £10m settlement with HMRC.
The 83-year-old tycoon, who is currently on trial in Germany for corruption charges having been alleged of paying a £26m bribe to a bank official, was investigated by HMRC for nine years before making a settlement payment in 2008.
The Panorama investigation dates back to 1995 – the year that Ecclestone secured ownership of the new, lucrative Formula 1 TV rights for the forthcoming seasons. Legal transcripts from the programme outlined how the Ecclestone family manoeuvred this money by transferring it into an offshore trust in Liechtenstein in Mr Ecclestone’s wife’s name, Slavica.
The TV rights represented colossal assets and by being placed in this offshore family trust, they could be sold for a huge profit and free of UK tax.
Although frowned upon, this tax-saving exercise is legally water-tight provided Mr Ecclestone had no control of the trust and wasn’t involved in setting it up.
It is thought to be the biggest individual tax ‘dodge’ in British history, saving Mr Ecclestone a potential tax bill of £1.2bn.
Barrister and taxation expert Jolyon Maugham conceded this represented a "pretty substantial" loss of tax to the Treasury.
"I'm certainly not aware of anything else remotely approaching that sort of magnitude, in my fairly extensive experience."
When quizzed on the £10m settlement figure paid to HMRC by BBC, Mr Ecclestone said he paid more than £50m in tax last year and refuted any claims of tax evasion saying he has ‘always paid’ his ‘fair share of tax’.
“I am proud to be British and proud to make my contribution by paying my taxes here,” added Mr Ecclestone.
An Ecclestone family lawyer, Frederique Flournoy, said: "In summer 2008, the Inland Revenue offered to conclude the matter if we paid £10m. We decided to pay up."
Ms Flournoy also told how the Ecclestone family trusts earn around £10m in interest every six weeks.
A spokesperson for HMRC refused to comment on specific cases, saying: "The way in which HMRC settles and assures tax disputes has been completely overhauled in recent years, making the process more transparent.
"The effectiveness and propriety of such settlements is overseen by a Tax Assurance Commissioner, who publishes an annual report covering all large settlement cases."
*Bernie Ecclestone image used freely in accordance with Creative Commons Attribution 2.0 Generic license.