BVI
companies have helped British buyers snap up luxury villas in Thailand – not
for tax avoidance, they say, but to avoid Thai curbs on foreign owners
The Guardian, David Leigh, Harold Frayman and James Ball, Tuesday 27 November 2012
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| Sales of luxury villas in Thailand have boomed, with many British owners using offshore companies to circumvent Thai foreign ownership laws. Photograph: Alamy |
One of the
side-effects of Britain's financial bubble was a temporary boom in sales of
luxury villas on the island of Phuket in Thailand.
These
exotic hideaways had infinity pools, their own gyms and waiting speedboats.
They could be rented out for cash when not in use by their owners, and cost
anything up to £5m to buy.
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| Offshore Secrets |
A Bangkok
law firm, Limcharoen Hughes and Glanville, employed a couple of expatriate
British solicitors and were active with UK clients. When approached by the
Guardian, the lawyers denied involvement. Their deputy chief executive officer,
Desmond Hughes, said: "Let me categorically correct your assertion that
our law firm 'sets up' BVI companies. We do not 'set up' BVI companies."
He called this a "fundamental error".
But his
denial turned out to be more a matter of semantics. Records show the law firm
in fact commissioned a specialist incorporation agency in the BVI on their
British clients' behalf, to do the detailed work of setting up a series of such
offshore companies.
One of the
Britons who buys and develops villas, the former tennis player David Lloyd,
pictured right, was willing to explain.
Lloyd, who
set up a profitable chain of UK gyms when he retired from sport, says the
reason for his two BVI entities, Rise Bright Development and High Joy Group,
was not tax avoidance. It was to circumvent Thai laws on land ownership.
"It's
purely because in Thailand, you can't own the land if you're a foreigner. What
you have to do is form a company to buy the land in which a Thai partner owns
51%. That company then gives a lease of the property to a BVI company which you
do own. There are no tax advantages: it is purely because of the restrictions
on land ownership".
One buyer,
Chris Sharp, a retired London shop-owner, told us he had been advised that his
BVI company would also allow him to avoid Thai capital gains tax, if he sold
the Phuket villa on.
Another
Thai villa owner is Ian Brimecome, the chairman of the Equitable Life insurance
company. He and his wife, Charlotte, used an entity called Fortune Green
Holdings in the BVI to buy a holiday home after visiting Phuket in 2007.
He told us
that another reason why local estate agents and lawyers used offshore companies
was to avoid Thai legal problems on inheritance.
"Instead
of having to change ownership of the property, you can simply transfer the
shares in the existing company to the person who inherits."
The British
tax authorities depend on offshore villa owners volunteering the existence of
their overseas assets and income.
Brimecome
said HMRC had mounted a detailed investigation in 2010 of such Thai villa
purchases, and had given him a clean bill of health.
The
Guardian/ICIJ Offshore Register: Thailand
Ian &
Charlotte Brimecome
Company:
Fortune Green Holdings
Chairman of
Equitable Life who used offshore entity to buy Phuket villa.
Brimecome,
who has a £2m home in Pirbright, Surrey, joined the boards of Equitable Life
and Axa in 2007. The same year the Brimecomes visited Phuket, the Thai beach
resort, to buy a villa. The BVI company to own it was set up through a local
law firm.
Intermediary:
Limcharoen Hughes & Glanville, Bangkok.
Brimecome:
"The local estate agents and lawyers arrange the sales this way. They say
it is less cumbersome than using an on-shore company, and avoids the problems
in Thailand of changing the property ownership to your heirs if you die. The
shares in the company can simply be transferred instead."
David Lloyd
Company:
Rise Bright Development; High Joy Group; David Lloyd Asia Co.
Tennis star
turned property developer in Thailand.
Lloyd was
Davis Cup captain and formerly coached Tim Henman. He built up a chain of gyms
in the UK, sold them and became a resort developer on Phuket in Thailand. He is
developing luxury villas at Cape Sawan, to sell between £2m-£5m and set up BVI
ownership entities in 2007-8.
Intermediary:
Limcharoen, Hughes & Glanville, Bangkok.
Comment:
"It's purely because in Thailand, you can't own the land if you're a
foreigner. What you have to do is form a company to buy the land in which a
Thai partner owns 51%. That company then gives a lease to a BVI company which
you do own. There are no tax advantages: it is purely because of the
restrictions on land ownership."
Chris Sharp
Company:
Charm Nice Group
Retired
London shop-owner who bought villa on Phuket.
Sharp
listed as retired. Company incorporated 1.11.2007.UK flat in Barnet,
Hertfordshire, EN5 4NG, sold for £292,000 in 2009.
Intermediary:
Limcharoen, Hughes & Glanville.
Comment:
"I retired from running a greeting card shop. I met a lady here. The lawyers
advised me to have a BVI company because otherwise, they said, when you sell,
the Thais take a lot of tax off you."
Gerry
Matthews
Company:
Kinetic Country Group
Retired
clothing wholesaler who bought villa on Phuket.
BVI company
was incorporated in July 2005, to buy a villa at the Cape Yamu development in
Phuket, with pools and gyms, developed by Irishman Peter Hamilton. At
retirement from his clothing wholesale firm, Smith & Brooks, Matthews owned
£3m house in Buckinghamshire.
Intermediary:
Campbell Kane, Phuket developers.
Comment: no
response to approach.
Michael
Macareavey
Company:
Add Merit Group
Macareaveyof
Aberdeen AB11 7SQ, bought offshore company in 2007, while in Malaysia. Formerly
director of MTM Process Engineering Ltd in UK.
Intermediary:
Limcharoen, Hughes & Glanville.
Comment: no
response to email.
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