Nando's using tax havens
The Guardian reported that a secretive £750m trust located in a Channel Islands tax haven sat at the top of an elaborate offshore web of companies belonging to the family behind the Nando's chicken chain.
It was claimed that the restaurant group – ultimately owned by Dick Enthoven, a South African tycoon – also used a battery of offshore techniques, including companies in Malta, Guernsey and the Netherlands, to legally reduce its UK corporation tax bill by up to a third.
It was estimated that the use of an offshore trust would mean that the Enthoven family would stand to avoid UK inheritance tax on all their fortune.
However the restaurant group pointed out that it paid £12.6m UK corporation tax in 2013.
The Guardian said "buy a £7.30 portion of spicy chicken thighs at Nando's and the cash flows into a network of accounting devices, involving Malta, the Isle of Man, Guernsey, the Netherlands, Ireland, Luxembourg, Panama and the British Virgin Islands."
Profits finally fetch up in Enthoven's Taro III Trust which is based in Jersey and operated by wealth managers Kleinwort Benson. The trust, not liable for UK tax, contained no less than £750m and possibly much more.
Enthoven's structures were all legal, but would significantly reduce the amount of tax the company and the family pay around the world, compared to a conventional onshore British operation.
It was reported that the family's English country estate, Spye Park in Wiltshire is owned by an annnymous British Virgin Islands offshore entity, which allows the family to legally avoid capital gains tax, inheritance tax and potential future stamp duty, esepcially as their South African heredity makes them "non-doms".
Nando's owners also legally reduced its UK corporate tax bill by making various permissible payments offshore.
It was explained that "the British entity that operated the 280 UK restaurants last year paid over £21m of its revenues as a royalty for using the Nando's brand name. The money then went to a low-tax Netherlands entity called Tortolli BV. Tortolli in turn collected the cash on behalf of another company registered in another tax haven , this time in Malta . Rent for the restaurants was paid to a separate UK company, itself also owned by a Netherlands intermediary. In addition, the financing to fit out each restaurant comes through Channel Island loans, with £5m in "finance charges" last year moved offshore to an entity in Guernsey, called Nando's Leasing Ltd. The chicken business profits ultimately flow to a Luxembourg low-tax registered partnership. Accounts showed the Luxembourg entity then pays cash over to the tax-free Jersey family trust as interest on a £750m loan."
"Richard Enthoven is the ultimate beneficial owner of Nando's," the company's spokesman told the Guardian. "He is not resident in the US or the UK." This means that he was not liable to pay any British personal tax.
Nando's spokesman stressed that the company did pay appreciable UK corporation tax and said its licensing fee was standard.
"In the UK, Nando's Group Holdings Ltd incurred corporation tax of £12.6m on a profit of £58.2m with revenues of £485.2m in the year ending February 2013," he said.
The Guardian calculated that the tax bill might have been half as much again, at £18m, had offshoring arrangements not existed.
The company added: "Nando's is a concept founded in South Africa. Nando's in the UK is one of 22 national franchises operating globally. All the franchises operate under standard market licensing arrangements and this includes the brand licensing fee. This franchising arrangement enables the UK company to access expertise, intellectual property and capital from the company's global operations and has helped fund its growth."