Central management and control of offshore companies, and UK tax

The International Consortium of Investigative Journalists (ICIJ) and its partners the BBC and The Guardian newspaper have recently produced detailed reports alleging that sanctioned Russian oligarch Roman Abramovich’s offshore companies might owe over £536m in undeclared UK tax and a further £1bn in penalties based on details apparently revealed in leaked documents from Cyprus-based financial services firm MeritServus. This is because the structures supposedly became tax-resident in the UK because of the involvement of Abramovich’s associate Eugene Shvidler (also a UK-based – and now sanctioned – Russian) thus making the companies liable to UK corporation tax on their profits.

A fair-minded reader seeing these reports might well assume that Abramovich has committed some wrongdoing in what the reports described as his ‘offshore tax avoidance plan’ which was ‘undermined’ by the activities of Shvidler. After all several MPs have noisily demanded that HMRC investigate Abramovich’s tax position....