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Revealed: the video the Candy brothers' tax adviser didn't want you to see Revealed: the video the Candy brothers' tax adviser didn't want you to see
(34 minutes later)
A promotional video featuring the property tycoons behind London’s most expensive housing complex, One Hyde Park, was edited after an adviser warned it could raise “huge issues” with the tax department.A promotional video featuring the property tycoons behind London’s most expensive housing complex, One Hyde Park, was edited after an adviser warned it could raise “huge issues” with the tax department.
Brothers Nicholas and Christian Candy, who are Conservative party donors, made millions of pounds from building the super-luxe apartments overlooking the royal park, with iris-scanning security, a virtual golf range in the basement, views of Harrods – and price tags of up to £140m.Brothers Nicholas and Christian Candy, who are Conservative party donors, made millions of pounds from building the super-luxe apartments overlooking the royal park, with iris-scanning security, a virtual golf range in the basement, views of Harrods – and price tags of up to £140m.
When the complex was nearly finished, the Candys were interviewed for a promotional video along with Richard Rogers, the architect who designed the glass and steel structures. The Guardian has been given an uncut early version which contains footage that was never meant to come to light. The video surfaced, along with a strongly worded memo to the film-maker, in which an adviser to the Candys suggested a series of changes that would “hugely improve the tax profile”.When the complex was nearly finished, the Candys were interviewed for a promotional video along with Richard Rogers, the architect who designed the glass and steel structures. The Guardian has been given an uncut early version which contains footage that was never meant to come to light. The video surfaced, along with a strongly worded memo to the film-maker, in which an adviser to the Candys suggested a series of changes that would “hugely improve the tax profile”.
One Hyde Park, which has generated about £2bn in sales, has been described as an “offshore island” in the middle of London. Many apartments were snapped up by overseas buyers looking for tax breaks, and the building itself was owned and developed by a company based in the tax haven of Guernsey.One Hyde Park, which has generated about £2bn in sales, has been described as an “offshore island” in the middle of London. Many apartments were snapped up by overseas buyers looking for tax breaks, and the building itself was owned and developed by a company based in the tax haven of Guernsey.
The leaked material illustrates how careful the creators of finely balanced offshore structures have to be in their use of language. The Candy brothers reject any suggestion the structure they used was “artificial”, but a tax barrister said the video might raise questions for HM Revenue and Customs.The leaked material illustrates how careful the creators of finely balanced offshore structures have to be in their use of language. The Candy brothers reject any suggestion the structure they used was “artificial”, but a tax barrister said the video might raise questions for HM Revenue and Customs.
“Generally: it needs quite a lot of editing in order for it to be ‘compliant’,” the memo warned. “One theme running through the Film is Chris often talking as if he was the developer: this is not really appropriate and I wander [sic] if Richard from PGGL [another director and Candy company executive] should make some of the statements. This would HUGELY improve the tax profile.” “Generally: it needs quite a lot of editing in order for it to be ‘compliant’,” the memo warned. “One theme running through the film is Chris often talking as if he was the developer: this is not really appropriate and I wander [sic] if Richard from PGGL [another director and Candy company executive] should make some of the statements. This would hugely improve the tax profile.”
PGGL is Project Grande (Guernsey) Limited, the company which owned and developed One Hyde Park, and the only Candy brother to hold a stake in PGGL was Christian, who is a tax exile in Monaco. The other stakeholder was the former prime minister of Qatar.PGGL is Project Grande (Guernsey) Limited, the company which owned and developed One Hyde Park, and the only Candy brother to hold a stake in PGGL was Christian, who is a tax exile in Monaco. The other stakeholder was the former prime minister of Qatar.
The offshore structure was set up when the Candys decided to divide their business in two. Interior decoration and project management remained in the UK, overseen by elder brother Nick, who is married to the pop star Holly Valance. The most profitable and most risky element – developing and selling property – moved offshore. It is run by younger brother Christian through his Guernsey-based CPC Group, which was founded in 2004, the year the land for the One Hyde Park development was acquired. The offshore structure was set up when the Candys decided to divide their business in two. Interior decoration and project management remained in the UK, overseen by the elder brother, Nick, who is married to the pop singer Holly Valance. The most profitable and most risky element – developing and selling property – moved offshore. It is run by the younger brother, Christian, through his Guernsey-based CPC Group, which was founded in 2004, the year the land for the One Hyde Park development was acquired.
Companies carrying out business in the UK but established offshore must not be run from the UK. Some moments in the film could be seen as suggesting the two brothers were jointly appointing the architects, bidding for the land and negotiating with the builders – all jobs normally done by property developers. Companies doing business in the UK but established offshore must not be run from the UK. Some moments in the film could be seen as suggesting the brothers were jointly appointing the architects, bidding for the land and negotiating with the builders – all jobs normally done by property developers.
Lord Rogers also appears to refer to Nick and Christian as the developers. He says on the film: “The Candys are exceptionally good developers ... I met the Candy brothers at a meeting at Land Securities [the firm which sold Bowater House, the office block that was demolished to build One Hyde Park] ... not long afterwards they approached us with this project.”Lord Rogers also appears to refer to Nick and Christian as the developers. He says on the film: “The Candys are exceptionally good developers ... I met the Candy brothers at a meeting at Land Securities [the firm which sold Bowater House, the office block that was demolished to build One Hyde Park] ... not long afterwards they approached us with this project.”
The memo suggests the Candys’ adviser was concerned Nick should not, for tax reasons, be seen to act in any way as the developer, and that Christian should not be presented as the only developer because the owner of the scheme was PGGL. The memo suggests the Candys’ adviser was concerned that Nick should not, for tax reasons, be seen to act in any way as the developer, and that Christian should not be presented as the only developer because the owner of the scheme was PGGL.
It is initialled SMS, and the author is thought to be Steven Miles Smith, head of corporate finance at CPC, and a qualified tax accountant. He suggested cutting statements made by Christian Candy (CC), Lord Rogers (RR) and building contractor Ray O’Rourke (ROR). Excerpts from the memo include: It is initialled SMS, and the author is thought to be Steven Miles Smith, a qualified tax accountant and head of corporate finance at CPC. He suggested cutting statements made by Christian Candy (CC), Rogers (RR) and Ray O’Rourke (ROR), the head of the building contractor, Laing O’Rourke.
Excerpts from the memo include:
• “RR says the Candy’s are property developers.”• “RR says the Candy’s are property developers.”
• “RR says “Candy Bros needed a return on their money” – very bad!” • “RR says ‘Candy Bros needed a return on their money’ – very bad!”
• “ROR talks about a breakfast meeting with Chris where the contract was agreed. This gives HUGE issues. He then goes on to describe the meeting itself. BAD.”• “ROR talks about a breakfast meeting with Chris where the contract was agreed. This gives HUGE issues. He then goes on to describe the meeting itself. BAD.”
• “ROR refers to they meaning N&C when he should have said PGGL” • “ROR refers to they, meaning N&C, when he should have said PGGL”
• “CC refers to “selecting our contractors”: PGGL selects the contractors.” • “CC refers to ‘selecting our contractors’: PGGL selects the contractors.”
• “ROR talks about the brothers exacting requirements: could be OK in an interior design/development management context: but he talks as if he takes instructions from N&C.” • “ROR talks about the brothers’ exacting requirements: could be OK in an interior design/development management context: but he talks as if he takes instructions from N&C.”
The hour and a half of interviews, recorded in 2010, are just a snapshot of a five-year project, but they show how hard it was in practice for the brothers to maintain the separation of their businesses.The hour and a half of interviews, recorded in 2010, are just a snapshot of a five-year project, but they show how hard it was in practice for the brothers to maintain the separation of their businesses.
The film raised another issue, according to the memo. As a tax exile, Christian can only spend a few months a year in the UK. But on camera he boasts: “I’ve been coming here now every single week for five years … my heart still races, I still get so excited just by … seeing it.”The film raised another issue, according to the memo. As a tax exile, Christian can only spend a few months a year in the UK. But on camera he boasts: “I’ve been coming here now every single week for five years … my heart still races, I still get so excited just by … seeing it.”
The memo’s verdict on that comment is stated in capitals: “VERY UNHELPFUL!”The memo’s verdict on that comment is stated in capitals: “VERY UNHELPFUL!”
After being contacted by the Guardian, lawyers for the Candys said: “The claim that Christian Candy visited One Hyde Park every single week for five years is absolutely denied, and is totally and demonstrably untrue.” The Guardian did not reveal that it had a copy of the video.After being contacted by the Guardian, lawyers for the Candys said: “The claim that Christian Candy visited One Hyde Park every single week for five years is absolutely denied, and is totally and demonstrably untrue.” The Guardian did not reveal that it had a copy of the video.
The remarks on film may well have been careless, unguarded or exaggerated. People have often used the term “the Candy brothers” as shorthand, but their lawyers argue this was “misrepresenting” the actual situation. They said the division of the brothers’ business into UK and Guernsey entities was “real”, “legitimate”, and designed to “minimise risk” when making investments.The remarks on film may well have been careless, unguarded or exaggerated. People have often used the term “the Candy brothers” as shorthand, but their lawyers argue this was “misrepresenting” the actual situation. They said the division of the brothers’ business into UK and Guernsey entities was “real”, “legitimate”, and designed to “minimise risk” when making investments.
Tax barrister and campaigner David Quentin said the video might raise questions for HMRC. “If the formal structure they set up doesn’t reflect what is actually happening commercially then they could be underpaying their tax,” he said. “Quite often huge amounts of additional tax are potentially payable and the question is whether the information, resources or political will exist for HMRC to mount a challenge.” The tax barrister and campaigner David Quentin said the video might raise questions for HMRC. “If the formal structure they set up doesn’t reflect what is actually happening commercially then they could be underpaying their tax,” he said. “Quite often huge amounts of additional tax are potentially payable and the question is whether the information, resources or political will exist for HMRC to mount a challenge.”
Speaking generally, Fiona Fernie, tax partner at Pinsent Masons, said: “HMRC will expect to see that the decisions for a business are genuinely being taken offshore. If management and control of a business is in the UK it’s potentially open to UK corporation tax.”Speaking generally, Fiona Fernie, tax partner at Pinsent Masons, said: “HMRC will expect to see that the decisions for a business are genuinely being taken offshore. If management and control of a business is in the UK it’s potentially open to UK corporation tax.”
Comments in the video by Graham Stirk, a partner in the Rogers practice, could also give the impression that Nick Candy was acting as a developer, rather than an interior designer. He said: “It was the bid for this site actually, that was when we first met them. It was in Victoria. It was in this little really small office, and they were wishing to make a bid for the site and asked if we would prepare a feasibility study.”Comments in the video by Graham Stirk, a partner in the Rogers practice, could also give the impression that Nick Candy was acting as a developer, rather than an interior designer. He said: “It was the bid for this site actually, that was when we first met them. It was in Victoria. It was in this little really small office, and they were wishing to make a bid for the site and asked if we would prepare a feasibility study.”
Towards the end of the video, Christian says: “This project can’t be built by just Nick and myself. We’ve got a phenomenal team beneath us ... ” Towards the end of the video, Christian says: “This project can’t be built by just Nick and myself. We’ve got a phenomenal team beneath us ....”
Karen Buck, MP for Westminster North, whose constituency includes One Hyde Park, said: “At the very least, this video and the comments in the associated memo illustrate how guarded those involved feel they have to be to stay within those rules. Karen Buck, the MP for Westminster North, whose constituency includes One Hyde Park, said: “At the very least, this video and the comments in the associated memo illustrate how guarded those involved feel they have to be to stay within those rules.
“There may be explanations for these all the edits they recommend, but HMRC need to satisfy themselves that these are robust, and all the tax affairs relating to the development of this landmark luxury housing scheme have been properly discharged.” “There may be explanations for all the edits they recommend, but HMRC need to satisfy themselves that these are robust, and all the tax affairs relating to the development of this landmark luxury housing scheme have been properly discharged.”
The Candys’ lawyers said: “Any suggestion that the corporate structure behind One Hyde Park is artificial is simply not correct. PGGL as the developer of One Hyde Park purchased Bowater House, appointed the architects of One Hyde Park, appointed Laing O’Rourke as building contractor and appointed Candy & Candy Ltd in its capacity as development manager and interior designer only.”The Candys’ lawyers said: “Any suggestion that the corporate structure behind One Hyde Park is artificial is simply not correct. PGGL as the developer of One Hyde Park purchased Bowater House, appointed the architects of One Hyde Park, appointed Laing O’Rourke as building contractor and appointed Candy & Candy Ltd in its capacity as development manager and interior designer only.”