Chelsea Barracks
The Qatari ruling family has been ordered to pay £38million in stamp duty for the purchase of Chelsea Barracks after using an aggressive tax avoidance scheme to avoid the bill.

The oil-rich country bought the 13-acre site from the Ministry of Defence for almost £1billion in 2007, making it Britain’s most expensive residential development site. But the Qataris powerful sovereign wealth fund did not pay any stamp duty on the purchase after employing complex tax avoidance methods.

The country’s investment arm sold the land to its own bank and then leased it back, exploiting a tax break called sub-sale tax relief, the taxman said. The loophole enables buyers to avoid paying stamp duty on a property they are buying by transferring it to a trust at the same time as they complete the sale.

The Qataris claimed they had done this for commercial purposes, and not to avoid tax, but their argument was yesterday rejected by the courts.

The famous barracks were sold to the Qatar Investment Authority (QIA), a Qatari government-owned body charged with managing the sovereign wealth fund. They bought the barracks for nearly £959 million – originally in partnership with Christian Candy’s CPC Group – but bought out CPC’s share in 2010.

The QIA has acquired at least £5billion of commercial property in London the last seven years, including famous building such as Harrods, in Knightsbridge, The Savoy Hotel, Park Lane Hotel and the Olympic Village. This is more than half the value of the entire Crown Estate, a wealthy portfolio of and buildings and property which funds the Queen’s expenses.

Only last week, the QIA bought the HSBC headquarters in Canary Wharf for about £1.1billion after fending off Chinese rivals.

Simon Mallinson, of Real Capital Analytics, said provisional data suggested the Qataris had been ‘the largest commercial property investor in the UK this year’.
And the sovereign wealth fund is set to make even more when it builds hundreds of homes on lucrative land at Chelsea Barracks, in central London.

Qatar’s prime minister, Abdullah bin Nasser bin Khalifa Al Thani, recently revealed the country has ‘interests’ in £23billion worth of UK property and business.
He said: ‘Our interests, in companies as diverse as Barclays and Sainsbury’s, Heathrow airport, Harrods and Canary Wharf, total more than £23billion.
‘These are not short-term investments. It is clear that both our countries benefit hugely from them.’
Sandhurst-educated Sheikh Tamim bin Hamad Al Thani, has also previously boasted of his British buy-up, saying: ‘We are investing everywhere. Even your Harrods – we took it.’

The Qataris are the latest in a long line of businesses and sovereign wealth funds accused of avoiding UK tax.

Google, Apple, Starbucks and Amazon have all been accused of shirking their full tax liabilities through complex avoidance schemes. A further 24 businesses and 900 homeowners who used a similar method to avoid their tax responsibilities will also now be told to pay up, which could net taxpayers another £85million.

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