Council hits back at criticism of use of offshore company to buy shopping centre
A North West council has hit back at criticism of its £32.5m acquisition of a local shopping centre via a Luxembourg-registered company.
A report in The Times claimed that Sefton Council had saved £1.6m in stamp duty when it purchased the Strand Shopping Centre in this way.
In response to the newspaper report Sefton said it had received expert internal and external legal and financial advice to ensure that the process, including all tax requirements, for acquiring the centre was legal within both the EU and UK.
A spokesman for the council said: “In no way has there been any avoidance of tax relating to the purchase of the Strand Shopping Centre. We paid all the tax due and will continue to do so regarding this important asset.
“The council bought the company that owned the asset, as this was the corporate structure that was marketed for sale. The vendors refused to sell us the New Strand itself. It was the company that was for sale.
“It was also made clear that post completion, the council would liquidate the corporate structure and hive up the asset directly to us.”
The spokesman added that the local authority had acquired the centre to primarily deliver a new revenue stream for the council to help pay for services that had been reduced as a result of central government cuts. The purchase also supported the delivery of regeneration in Bootle town centre.
“It also contributes significantly to the UK tax revenues through VAT, Corporation Tax, and Business Rates,” he said.
The spokesman continued: “Most commercial transactions are governed through contract by commercial confidentiality, and therefore we are limited on what information can be publicly shared.
“However the leaders of the opposition parties were fully briefed in advance of the decision and were able to ask questions on this matter. They were also present when the Cabinet agreed the purchase. There was no attempt to disguise or hide the residency status of this company.”
He said: “The sale received expert internal and external legal and financial advice to ensure that the process, including all tax requirements, was legal within both the EU and UK. Under our ownership that continues to be the case.
“We also want to make it clear that council tax and business rates were not the source of funds used to purchase the shopping centre. Instead, the investment was funded through a loan to the council and servicing the debt can be comfortably accommodated within the financial return to us.
“Through the purchase we have taken a local asset out of foreign ownership and returned it to Sefton ownership following all rules and regulations surrounding tax.”
The spokesman said the council would continue to look at opportunities for new and improved revenue streams to help compensation for loss of government funding.
