Permission Granted For Al Fayed Tax Investigation

by Robin Pilgrim, LawAndTax-News.com, London

18 May 2004

Permission for a full-scale investigation into the tax affairs of Harrods owner, Mohamed al Fayed was granted last week at the Court of Session.

Ruling last Tuesday, Lord Reed rejected claims that a tax investigation initiated following the ending of the 'forward contracts' tax break for super-wealthy foreign-domiciled UK residents, constituted an abuse of power on the part of the Inland Revenue.

Explaining the reasoning behind his decision, the judge observed that:

"Mr al Fayed works as a director of major companies, but does not appear to be paid a salary. He lives in expensive accommodation, but he does not appear to own or rent it."

"The natural inference from the evidence is that a great deal of effort and ingenuity has gone into creating networks of offshore companies, trusts and other entities in order to minimise liability to tax."

He concluded:

"In the face of such opaque and sophisticated arrangements, it is important the Revenue should be able to ensure UK tax liabilities are accurately assessed."

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