Nando’s using secretive tax haven trust to avoid inheritance tax bills

Popular restaurant chain’s Channel Islands tax haven trust at top of elaborate web of companies is worth £750m

A secretive £750m trust located in a Channel Islands tax haven sits at the top of an elaborate offshore web of companies belonging to the family behind the Nando’s chicken chain.

The restaurant group – ultimately owned by Dick Enthoven, a South African tycoon – also uses a battery of offshore techniques, including companies in Malta, Guernsey and the Netherlands, to legally reduce its UK corporation tax bill by up to a third.

The use of an offshore trust would mean that the Enthoven family would stand to avoid UK inheritance tax on all their fortune. But the restaurant group points out that it paid £12.6m UK corporation tax last year.

Nando’s growing popularity has seen it become a British destination for a broad variety of customers, including celebrities such as David Beckham, Jay Z, as well as the prime minister during the campaign running up to the European election.

Controversy over tax avoidance is mounting this week, with calls for the Treasury minister Andrea Leadsom to explain to the cabinet secretary a total of £816,000 of political donations to the Conservatives made by her own Guernsey banker brother-in-law. She claims she was unaware of their size.

This week the Times newspaper named Sir Michael Caine and musicians Arctic Monkeys and Katie Melua as would-be beneficiaries of an aggressive tax avoidance scheme called Liberty.

The Financial Times also this week identified Dame Clara Furse from the Bank of England financial policy committee and Lord Hollick as among the investors in Ingenious Media, another controversial scheme.

Documents seen by the Guardian, which reveal past and present offshore clients of wealth managers Kleinwort Benson, are being published simultaneously in the US by the non-profit news organisation ICIJ, reveal a variety of legal offshoring activities which we invited business magnates to explain.

Those named with offshore links include the Rothermere family, owners of the Daily Mail; Sir Ken Morrison of supermarket fame; the Laura Ashley family; Sir Stelios Haji-Ioannou, the founder of easyJet; the inventor Sir James Dyson, the Malaysian tycoon Khoo Kay Peng; the software executive Martin Read; and the television boss Bruce Gyngell.

The offshore world of Nando’s is particularly elaborate. The family’s personal cash pile, their £8m Wiltshire stately home, and their corporate structures all have offshore addresses.

Buy a £7.30 portion of spicy chicken thighs at Nando’s and the cash flows into a network of accounting devices, involving Malta, the Isle of Man, Guernsey, the Netherlands, Ireland, Luxembourg, Panama and the British Virgin Islands.

Profits finally fetch up in Enthoven’s Taro III Trust. It is based in Jersey and has been operated by Kleinwort Benson. This trust, not liable for UK tax, contains no less than £750m and possibly much more.

Enthoven is a South African tycoon whose own Dutch father, Robert, amassed an insurance fortune. Dick’s funds are behind much of Nando’s international rise.

Enthoven’s structures are all legal, but they are complex and not transparent. They significantly reduce the amount of tax the company and the family pay around the world, compared to a conventional onshore British operation.

As often in the offshore universe, one of the fruits of these manoeuvres turns out to be a classically English country estate, Spye Park in Wiltshire. The estate, which goes back to the 16th century, is occupied by Gigs and Robby Enthoven. Robby, who is Dick Enthoven’s son, developed the UK end of the restaurant chain.

But the registered owner of Spye Park is actually an anonymous British Virgin Islands offshore entity.

Such arrangements can legally avoid capital gains tax, inheritance tax and potential future stamp duty for those like the Enthovens, whose South African heredity makes them “non-doms”.

Nando’s owners also legally reduce their UK corporate tax bill by making various permissible payments offshore. Nando’s does then pay UK corporation tax on the remainder of its profits.

The British entity that operates the 280 UK restaurants last year paid over £21m of its revenues as a royalty for using the Nando’s brand name. The money goes to a low-tax Netherlands entity called Tortolli BV. Tortolli in turn collects the cash on behalf of another company registered in another tax haven , this time in Malta .

Rent for the restaurants is paid to a separate UK company, itself also owned by a Netherlands intermediary. In addition, the financing to fit out each restaurant comes through Channel Island loans, with £5m in “finance charges” last year moved offshore to an entity in Guernsey, called Nando’s Leasing Ltd.

The chicken business profits ultimately flow to a Luxembourg low-tax registered partnership. Accounts show the Luxembourg entity then pays cash over to the tax-free Jersey family trust as interest on a £750m loan.

“Richard Enthoven is the ultimate beneficial owner of Nando’s,” the company’s spokesman told us. “He is not resident in the US or the UK.” This means that he is not liable to pay any British personal tax.

Nando’s spokesman stressed that the company does pay appreciable UK corporation tax and said its licensing fee was standard.

“In the UK, Nando’s Group Holdings Ltd incurred corporation tax of £12.6m on a profit of £58.2m with revenues of £485.2m in the year ending February 2013,” he said.

The Guardian calculates that the tax bill might have been half as much again, at £18m, had offshoring arrangements not existed.

The company added: “Nando’s is a concept founded in South Africa. Nando’s in the UK is one of 22 national franchises operating globally. All the franchises operate under standard market licensing arrangements and this includes the brand licensing fee. This franchising arrangement enables the UK company to access expertise, intellectual property and capital from the company’s global operations and has helped fund its growth.”

Neither the Enthovens nor Nando’s UK commented on the Taro III Trust or the company’s other offshore structures.