Upmarket leather goods firm employing Prime Minister’s wife Samantha Cameron based in tax haven

The upmarket leather goods firm employing the Prime Minister’s wife is based in a tax haven.

Smythson is owned through a holding company in Luxembourg and linked to a secretive trust in the Channel Island of Guernsey, another well-known tax haven.

The store in Central London’s New Bond Street, which sells £2,000 python skin handbags, has employed Samantha Cameron as a creative consultant since 2010 on a salary thought to be up to £100,000 a year. The firm’s tax arrangements will be a major embarrassment for her husband.

The Prime Minister has spoken out several times about tax avoidance, most recently when he warned that businesses setting up ‘ever-more complex tax arrangements abroad’ should ‘wake up and smell the coffee’ – a jibe aimed at Starbucks, which has paid only small sums of tax in the UK.

Chancellor George Osborne unveiled a so-called ‘Google Tax’ in his recent Autumn Statement, aimed at curbing tax avoidance and stopping multi-national tech companies from channelling revenues into secretive tax havens.

Smythson is owned and run by secretive Egypt-born Frenchman Jacques Bahbout, who bought the group for £18m in 2009 through his Italian handbag manufacturer Tivoli Group. Smythson pays several million pounds a year for Tivoli’s goods and services.

Bahbout is also looking at selling a stake in the business this year to raise money to expand.

Since Bahbout bought the business, the holding company Holdsmyth has paid around £1.06m in corporation tax.

But £1m in dividends paid out since Bahbout bought the group may have benefited from the tax status of Guernsey and Luxembourg.

Controversy over its tax affairs is likely to intensify as the company has also benefited from taxpayer-backed low-cost loans. The company previously borrowed £2m under the National Loan Guarantee Scheme, a Government initiative for the banks to provide small firms with cheap finance, and currently has a £5m credit facility which is classed as ‘state aid’.

Mrs Cameron was previously creative director of the brand until 2010. She took home about £30,000 as a bonus when it was sold.

The Prime Minister’s Press Office said it had no comment to make on the company or its tax situation.

Details in the firm’s annual accounts filed at Companies House show Holdsmyth is owned by ‘a company incorporated in Luxembourg’ and is ultimately controlled by ‘Ogier Trustee (Jersey) Ltd as trustees of the Barracuda Trust, a trust settled in Guernsey’.

The company did not comment on its ownership structure but a spokesman said that it has ‘ambitious’ expansion plans for the next two years.