F1’s Bernie Ecclestone hit with £1bn tax bill after new charges reopen HMRC investigation

Prosecutors in Germany charged Ecclestone with bribing banker?Gerhard?Gribkowsky, who had been in charge of selling a 47.2 per cent stake in F1 to private equity firm CVC. He was also accused of steering the sale to CVC if it agreed to keep him on as CEO.

Ecclestone suggested?Gribkowsky?had threatened to make ?insinuations? about his tax affairs and threatened to report him to HMRC if he didn’t pay him ?27.5m.?

He said: “He was shaking me down concerning some allegations that he could say to the HMRC that I controlled our family trust, which would have been extremely expensive?.

HMRC had spent nine years investigating?Ecclestone and his family for tax fraud. With Ecclestone needing to have a triple bypass in 1999, his wife at the time was not domiciled in the UK and would have had to pay 40 per cent inheritance tax on money received from him if he died.

To prevent such a situation from happening, Ecclestone?transferred the entire share of F1 to its parent company?? owned by his wife.?She put the shares in the Bambino family trust, which is located offshore.

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As a UK resident,?Ecclestone is not allowed to control the trust. Claiming as much, HMRC reached agreed not to tax the F1 boss in 2008.?Upon finding out about the recent charges, HMRC tore up a deal with Ecclestone on the grounds that he had withheld information, which made the agreement invalid.

HMRC has reassessed Ecclestone and issued him with a bill comprising of 13 years worth of income earned by his Bambino trust,?having argued that it had been ?misled and relied on representations that were false?. This culminated into a bill of more than ?1bn in tax and interest.

Ecclestone’s lawyers have argued that HMRC has failed to put forward ?any rational reason? for scrapping its prior agreement not to tax him.?

A spokesman claimed that HMRC should act in accordance with its obligations and the law given that Ecclestone chose to live in the UK, “even though he could have lived and worked elsewhere”.?

The judge, Kenneth Parker, ruled that a judicial review to decide whether HMRC had breached its guidance would only be considered after the commercial court decides if HMRC?s withdrawal from its prior agreement was legal. ?

By Shan? Schutte

Image: Shutterstock

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