Four Highland estates owned in tax havens together received £69k in Covid-19 grants, despite Holyrood voting to ban firms owned offshore from accessing support during the pandemic.
A Ferret analysis of Highland Council Covid grants found that the Ben Alder, Gledfield, Kilchoan and Dorback estates, each received financial support while being owned by companies located in either the Bahamas, Guernsey or Jersey.
They were eligible because Scottish Government rules only excluded companies from support if they were owned in a country named on an EU blacklist of tax havens. There is no suggestion of any wrongdoing and the estates pointed out the grants helped them survive during the pandemic.
The EU list focuses on very small jurisdictions which are only involved in 0.5 per cent of global tax avoidance. It does not include any of the countries named in the top twenty of the Tax Justice Network’s corporate tax haven index, which includes the Bahamas, Guernsey and Jersey.
The Scottish Government said its powers to tackle tax avoidance were “constrained by the devolution settlement”, and that it does not have the powers to “independently designate tax havens”.
But opposition politicians argued the findings showed the government’s commitment to stopping tax haven firms receiving support was “utterly hollow”. Tax experts said the Scottish Government could have used benchmarks, other than the EU list, to ensure that public funds were not “wasted” on tax haven firms.
Ben Alder Estate — located on the outskirts of the Cairngorm National Park — received total payments of £34k. It is majority owned by a company called Argo Invest Overseas which is incorporated in Guernsey. Kilchoan Estate, near Mallaig — which received a £10k grant — is also owned by a firm located in Guernsey.
Gledfield Estate in Sutherland received a £10k payment in Spring 2020. At the time it was owned by a firm located in Jersey.
The Jersey company sold Gledfield to an unconnected company — which is registered in the UK — in September 2020. The new owners have not claimed any Covid grants.
Dorback Estate near Aviemore, meanwhile, is ultimately owned by a holding company registered in Nassau, in the Bahamas.
The money was paid out by Highland Council which told The Ferret that the Scottish Government did not require local authorities to check company declarations about whether they were owned in tax havens before issuing the payments.
The Scottish Parliament voted to block firms owned in tax havens from receiving Covid-19 bailout funds in May 2020. MSPs said at the time this would prevent companies which do not “contribute to society” from “getting handouts when things go wrong”.
Scotland followed other European countries, including Denmark and France, in placing some restrictions on firms in low-tax jurisdictions receiving support. The restrictions were written into emergency legislation produced by Holyrood at the start of the pandemic.
The rules were criticised by the Tax Justice Network (TJN) when announced, because the countries identified as tax havens were those included in the EU’s list of non-cooperative jurisdictions for tax purposes.
The campaign group has dismissed the EU list as “biased” because it does not include any EU members.
TJN – which campaigns against the use of tax havens – produced a list of 13 jurisdictions which should be excluded by governments. The list was based on TJN’s tax haven and financial secrecy indexes and included both the Bahamas and Jersey.
The campaign group said the Scottish Government could have avoided a lot of issues with the EU list if it had instead excluded support from companies that do not publish their ultimate beneficial owners and their accounts.
Alex Cobham, chief executive of TJN, also noted that stronger initiatives than the EU list could have been used to make it “much less likely that public funds are wasted, or directed to firms that are not committed to paying their fair share of tax”.
He said: “That in turn would provide a level playing field for all the tax-compliant Scottish firms that are disadvantaged.”
Sweeney added: “It appears that the Scottish Government’s commitment to ban firms owned in tax havens from receiving Covid financial support was utterly hollow. It cannot be right that while families are struggling to pay their bills, the Scottish Government is handing out public money to companies owned in tax havens while proclaiming that the very same firms are banned from receiving that support.
“I will be writing to the Scottish Government to establish why they proceeded with these payments despite their public opposition and clarify how they plan on recouping the money so it can be spent on public services across Scotland.”
A Scottish Government spokesperson said that since the start of the pandemic it had provided more than £4.5bn in business support with the aim of protecting “thousands of jobs” across the country.
The spokesperson added: “We were the first part of the UK to legislate to restrict coronavirus grants made to businesses associated with certain specified tax havens, as listed on the EU’s list of non-cooperative jurisdictions for tax purposes.
“The Scottish Government’s capacity to tackle tax avoidance is constrained by the devolution settlement, we have no power to legislate on reserved tax policy or in areas such as international affairs, which includes the ability to independently designate tax havens.”
Highland Council said “When delivering the various Covid-19 business grant schemes on behalf of the Scottish Government, Highland Council did so in full accordance with the eligibility criteria and specific grant terms and conditions set by the Scottish Government. The council received dedicated funding from the Scottish Government to enable it to make the required payments to eligible businesses.”
A spokesperson for Dorback Estate said: “Dorback Estate is a renowned Scottish Highland estate, which has invested heavily in conservation projects in the past 10+ years including planting over one million trees, hundreds of metres of new hedges without grant funding and works closely with the Cairngorms National Park on potential enhancement projects.
“The estate was eligible for a Covid recovery grant and used it to upgrade the Estate holiday cottages. The cottages had been closed for several months under Covid restrictions in place during 2020 and the early part of 2021.
“The opportunity to improve the cottages during this period provided work undertaken entirely by local tradespeople and every penny of the grant was spent on cottage projects, for the benefit of visitors to the estate and the surrounding area.”
Kilchoan Estate said: “The funds went into the operating budget of the management company of Kilchoan which helped us with missing income because of pandemic related cancellations. Like others in this industry we were grateful with a little help”.
Ben Alder Estate said that “all support claimed from The Framework Business Fund was claimed legitimately, all the funding received was used to support the business in Scotland, and no funding was transferred offshore”.
There has been growing scrutiny of the role that firms with links to tax havens play in the delivery of Scottish public services, as well as their ownership of the country’s infrastructure and property.
In 2018 it was revealed that companies based in the Channel Islands, Dubai and the Cayman Islands had major stakes in 47 private finance schemes to build Scottish motorways, schools, hospitals and colleges.
In March 2022, The Ferret reported that more than one thousand private let properties in Glasgow were owned in tax havens.
Companies located in tax havens also more than doubled the number of land and property titles they own in Scotland between 2017 and 2021. This included titles registered to limited companies owned in the Bahamas, Guernsey, and Jersey.
Search the Covid-19 grant data
This story was based on data obtained from a Freedom of Information request to Highland Council.
You can search all the Covid-19 grants that the council provided to local organisations using this data visualisation.
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