Matalan founder John Hargreaves has lost a court battle with HMRC over his attempt to avoid a tax bill of up to £135 million.
The Monaco-based retail boss has been ordered to pay after a court ruled he owed capital gains tax in relation to his £231 million sale of the Merseyside-headquartered retailer in 2000.
Mr Hargreaves has been in dispute with officials over his tax status for almost 20 years, reports BusinessLive.
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Mr Hargreaves, 78, launched the brand as a shop in Preston in 1985 before moving to Monaco two years after floating it on the London Stock Exchange in 1998.
He submitted a P85 form to HMRC outlining his tax-haven status four days after arriving and signed a lease on an apartment six months later.
The court papers said: “Part of Mr Hargreaves’ object in moving to Monaco was to ensure that he was no longer resident in the UK for tax purposes so that he could dispose of shares without becoming liable to capital gains tax.”
Mr Hargreaves pressed ahead with the sale of Matalan shares in May 2000.
Court documents reveal he did not fill out the capital gains pages in his tax return because he did not consider himself a UK resident.
However, he continued to spend time in the UK and worked in Liverpool three days a week as executive chairman of Matalan. He also maintained a property in the UK.
Tax officials started probing Mr Hargreaves’ tax affairs in 2004, but they missed a deadline to start an investigation before 31 December 2003.
The company was taken private again by the Hargreaves family in October 2006.
In 2007, HMRC concluded that Mr Hargreaves owed £84m in extra tax for the year 2000-01 after spending 152 days in the UK in that time.
The businessman has previously argued he was not a UK tax resident when he sold the shares and has also previously said the tax bill was not valid because HMRC missed its deadline to investigate.
A final sum has not been revealed but it could reach £135 million.
The Upper Tier Tribunal - the highest court that oversees tax cases – ruled against Mr Hargreaves’ latest appeal on February 11.
He has three weeks to take the case to the Court of Appeal.
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