Roman Abramovich could owe UK £1bn over tax dodge that helped bankroll Chelsea FC

Sanctioned Russian oligarch Roman Abramovich could beryllium the UK up to £1bn aft a botched effort to debar taxation connected hedge money investments, grounds seen by the BBC suggests.

Leaked papers uncover investments worthy $6bn (£4.7bn) were routed done companies successful the British Virgin Islands (BVI). But grounds suggests they were managed from the UK, truthful should person been taxed there.

Some of the wealth that funded Chelsea FC erstwhile Mr Abramovich owned it tin beryllium traced backmost to companies progressive successful the scheme, the BBC and the Bureau of Investigative Journalism (TBIJ) besides found.

The oligarch's lawyers said helium "always obtained autarkic adept nonrecreational taxation and ineligible advice" and "acted successful accordance with that advice". He denies having immoderate cognition oregon being personally liable for immoderate unpaid tax.

Joe Powell, a Labour MP who leads a Parliamentary radical connected just taxation, called connected HM Revenue and Customs to "urgently" analyse the lawsuit to retrieve what could beryllium "very important amounts of wealth that could beryllium invested successful nationalist services".

At the bosom of the strategy was Eugene Shvidler, a erstwhile Chelsea FC manager and a billionaire businessman successful his ain right, who is presently challenging the UK government's determination to authorisation him for his adjacent links to Mr Abramovich.

Mr Shvidler moved to the USA aft Russia's penetration of Ukraine, but from 2004 until 2022 helium lived successful the UK, with properties successful London and Surrey.

A taxation adept told the BBC that grounds Mr Shvidler had been making strategical decisions connected the investments portion based successful the UK, and not successful the BVI, was "a beauteous large smoking gun", suggesting the companies should person been paying UK tax.

Lawyers for Mr Shvidler said the BBC was basing its reporting connected "confidential concern documents that contiguous an incomplete picture" and had "drawn beardown and erroneous conclusions arsenic to Mr Shvidler's conduct".

They said "the operation of investments" was "the taxable of precise cautious and elaborate taxation planning, undertaken and advised connected by starring taxation advisors".

The strategy involving Mr Abramovich's hedge money investments was revealed successful a immense leak of information that the BBC and the Bureau of Investigative Journalism person been examining for implicit a twelvemonth - thousands of files and emails from a Cyprus-based institution that administered Mr Abramovich's planetary empire.

The BBC and its media partners, including The Guardian, person been reporting connected the leaked files since 2023 arsenic portion of the International Consortium of Investigative Journalists' Cyprus Confidential investigation. On Tuesday, we revealed however Mr Abramovich had dodged millions successful VAT connected the moving costs of his yacht fleet.

The leaked information shows however Mr Abramovich invested a ample portion of the wealthiness helium acquired successful the 1990s done a corrupt deal - ploughing it into a institution successful the BVI called Keygrove Holdings Ltd.

A web of British Virgin Islands companies owned by Keygrove invested this wealth - up to $6bn (£4.8bn) betwixt the precocious 1990s and aboriginal 2020s - into Western hedge funds, according to the leaked files.

These investments made the oligarch an estimated $3.8bn (£3.1bn) successful profits implicit astir 2 decades. By making the investments done companies successful the BVI, which does not levy taxation connected firm profits, the strategy appears to beryllium acceptable up to guarantee arsenic small taxation arsenic imaginable was paid.

It is not antithetic for businesses to legally debar paying taxation connected their profits by making their investments from companies successful taxation havens. But the companies progressive indispensable beryllium managed and controlled offshore wherever they are incorporated.

If an offshore company's strategical decisions are being taken by idiosyncratic successful the UK, its profits could beryllium taxed arsenic if it were a UK company.

The leaked documents amusement however the directors of the BVI concern companies handed sweeping powers implicit them to Mr Shvidler, who was surviving successful the UK and gained British citizenship successful 2010.

The BBC has seen "general powerfulness of attorney" documents dated betwixt 2004 and 2008, that gave him the "broadest imaginable powers" and "full powerfulness to bash everything and anything" to concern companies successful the BVI.

From 2008, Mr Shvidler appears to person acquired the powerfulness to nonstop the investments of Keygrove, which owned the BVI companies, done different company.

Millennium Capital Ventures Ltd, which was owned indirectly by Mr Shvidler's woman and appointed him arsenic a manager successful 2000, became Keygrove's concern manager. It was assigned "full powerfulness and authorization to supervise and direct" the concern of the assets, "all without anterior consultation with client".

Further grounds of Mr Shvidler's important relation successful the concern decisions of the BVI companies emerged successful a tribunal lawsuit brought successful September 2023 by the US Securities and Exchange Commission (SEC) against a New York steadfast called Concord Management.

The SEC filing says that Concord had lone 1 client, since identified arsenic Mr Abramovich. The institution advised connected concern decisions for the oligarch's BVI companies.

It identifies a "longtime adjacent associate" of Mr Abramovich, referred to arsenic "Person B", who "made concern decisions" for Mr Abramovich.

It says helium was "the constituent of interaction for receiving concern advice" and "for either deciding oregon communicating the determination whether to spell guardant with recommended transactions".

Using the leaked documents, the BBC was capable to place "Person B" arsenic Eugene Shvidler.

The grounds suggests Mr Shvidler was making the decisions described by the SEC, managing and controlling Mr Abramovich's investments, from the UK alternatively than the BVI.

Tax adept Rita de le Feria told the BBC that grounds a UK resident, specified arsenic Mr Shvidler, was taking "strategic large decisions" connected the hedge money investments was a "clear indication" the immense profits should person been taxed by the UK.

"I deliberation this is simply a beauteous large smoking gun. That would be, again, beardown grounds that the effectual absorption of the institution was not taking spot successful the BVI," she said.

Mr Shvidler's lawyers said determination tin beryllium "no question of Mr Shvidler, either knowingly oregon negligently, being progressive successful an unlawful strategy to debar paying tax".

Lawyers for Mr Abramovich said that successful summation to the proposal helium obtained implicit his taxation affairs, helium "expects that akin proposal was sought" by those with work for moving companies related to him.

The leaked documents besides uncover however ample amounts of the untaxed profits from Mr Abramovich's hedge money investments passed done a web of the oligarch's companies earlier flowing into Chelsea FC.

The hedge money investments flowed backmost into his companies successful the BVI and past into Keygrove, their genitor company.

Keygrove past loaned retired wealth to different companies successful Mr Abramovich's network, which successful crook lent wealth to Camberley International Investments Ltd - a institution acceptable up to bankroll Chelsea FC.

By 2021, erstwhile Chelsea won the Champions League, Club World Cup and UEFA Super Cup, hundreds of millions of dollars successful loans to the nine could beryllium traced backmost to companies benefiting from Mr Abramovich's untaxed hedge money investments.

If HMRC were to investigate, however overmuch could Mr Abramovich oregon the companies acrophobic owe?

We person assessed the profits made by the concern companies successful the BVI from 1999 to 2018.

The leaked documents lone incorporate implicit accounts for the companies investing successful hedge funds from 2013 to 2018.

But we tin estimation however overmuch wealth the companies progressive were apt to person made implicit the full play by looking astatine their "revenue reserves". These are profits kept successful the businesses, alternatively than being paid retired to shareholders. By the extremity of 2018 this amounted to $3.8bn.

Applying humanities UK corp taxation and currency conversion rates to the gross reserves up to 2012, and the yearly profits to 2018, amounts to a imaginable taxation measure of much than £500m owed to HMRC.

But successful the lawsuit of an enquiry into unpaid tax, HMRC tin besides enforce precocious outgo involvement and penalties for nonaccomplishment to notify the authorities.

If taxation has gone unpaid, past depending connected whether an probe concluded those liable knew but did not archer HMRC, oregon whether they did not know, the full magnitude owed could scope from astir £700m to implicit £1bn.

There is simply a anticipation that immoderate taxation connected the profits could not beryllium recovered, arsenic HMRC investigations tin lone spell backmost a maximum of 20 years.

However, our calculations are besides apt to beryllium an underestimate, due to the fact that we person applied the lowest complaint of corp taxation that existed betwixt 1999 and 2012, and it is imaginable profits had been extracted from the companies successful that play that we person not included successful our sums.

In immoderate event, Mr Abramovich's taxation measure could dwarf the £653m measure imposed connected Formula One brag Bernie Ecclestone successful 2023.

Following Russia's full-scale penetration of Ukraine, the British authorities allowed Roman Abramovich to merchantability Chelsea FC to Todd Boehly. It did truthful connected the information that £2.5bn from the proceeds would beryllium donated to charities supporting victims of the warfare successful Ukraine.

Nearly 3 years later, the wealth inactive sits successful a frozen Barclays slope account, reportedly owed to disagreement implicit however it should beryllium spent, with Mr Abramovich wanting the wealth to spell to "all the victims" of the war, and the UK authorities insisting it should beryllium spent solely connected humanitarian assistance successful Ukraine.

The BBC's probe suggests that, conscionable arsenic Ukrainians are waiting for wealth from the erstwhile Chelsea boss, truthful is the British taxpayer.

Cyprus Confidential is planetary collaborative probe launched successful 2023 led by the International Consortium of Investigative Journalists (ICIJ) into Cyprus firms provided firm and fiscal services to associates of Russian President Vladimir Putin's regime.

Media partners see The Guardian, the investigative newsroom Paper Trail Media, the Italian paper L'Espresso, the Organised Crime and Corruption Reporting Project (OCCRP) and the Bureau of Investigative Journalism (TBIJ).

TBIJ reporting team: Simon Lock and Eleanor Rose.