


The Barclay brothers’ tax arrangements
Could the Barclay twins or their wives have been outside the UK’s tax net in 1979?
In contrast to the United States, Britain does not expect its citizens to pay taxes on their income and capital gains if they live abroad. That has fuelled an offshore industry catering to people who are British and may spend time in Britain and own houses there, but who are careful not to cross the path of HM Revenue & Customs.
If the Barclay twins or their wives counted as non-resident in 1979, then using Gestplan Hotels to move money offshore to Jersey by buying shares in Trenport was a perfectly legal way to avoid paying tax. But if they were still resident, then the brothers’ purchase resulted in profits in Russet that were taxable. If the twins failed to declare these profits it would have counted as tax evasion, which is a criminal offence. The Economist has been able to dig into the question of the Barclays’ residency thanks to judgments in March 2021 and July 2022, in a civil action between Sir Frederick and Lady Hiroko Barclay, over a financial settlement following their divorce.
The judgment from 2022 makes clear that the twin brothers did not move offshore until 1990, when the judge explains that they moved to Monaco after buying Ellerman Lines, a shipping company. What about their wives, Hiroko and Zoe?
The Economist asked the family, including Sir Frederick and his nephew, Aidan, whether Hiroko or Zoe were non-resident at the time. We contacted Sir Frederick and Aidan, but they offered no comment.
In 1979 it was hard for British citizens to qualify as non-resident. The simplest test required someone to spend more than 183 days abroad in any given tax year. However, even if they were resident abroad, someone who had lived in Britain for many years and who had British citizenship could still be deemed “ordinarily resident” in the United Kingdom. Each case was different, determined by case law and practice interpreted by the tax authorities, experts tell The Economist. As a rule, tax inspectors expected you to be completely absent from the UK for at least one year, and from then on to spend much of your time abroad.
We think that Zoe was unlikely to have met this test. She had three children. Aidan, the eldest, was born in 1956 and Duncan, the youngest, in 1961. Perhaps they went to boarding schools and spent the holidays abroad with their mother. Even so, it seems unlikely that Zoe would have lived abroad without visiting Britain for a year or more in 1976-79. In those chauvinistic times, the test for women was more stringent than for men. Tax experts say that a mother with dependent children and a matrimonial home in Britain was more likely to be assumed to be ordinarily resident.
Lady Hiroko was born in Japan. If she had taken up British citizenship, she would have struggled to qualify as a non-resident, too. Her only daughter, Amanda, was born in 1978. The civil case strongly suggests that Lady Hiroko was resident in Britain. The judge, Jonathan Cohen, describes the couple living together in London until Sir Frederick emigrated to Monaco leaving his wife behind to care for their daughter.
Even if Zoe qualified as non-resident and Hiroko had not taken up British citizenship, it would have been extraordinary if either of them had been the beneficial owner of the Jersey company. Zoe and David separated in the 1980s. Frederick and David shared everything 50/50, including Barclays Hotels when it was their main financial holding. But they did not share their assets with other people.
In one of the judgments in the case between Sir Frederick and Lady Hiroko, the judge says that “consistent with [Sir Frederick]’s approach to minimising taxes and to keep control himself, for only a short time during this very long marriage did [Lady Hiroko] ever hold any property assets of any sort other than her own bank account which contained modest…savings.” We think that here the judge was referring to a house in Chester Square, which Sir Frederick put into Lady Hiroko’s name, before instructing her to make it over to Amanda in 2010 or shortly after.
Why would a man who did not trust his own wife with relatively small sums, have signed over his entire cash fortune to her or his sister-in-law? ■
Read the full investigation here.

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