The mystery of Tony Blair’s finances is indeed a good one.
One of the mysteries is why he chose to use the arcane structure of a Limited Partnership for what appears to be his main trading entity â€“ Windrush Ventures No 3 Limited Partnership. I stress, this is a limited partnership registered under the Limited Partnership Act 1907, and is not a Limited Liability Partnership registered under the Limited Liability Partnership Act 2000.
The entries at Companies House for this Limited Partnership are as follows:
Name & Registered Office:
WINDRUSH VENTURES NO.3 LP
Company No. LP012665
Date of registration: 19/12/2007
Country of Origin: United Kingdom
Company Type: Limited Partnership
Nature of Business (SIC(03)):
Accounting Reference Date:
Last Accounts Made Up To: (NO ACCOUNTS FILED)
Next Accounts Due:
Last Return Made Up To:
Next Return Due:
No previous name information has been recorded over the last 20 years.
Documents on the Guardian web site show that the members of this Limited Partnership are a UK limited company - â€“ and an LLP - Windrush Ventures No 2 LLP.
Windrush Ventures No 2 LLP is the general partner (that is the unlimited partner) in Windrush Ventures No 3 Limited Partnership â€“ which appears to be the main Blair trading entity.
The limited partner is BDBCO No.819 Limited â€“ and a search at Companies House shows it to be a) dormant b) incorporated to be a nominee and c) set up and owned by lawyers to achieve this aim. It is but a fig leaf â€“ a thing of no substance and no trade inserted just as a make weight in this whole arrangement.
That focuses attention back on Windrush Ventures No 2 LLP. It has a trade â€“ as the general partner in Windrush Ventures No 3 LP, for which of course it would have unlimited liability but for the fact that it does itself enjoy limited liability. The accounts of the LLP are available here. These and the other accounts noted show:
- Its members are Windrush Ventures Limited and Windrush Ventures No 1 Limited (they certainly exercised their imaginations when naming this lot).
- KPMG audited it, which leaves me overflowing with confidence;
- It turned over Â£6.8 million and made a profit of Â£350,000 from December 2007 to April 2009. We know from the accounts of Windrush Ventures Limited (see Guardian web site again) that just Â£12,000 of this was due to Windrush Ventures Limited to April 2008 but in the period from, presumably, December 2007 to April 2008 (when the limited company accounts were made up) some Â£1,463,000 was paid to Windrush Ventures for management services to Windrush Ventures No 2 LLP. That’s about Â£365,000 a month. If that continued to April 2009 another Â£4.4 million or so of the income of the LLP would have gone to the Limited company in this way. That’s most of its reported expenses. It would be interesting to know why tax relief might be granted on this sum, and what transfer pricing enquiry it might give rise to (and yes, transfer pricing rules do apply internally in the UK) but I leave that aside for now.
- Tony Blair is the controlling party of the whole structure. This is despite the fact that the recorded owner of the one share in issue in both Windrush Ventures Limited and Windrush Ventures No 1 Limited is a nominee company â€“ Bircham and Co Nominees Limited. We have to assume they act for Tony Blair.
- Windrush Ventures No 1 Limited simply seems to hold a 50% interest in Windrush Ventures No 2 LLP â€“ from which it received Â£12,000 profit in the period to 30 April 2008. It seems to have no other activity.
- Windrush Ventures limited does have a trade, and an odd balance sheet which seems inflated by both large long terms debts and liabilities for the size of probable activity it is undertaking, but from which no firm conclusions can be drawn as abbreviated accounts have been filed.
What can be concluded from this? First, there is an obvious desire for secrecy in this structure and a willingness to pay for it. The use of nominees to own the companies at the bottom of the pile is a start. Add to that the fact it is hard to even find Blair in the set up even though he owns it.
Is it tax efficient? Not particularly. True, the profits all end up in UK limited companies â€“ and the number of them means that the use of the small companies rate might be restricted â€“ increasing the tax bill in the year to 30 April 2009 in all likelihood. There is, however, nothing very odd about this.
Could it be used as an inheritance tax planning tool as I know some think likely? Candidly, it could â€“ but I doubt it â€“ logically Blair would need to have an interest in the Limited Partnership to achieve that and he has not â€“ at least not directly as I think would be needed if the Inheritance tax planning arrangement using limited partnerships designed by Withers LLP â€“ well known tax planning lawyers â€“ was to work.
So what could explain this strange structure? Actually â€“ a desire to not put accounts on record despite trading with limited liability in the UK could be the explanation. Limited partnerships usually only do not have to file accounts in the UK if there is a general partner who is a natural person. But I think the lawyers who set up this structure noted a flaw in the regulations requiring the filing of accounts by limited partnerships, created in 1993 and updated at least twice (2005 an 2008) since then and which are summarised by Companies House as follows:
The Partnerships (Accounts) Regulations 2008 require companies which are members of 'qualifying partnerships' to prepare and attach accounts of the partnership to their own accounts.
1. What is a qualifying partnership?
A qualifying partnership is a partnership that is formed under the law of any part of the United Kingdom if each of the members is:
- a limited company; or
- an unlimited company or a Scottish partnership, each of whose members is a limited company.
The partnership regulations will apply to most limited partnerships that have limited companies as their general partners and are registered under the Limited Partnerships Act 1907, as these partnerships must have their principal place of business in Great Britain on registration.
Note the key point in the last paragraph: if the general partner is a limited company then the limited partnership must file accounts. And that is also true if the general partner is an unlimited company or Scottish partnership with members who are limited companies. But someone, somewhere, clearly forgot to update the regulation for the creation of UK limited liability partnerships in 2000. And some lawyer somewhere has noticed this. The result is the whole structure that has been created for Tony Blair.
The Limited Partnership has a limited liability partnership as its general partner: there is no reason to file accounts therefore. The other partner is a mere token nominee.
The limited liability partnership is tax transparent. If it had Tony Blair as a member he would pay tax at the UK highest income tax rate. So two companies are put in his place as members, and because of the loophole in the limited partnership accounting regulations this is acceptable: it does not change the fact that the limited partnership will not have to file accounts.
And then the two companies are owned by nominees to hide the Blair involvement â€“ it’s just a pity one set of accounts had to give it away that he was the beneficial owner or we might still be unaware of all this.
So what did Tony want? Just a bit of secrecy and his profits sheltered at corporate tax rates seems the superficial answer.
But hang on â€“ this structure came at some price, and has some cost to run â€“ five figures a year with a first digit of more than one I suspect. So why do that? Because the entity at the top of the pile â€“ Windrush Ventures No 3 Limited Partnership now has what most people want from a secrecy jurisdiction â€“ complete secrecy and lower tax than might otherwise be expected, and all onshore.
So there is an obvious question outstanding still. Just what is it that Tony is so keen to hide that he’ll go to this length and this cost to do so?
And memo to Peter Mandelson: this really is an abuse you should stop very soon.