Ecclestone avoids paying £1.2bn tax bill
|28 April 2014 by TF1T Staff | M||Tweet
Bernie Ecclestone has avoided paying a potential tax bill of £1.2 billion ($2bn, €1.45bn) to Revenue and Customs (HMRC) after agreeing a secret deal with the British government.
A BBC Panorama investigation found Ecclestone paid a £10m ($16.8m, €12m) settlement in 2008 to end a nine year investigation by HMRC into his family's tax affairs.
In 1995, when Ecclestone took control of Formula 1's TV rights, he handed the rights to then wife, Slavica, who set-up an offshore trust fund in Lichenstein to contain the profits.
Because the trust is offshore, no UK tax is paid on the TV deals Ecclestone makes, avoiding huge tax bills - as long as Ecclestone had no hand in setting the offshore account up, nor has any control over it.
If he does, then he would be entitled to pay tax, which could have cost him upwards of £1.2bn. However, if he had no hand in the trust fund, the 'tax dodge' is completely legal.
The investigation into Mr Ecclestone's involvement wasn't conclusive and therefore he agreed to pay a £10m settlement to make it disappear.
Meanwhile, his ex-wife makes regular payments to Mr Ecclestone as part of their divorce settlement. As he is unable to draw money from the family trust - which earns £10m ($17m) in interest every six weeks - it must pass through Slavica first.
When asked how much these payments were, she replied: "I don't know the exact figure, however it must be around $100 million (£60m) a year."