Boats, shares, properties and cash were all transferred into offshore firms, their ownership obscured to reduce duties

In his messages to Appleby, James O’Toole described himself as a “tax alchemist”, and with some reason.

It seemed that with a few emails to the offshore law firm at the centre of the Paradise Papers leak, O’Toole could legitimately turn taxable assets into something that would pass unnoticed by UK tax authorities.

Mrs Brown’s Boys stars used web of offshore companies to avoid tax Read more

Boats, shares, properties and cash were all transferred into offshore companies set up in tax havens such as Mauritius and Seychelles, their ownership obscured to reduce duties in the UK and Ireland.



O’Toole, a British lawyer, co-runs a firm called Aston Court Chambers. Its speciality: aggressive tax avoidance. Working with advisers and offshore law firms such as Appleby, Aston Court sets up structures designed to help the wealthy hide and protect their assets from the taxman.

There are all kinds of off-the-shelf schemes to help people do this. All of them are aggressive. Many of them are now likely to come under scrutiny from HMRC, which has pledged to crack down on artificial schemes.

Politicians across the spectrum have denounced complicated arrangements that allow people to shelter their earnings from tax authorities.



A favourite method recommended by Aston Court appears to be the one adopted by some of the actors from the BBC One sitcom Mrs Brown’s Boys. Earnings from their work were transferred offshore into Mauritius-based cell companies. There, they became non-taxable loans.

Facebook Twitter Pinterest Mrs Brown’s Boys. Photograph: Alan Peebles/BBC

Technically, the clients did not own the money any more. But by signing up to be “investment advisers”, they were able to keep control over how the cash was spent.

Mrs Brown’s Boys actors were not alone in moving earnings and assets out of the UK.

The Paradise Papers show many wealthy business people, including a former war photographer and a Premier League football club chairman, were also clients of Aston Court.

Mark Faulkner, a banker, and his wife, Harriet Logan, an award-winning photographer, had perhaps the largest and most complicated setup arranged by Aston Court. The pair transferred millions of pounds of assets into a set of companies in Mauritius called Babington PCC, in a move that is not illegal.

Alongside cash, they transferred stocks and shares, a yacht and a large portfolio of pictures, including well-known images of Martin Luther King Jr and Jackie Kennedy. Legally, they belong to Babington. In an interview in the Guardian this year, Logan referred to them as they hung on the walls of her home in Essex.

In their role as investment advisers, the couple have recommended the purchase of properties around Spitalfields in London, a £136,000 classic car and a £200,000 collection of fine wine.

A lawyer for Faulkner and Logan told the Guardian the couple had instructed accountants and lawyers to carry out a full review of their financial affairs earlier this year.

“Our clients have now commenced dialogue with HMRC to review the arrangements that their previous advisers had recommended,” the lawyer said.

“If any financial arrangement that concerns our clients does not align with changes in law or the interpretation by the courts of the law, our clients, upon obtaining professional advice, will correct the position, including any required payment of tax following an assessment by HMRC.”

Like some of Aston Court’s other clients, Faulkner and Logan needed to access some of their money to pay school fees. O’Toole and his colleagues devised a way to help without triggering a UK tax bill. It was called the Educational Purpose Trust (EPT).

It was set up in Mauritius in February 2013 and, if run according to the rules, the trust legally offered scholarships to children the trustees deemed worthy of help. However, those who applied were typically Aston Court clients who were already sending their children to some of the UK’s top schools.

If successful in their application, and most seem to have been, they were asked to make a “charitable contribution” to the trust, enough to cover the cost of their children’s fees, plus £1,000 to help an “orphan child”.

A review of the EPT carried out by Appleby in December 2015, two and a half years after it was set up, listed no beneficiaries who were not related to Aston Court clients.

Facebook Twitter Pinterest Mike Garlick (right) hands out medals to Burnley players in 2014. Photograph: Richard Sellers/EMPICS Sport

The company also helped clients move pension savings offshore - a legal option for savers. One client was Mike Garlick, the chairman of Burnley FC, has made millions from the IT consultancy Michael Bailey, which he founded in the 1980s.



Documents show Garlick transferred his personal pension into an offshore scheme and used it to buy investments – a perfectly legal move and one not subject to tax at the time he did it.

Garlick told the Guardian he had moved the money overseas because he planned to retire to another country. He has not brought oney cash from the pension back to the UK, so no tax has been payable. Garlick said: “I would like to stress that I pay all my UK taxes and have never been involved in any illegal activities such as money laundering or the obscuring of ownership of assets.”

These and other structures set up by Aston Court made O’Toole and his fellow advisers a small fortune in fees. For one arrangement, in which saw a wealthy couple were advised to sell their Spanish villa through a Mauritius cell company to avoid capital gains and inheritance tax, O’Toole’s company charged £960,000 in fees, of which £827,000 was paid into an offshore bank account.

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O’Toole, now based in Seychelles, runs a web of cell companies to hold his assets. He is an investment adviser to a Mauritian company that owns his country house in Northumberland, and has advised it to pay for a personal shopper for him and his family.

At one point, O’Toole asked that the rent for a ski chalet in the French resort of Courchevel be paid by his offshore cell, and Appleby replied saying that it should be arranged as a bonus under his employment contract.



A letter followed announcing a payment of €15,000 (£13,200). It praised O’Toole, saying: “The company is extremely delighted by your performance for carrying out your duties as an investment consultant and working in the best interest of the company.”

On another occasion, he told the law firm he had been wearing a £25,000 Rolex that belonged to his cell company.

“To ensure HMRC do not try to tax me on this as some form of benefit … I think it sensible for me to pay a rent for wearing the watch of £50 per month. I will make a payment of £300 covering back rent and set up a standing order covering future payments,” he said.

To ensure HMRC does not have grounds to challenge any of the structures, it is important that clients are not seen to control the money and assets they have given away. But correspondence in the Paradise Papers suggests some were in danger of giving the game away.

Facebook Twitter Pinterest Seychelles, where O’Toole is now based. Photograph: Alamy

In response to an email from a client asking when some money would arrive in his account, O’Toole warned: “Can I ask there are no personal pronouns used in written correspondence please guys. Technically, the account belongs to a cell company which belongs to a trust. ‘The’ account, ‘the cell account’; anything buy [sic] ‘my’ account please.”

In a recommendation to another set of clients sent in early 2016, O’Toole said: “If HMRC could be trusted to apply the law fairly, none of the above would be of any concern to any law-abiding taxpayer that had a tax-efficient structure.

“However, HMRC can be trusted to do the exact opposite and to use any excuse to bully taxpayers into making ‘voluntary settlements’ wherever possible.”

By this point, Aston Court had already appeared on HMRC’s radar.

In 2014, UK tax authorities took action against Gareth Clark, a retired businessman who transferred £2.1m into an Aston Court scheme. The “pension transfer plan” he was sold involved a web of companies set up in Cyprus and the British Virgin Islands. These companies made large loans to him to buy UK property.

HMRC found that the transfer should have triggered a charge of £1.1m. Judges who heard, and eventually dismissed, an appeal by Clark said he had “had the misfortune to become involved with an organisation, Aston Court Chambers, whose attitude and operation might fairly be described as unprofessional”.

Appleby raised concerns about some of Aston Court’s methods in late 2015, with internal emails suggesting the schemes were too similar to the K2 scheme used by the comedian Jimmy Carr. That was investigated by HMRC and prompted a crackdown on structures set up purely to reduce people’s tax burdens.

Appleby’s compliance department noted that several of Aston Court’s clients had borrowed money from offshore companies and not paid it back.

“Whilst these cases may have been considered like isolated cases, recent correspondences from members of Aston/PFS regarding the promissory notes/loans look like in practice all the interests and loans will never be repaid,” it said.

The firm added that the structures seemed designed to disguise the fact that people were borrowing money from the cell companies they were contracted to advise.

In official guidance issued in 2016, HMRC said it would investigate and challenge such schemes. “Scheme promoters will tell you that the payment is non-taxable because it’s a loan and doesn’t count as income,” it said.

“In reality, you don’t pay the loan back, so it’s no different to normal income and is taxable. So if you’re using one of these schemes and being paid this way, you’re highly likely to be avoiding tax.”

HMRC has the power to send people using these sorts of schemes “accelerated payment notices” that require them to repay the tax immediately while their case is investigated.

In response to Appleby’s concerns, Aston Court announced that it would wind up some of its clients’ accounts, but it is not clear whether they were closed or moved elsewhere.

There are signs that O’Toole’s relationship with the law firm soured early last year following a row about gold.

After its takeover by a private equity firm, the part of Appleby that looked after the Aston Court companies asked for additional paperwork when O’Toole requested £500,000 from an offshore trust to invest in gold.

In an email, the firm told him the requirements had become “non-negotiable” following recent law changes and “Swiss leaks and a few weeks ago, the Panama Papers”.

In response, O’Toole decided to fire the firm as trustees of Aston Court’s main trust and appoint himself and a partner in their place.

O’Toole did not respond to the Guardian’s request for comment.



In a statement published in response to questions from the International Consortium of Investigative Journalists, which coordinated the global collaboration on the Paradise Papers, Appleby said: “There is no evidence of wrongdoing either on the part of ourselves or our clients.

“We take any allegation of wrongdoing implicit or otherwise extremely seriously. We are committed to the highest standards of client service and confidentiality.”