“Tax haven” company in £1.2m Hes East profit

The University is sharing profits on some of its most lucrative Heslington East halls of residence with a private company registered in the secretive tax haven of Jersey.

An investigation by Nouse has uncovered the joint business venture with Evans University Accommodation Limited, which makes annual profits of more than £1m from running student halls in Goodricke and Langwith.

The University sold off half the ownership of Goodricke and Langwith accommodation to property developers Evans Group in 2010, and now shares the firm’s profits from running the student flats.

Evans Group is run by Michael Evans, property tycoon, and runs the Heslington East halls through Evans University Accommodation Limited – an offshoot company registered in Jersey.

The University has refused to be drawn on whether Evans Group is avoiding paying tax in the UK by funnelling its profits through a Jersey-registered offshoot. A spokesman said, “They are a matter for HMRC.”

The HMRC Anti-Avoidance Strategy says, “A small minority of HM Revenue & Customs (HMRC) customers continue to engage in tax avoidance, which undermines the delivery of fair tax outcomes.

“In the UK, the tax loss from avoidance is estimated to run into several billion pounds across both direct and indirect taxes. This directly affects the delivery of public services and long-term economic growth.”

The joint venture between Evans Group and the University was set up in 2010 to handle the business of Goodricke’s and later Langwith’s student accommodation.

Now, those who pay to live in the two colleges earn the enterprise profits, which are shared between the University and Evans Group’s Jersey-based company Evans University Accommodation Limited.

The University has chosen to split the ownership of the two Heslington East colleges in two companies, Student Accommodation Provision LLP and Student Accommodation Provision Two LLP. Both the University of York and Evans University Accommodation Limited have a 50 per cent share in each.

In 2012, Student Accommodation Provision LLP registered a turnover of more than £3m and a profit of almost £1.2m.

On the published accounts of the joint ventures, Student Accommodation Provision LLP and Student Accommodation Two LLP, there are two designated members. One member is registered at the University of York, Heslington. The other is in Saint Helier, Jersey.

The UK has a corporation tax of 24 per cent. There is no corporation tax in Jersey, except for utility companies and financial services companies.

Evans Property Group was contacted but did not respond with a statement.

A spokesperson for the University said, “We need investors to help fund new and additional student accommodation. Joint ventures reduce the financial risk from the University’s perspective and allow us to improve facilities for students, without losing control over rents and support for students.

“We are aware of the arrangements governing the tax status of Evans group companies and are satisfied that these work neither to the University’s nor our students’ disadvantage. Beyond that, they are a matter for the HMRC.”

As a joint owner of the Goodricke and Langwith accommodation companies, the University of York receives a share of the companies’ profits as a surplus to reinvest. The pre-tax profits for 2012 were almost £1.2m.

As a Jersey-registered company, the University’s Evans Group venture partner is not obliged to pay UK corporation tax on any profits it makes, but other UK-based Evans Group companies will pay tax under UK law.

In 2012 the University withdrew a £1.1m surplus from the two joint companies.

In the same year, the average price for accommodation offered on Heslington East was £117 per week. Despite recent complaints over problems with heating and water, the average price is set to rise to £127, with the most expensive reaching over £153 per week in 2013/14. The cheapest accommodation available, priced at £96.39 will rise to £99.05 in the coming year.

The University spokesperson said, “The arrangements with Evans benefit students and the University directly by allowing us to focus the use of our capital on provision of teaching, research and other amenities.

“They also give the University access to a share of any surpluses arising from student accommodation – these are then reinvested in University activities in accordance with our charitable status.”

The investigation also found a separate company, Drachs Investment No 3 Limited, registered at the same Jersey address as the University’s venture partner.

Documents obtained by Nouse from Companies House say, “Drachs Investments No 3 Limited is owned by a trust for the benefit of the Evans Family.”

Pictured on page 1 is the 1,643 ton, £60 million White Rose of Drachs, belonging to Michael Evans, a British, multi-millionaire property developer and owner of the Evans Property Group. According to Powerboat and Motoryacht Magazine, “The yacht is used for both personal and business purposes”, but there is no implication that profits from the Heslington East joint venture were spent on the yacht. It is pictured (top of page) in Venice, Italy. From 16 to 21 January 2013, it has been docked in Monaco.

Andrew Pollard, solicitor and director, answered the phone at the Drachs offices in Jersey. When asked why the University’s venture partner was registered at Drachs’ address he said, “I have no idea.”

“All I can say to you is that you clearly are investigating matters of fact and you can establish matters of fact for yourself. So you’ve obviously done that, and you must rise and fall by what you’ve done. So I shall leave that to you.

“You’ve been undertaking some research, and you’ve established that the joint venture is made of two parties, you’ve established who those two parties are, you’ve established where they’re registered.

“And that’s a perfectly sensible thing to do. But you then ask about shareholdings in Drachs. Well, that information isn’t in the public domain, and therefore, it’s not something that I’m able to confirm or deny.”

Nouse has since found that, according to public domain documents obtained from the Jersey Companies Registry, Drachs Investments No 3 Limited is the parent company of the University’s venture partner, Evans University Accommodation Limited, owning 100 per cent of the shares since its foundation in 2010.

Though registered in Jersey, according to company documents, Evans University Accommodation Limited used to be called Goodricke Limited.

When asked if Drachs Investments No 3 Limited is a parent company for Evans Property Group, Pollard said, “That information isn’t in the public domain. So if you choose to say that, you choose to say that at your risk.”

When asked about paying UK tax he said, “I’ve no idea. It’s not something I’m engaged in. I’m a Jersey resident, and I’m engaged in the provision of my duties in Jersey. I’ve no idea about other jurisdictions. The UK is a foreign jurisdiction to Jersey.”

Evans Group is a complex network of at least 23 companies, with some registered in the UK, and some – including the University’s joint venture partner – registered in Saint Helier, Jersey.

Evans Property Group Limited, a company in the Evans Group, is registered in the UK. It published a pre-tax loss of £235,000 in 2012, and a tax payment of £0. But in 2011 it published a pre-tax profit of £990,000. A tax payment of £0 was published that year too. This does not suggest that no tax has been paid at all by Evans Group, it just shows the particular company submitting those accounts paid no tax in that period.

Another UK company in the group is Evans Student Investments Limited.

Nouse’s findings reveal that Drachs Investments No 3 Limited is the “ultimate holding company” for this UK-based Evans Group company.

According to published accounts, it made pre-tax profit of £208 in 2012, and so paid £50 in tax at normal UK corporation tax rate.

This company’s published accounts also show it has a 100 per cent share in a further subsidiary company, Evans Student Accommodation Limited, also based in the UK.

Evans Student Accommodation Limited had a published net worth of £4.2m in 2008; followed by negative £570,000 in 2009; £1.5m in 2010; £5.5m in 2011; and £6.9m in 2012.

Its published tax payment for 2008 was £245,000; and for 2009 it was £11,000. But for 2010 it published £409,000 tax credit, and in 2011 £85,000 tax credit.

The sum of these published tax payments is exactly £0. The published net profit over the same period is £2.7m.

Again, this does not suggest that no tax has been paid by Evans Group, it just shows the particular company submitting those accounts paid no tax in that period.