“A company co-founded by Jeremy Hunt breached company law before carrying out a restructuring designed to reduce the health secretary’s tax bill by about £100,000, it has emerged.
Hotcourses, which was at the time majority-owned by Hunt, failed to file crucial documents with Companies House for over three years, when the law says they must be filed within 15 days.
It was reported in 2012 that Hunt reduced his potential tax bill by around £100,000 by moving an office building out of the company before a change to the dividend rate.
The Hotcourses’ mistake is a further embarrassment for the health secretary, who recently had to apologise after being investigated by the standards commissioner for failing to report ownership of seven flats in Southampton through a company.
Hunt has admitted breaching money-laundering rules brought in by his government, having failed to declare his 50% interest in the property firm to Companies House.
Hunt’s accountant, Grunberg & Co, said their failure to file the documents was “regrettable” and an “administrative error”, but not Hunt’s error as at the time he was a shareholder and not a director. Hunt referred inquiries to his accountant.
As has been previously reported, Hunt and his business partner, Mike Elms, transferred an office building in 2010 worth £1.8m out of Hotcourses and into their own names. They then immediately started renting the building back to the company.
The two men had to pay dividend tax on this “dividend in specie”, which at the time was 32.5%.
The March 2010 transfer took place just before the tax rate for the transaction rose to 42.5% at the beginning of April 2010. By paying themselves the building as a dividend before the change in tax rules, the two men saved themselves an income tax bill of around £200,000 on the deal.
According to documents filed at Companies House, Hunt and other shareholders signed documents to vary the rules of the company in February 2010. However, it was not until May 2013 that the “articles of association” were sent to Companies House.
Hunt’s accountants said that the dividend in specie could have been paid under the old articles of association, so the tax position would not have been affected by the changes.
Hunt stopped being a director of Hotcourses in 2009 but remained the largest shareholder in the company. Grunberg said it was the responsibility of the directors to file the documents.
Hunt co-founded the educational listings company in 1990. In 2017, the company was sold for £30.1m to IDP Education, a Melbourne-based student placement company that co-owns the popular IELTS English language proficiency test. The sale netted Hunt around £14.5m, which made him one of the richest Conservative MPs. In the MPs’ register of interests, Hunt also declares a half-ownership of a house in Italy.
Hunt’s shares have been held in a blind trust since he became a cabinet minister in 2010.
Hotcourses runs a variety of education-search websites including Whatuni, Postgraduate Search and the Complete University Guide. It also operates sites under its own name.
Hunt, who recently became the longest serving health secretary in history, has said previously that the success of Hotcourses came only after he and Elms had pursued a string of failed ventures, including a scheme to export marmalade to Japan and building children’s playgrounds.
https://www.theguardian.com/politics/2018/jun/26/firm-co-founded-by-jeremy-hunt-broke-law
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