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Matalan founder Hargreaves loses court battle over multimillion-pound tax bill

Sophie Smith
21 February 2022

Matalan Founder John Hargreaves has lost a long-running court battle over an attempt to avoid a tax bill of up to £135 million.

The businessman, who is based in Monaco, has been ordered to pay capital gains tax on his sale of £231 million of Matalan shares in May 2000.

In March 2000, Hargreaves submitted a P85 form, outlining that he would be leaving the UK to live in Monaco. In that form, Hargreaves said that he expected to spend “no more than two months” a year in the UK.

Court documents have revealed he did not fill out the capital gains pages in his tax return, as he did not consider himself a UK resident. However, he continued to work as Matalan’s Executive Chairman and still spent a significant amount of time in the UK.

In the 2000-01 tax year, he spent 152 days time in the UK.

In May 2000, Hargreaves went ahead with the sale of Matalan shares. As Hargreaves did not complete the capital gains pages of the Return, HMRC were unaware of any gain that this sale generated by the Information Date. The deadline for HMRC to open an enquiry into the Hargreaves’ tax return for 2000-01 expired.

HMRC made the assessment on 9 January 2007, that estimated Hargreaves owed £84 million of additional tax for the 2000-01 tax year.

HMRC believed that Hargreaves was a resident and made an assessment on the basis that he was liable to both income tax and capital gains tax in amounts greater than those stated in the Return.

Hargreaves had originally argued that he was not liable to pay any taxes because he was no longer a UK resident when he cashed in his Matalan shares. Shortly before the hearing, Hargreaves abandoned this view, accepting that he had been resident in the UK in the 2000-01 tax year.

The Upper Tribunal, the highest court that oversees tax cases, ruled against Hargreaves.

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