Roman Abramovich's Tax Avoidance Could Cost UK £1bn: Investigation Reveals

Leaked documents indicate Roman Abramovich may owe the UK government up to £1 billion due to possible tax avoidance strategies connected to his investments.

Sanctioned Russian oligarch Roman Abramovich faces potential tax liabilities of up to £1 billion following revelations about a complex scheme designed to dodge UK taxes on hedge fund investments. The BBC has obtained leaked documents suggesting that approximately $6 billion (£4.7 billion) was funneled through companies based in the British Virgin Islands (BVI), although evidence indicates management control from the UK obliges these profits to be taxed in Britain.

Mr. Abramovich’s significant stake in Chelsea FC could trace financial roots back to the investment activities described in the leaked files. His legal team asserts that the oligarch has consistently utilized expert advisory services, claiming there was no direct knowledge or responsibility for any unpaid obligations. Presently, he reportedly resides between Istanbul, Tel Aviv, and Sochi.

Joe Powell, a Labour MP who heads a Parliamentary group focused on fair taxation, has urged HM Revenue and Customs (HMRC) to delve into the case, emphasizing the importance of recovering funds that could greatly aid public services. Eugene Shvidler, a former Chelsea FC director and business magnate linked to Abramovich, is at the center of this financial controversy. Following Russia’s invasion of Ukraine, he has relocated to the USA, while being sanctioned by the UK government due to his affiliation with Abramovich.

Tax experts highlight that evidence pointing to Shvidler’s UK-based control over investments could be vital in determining the legitimacy of tax avoidance. Shvidler’s lawyers criticize the BBC’s narrative, describing it as an incomplete portrayal, asserting that all financial maneuvers were conducted following detailed planning from leading tax advisors.

The complexities of the hedge fund investments venture reveal that profits generated from these maneuvers, reportedly amounting to $3.8 billion (£3.1 billion) over several years, remain untaxed. While offshore entities can sometimes mitigate tax responsibility, any substantial UK-based managerial activity can bring profits into the HMRC's jurisdiction.

As investigations proceed, numerous questions arise around the tax obligations owed by Abramovich due to these strategic financial decisions. HMRC could potentially impose significant penalties, elevating the total tax dues to over £1 billion based on their findings of culpability.

Adding to the controversy, the British government sanctioned the sale of Chelsea FC with the stipulation that £2.5 billion from the proceeds go to charity aiding Ukrainian victims of war. Nearly three years later, these funds languish in a frozen account as disputes persist over their allocation.

The ongoing investigation is part of the larger Cyprus Confidential project, an international initiative established in 2023 to expose financial dealings tied to associates of Russian President Vladimir Putin.