Lewis Hamilton tax on Challenger 605 purchase caught up in Paradise Papers

Challenger 605 G-LCDH

Current Formula One world champion Lewis Hamilton has been caught up in the Paradise Papers scandal, with allegations that he avoided paying tax on his 2013 purchase of a private jet.

The story has come to light as part of a leak of 13.4m files related to shell companies in offshore tax jurisdictions. The documents were leaked to German newspaper Süddeutsche Zeitung, which then enlisted the help of the International Consortium of Investigative Journalists (ICIJ) to research the documents.

The Guardian newspaper, French Television and the BBC’s Panorama TV programme have been three of the outlets to cover the story so far, with both having stories about Hamilton avoiding paying tax on his private jet.

According to an article by The Guardian, when Hamilton registered Bombardier Challenger 605 msn 5904 / G-LCDH in January 2013, he allegedly used shell companies in the British Virgin Islands, the Isle of Man and Guernsey to avoid paying the £3.3 million tax bill on the £16.5 million purchase.

The Guardian article states that the aircraft was officially owned by a company registered on the Isle of Man called Stealth Transportation (IOM). Stealth then leased the aircraft to a private jet operator in the UK, with the lease fee allowing Stealth to claim itself as a legitimate business.

Although the UK operator remains unnamed, the Guardian states that it is based at Farnborough Airport. It then leased the aircraft to Hamilton directly, as well as to his Guernsey-based company BRV Ltd.

Hamilton himself was likely not directly involved in setting up the scheme himself, and was following professional advice. The Guardian says that Hamilton said he had a senior lawyer look over the arrangement, who told him they were lawful.

Under government tax rules, individuals and companies are entitled to reclaim VAT on purchases and running costs of private jets if they are used for business purposes.

Although the aircraft had been used to ferry Hamilton between Formula One races, he had also used the aircraft for his own personal holidays.

Various posts on image sharing website Instagram show Hamilton and the aircraft in exotic locations around the world, including one unnamed location where he has written the caption: “Two day holiday before the greatest race weekend of the year!!”

Charter contracts seen by The Guardian show that Hamilton intended to charter the aircraft for 80 hours a year for his own use, and 160 hours a year by his Guernsey company BRV.

The aircraft left the UK civil aircraft register in April 2017 and is now registered in Austria as OE-IXI.

The Austrian civil aircraft register shows the aircraft is currently operated by a company called Laudamotion GmbH, which is controlled by former Formula One world champion Niki Lauda.

Lauda is a long term advocate of business aviation, and a brand ambassador for Bombardier Business Aircraft, the company that manufactured Hamilton’s aircraft.

After having previously owned an airline as well as a business jet operator, Lauda re-entered business aviation in December 2015 with the purchase of Austrian operator Amira Air. The company was then renamed Laudamotion.

According to the company’s website, Laudamotion offer aircraft management and charter services, although the Challenger 605 is not listed on the fleet page.