BBC's Panorama programme has revealed that London's luxury hotel, The Ritz, has paid no corporation tax since it was taken over by billionaire twins David and Frederick Barclay.
The Barclay brothers acquired the hotel in 1995 through their company, Ellerman Investments. Built in 1906, The Ritz is estimated to be worth at least £625m (€770m, $1.0bn). It has been a successful investment for the Barclay brothers despite the ongoing economic crisis, with rising turnover and profits.
The BBC documentary analysed the accounts of The Ritz, which charges up to £3600 a night, and claimed that the hotel has used a series of tax reliefs to reduce its corporation tax to zero.
The hotel's efforts to achieve zero tax liability, which are technically legal, come to light as another firm owned by the billionaires, catalogue company Littlewoods, is involved in a legal battle with HMRC, according to the BBC.
Having won a VAT rebate plus interest worth £472m from HMRC, Littlewoods is demanding a further £1bn from the government in compound interest.
The Barclay brothers, who own the Daily and Sunday Telegraph newspapers, claimed that they are not involved with the operations of their UK companies since they went to tax haven Monaco more than 20 years ago.
"We have not attended office, management or board meetings in the UK since leaving the country," BBC quoted David Barclay as saying.
"My brother and I have no editorial, political or economic power in the UK."
Offshore trusts set up by the twins are controlling the operations of Littlewoods, the Ritz and the Telegraph and one of the brothers attends the trust meetings, the BBC claims.
David's son Aidan Barclay, who manages the family's UK businesses, told the programme that the VAT claim by Littlewoods was lodged before the family took over the company. He added that the profits from The Ritz had been reinvested and the company had not paid any dividends.
"We have always acted in a responsible way with regard to taxation and have never been involved in any tax avoidance scheme. We are not responsible for corporate taxes in the UK and are unaware what tax is paid on the Ritz," David Barclay added.