BNP Paribas Real Estate, one of the country’s leading firms of property consultants, and a major contractor to local government in London, has published a marketing brochure demonstrating to potential investors in London property how they can avoid taxes. Should local authorities continue to do business with this company?
Who are BNP Paribas?

BNP Paribas Real Estate is a firm of property consultants. They advise property developers and local councils on development. Their current chairman is Stephen Norris, who was a former Conservative mayoral candidate.
On the local authority side they are one of the biggest firms advising on development viability. BNP Paribas Real Estate is contracted by councils to examine the development viability studies submitted by developers when they wish to remove affordable housing from a development. The company advises local councils on whether or not they should accept a loss of affordable housing. Almost always they agree with the developers that the local authority’s policy on affordable housing is unachievable, leading to a loss of affordable housing.
In a previous article on this site we revealed how BNP Paribas were sometimes paid by developers to carry out their local authority work, leading to real concerns over conflicts of interest.
The tax avoidance scheme

Of course, BNP Paribas Real Estate also advises private clients. As part of the marketing effort the company publishes an “Investing in London” guide, which they describe as follows:
“Our Investing in London guide aims to help overseas investors understand the London market and what changes may be in store going forwards. Throughout this document, our experts will guide you through the different makeup of the London submarkets, all you need to know about London, examples of transactional deals we have done with overseas investors, and of course, where the next opportunities are coming from.” [emphasis added]
In one part of the guide, written by Kirsten Pritchard Jones of Nabarro, a law firm, there is a demonstration of how a potential investor can avoid taxes on their investment in commercial real estate.
In the BNP Paribas brochure Kirsten takes potential investors through a case study involving the purchase of a “trophy office property in Central London” by a Singaporean investor (S PLC). Kirsten recommends using a Jersey based holding company for the transaction (J CO).
This means that in the future the Jersey company owning the building can be sold instead of the building itself, avoiding stamp duty land tax on the transaction. A substantial saving, in this case £4m. In addition, if the Singaporean owner loans the money to the Jersey company to buy the offices, then rental income can be offset against interest payments, resulting in further savings. Further tax can be avoided if rental income is taken out of the country as management fees. As Kirsten says, “The net effect is that J Co should be subject to a very low effective rate of UK tax. ”
Once the money is in Jersey, Kirsten explains:
“J Co is not subject to tax in Jersey on the rental income from London Building. Payments of dividends and interest are not subject to withholding tax. S Plc picked Jersey for these features, however, similar results can also be achieved with other jurisdictions.”
Kirsten has now moved to Macfarlanes, where she advises a number of clients, including Lend Lease and the Church of England on tax and real estate. God only knows what she tells them.
Cash strapped councils
At a time when governments are being starved of cash through cuts in their grant from central government, this raises real questions as to why local authorities spend money procuring services from BNP Paribas Real Estate; an organisation that works with lawyers to help their clients to avoid paying the very taxes that fund them.
Joel Benjamin, founder of Community Reinvest, a community interest company that helps local authority pension funds move to more sustainable investments told us:
“Local authorities, which rely on tax funded grants from central government for 75% of their income have no business doing deals with tax dodging multinationals, let alone companies like BNP and Nabarro which enable foreign property speculators to gamble tax free on “trophy properties” in the London housing market.
“The Investing in London Guide is a marketing brochure that has been freely and publicly available on our website for several years. It provides a factual overview of the features of the London real estate market and does not constitute legal or professional advice.”
Well reader – what do you think?
I share your outrage George and value the light you shine into dark corners. But I’m sure such behaviour is totally ‘normal’ among London ‘professionals’. Tax systems are designed in the knowledge that clever ppl will try to minimise their liability in this kind of way. Shaming them may be part to a campaign to change things but surely tougher laws (e.g. on overseas jurisdictions) are the main power we have.
Yes! I have been told that the transaction outlined is completely normal and HMRC has no problem with it. That is the problem and I would think there would be a lot of schemes that could be killed quickly if HMRC gave some advice to Parliament on how to change the law to deal with them, rather than just produce report after report telling the world how well they are doing.
Your reporting on developmental viability studies and their damaging impact on the creation of affordable housing is raising some important questions which deserve widespread attention and debate. However, like the commenter before me, I also feel that the issue of tax avoidance is a bit of a red herring. Local authorities are indeed constrained by the cuts in government grants to them, but it is not true to say that the government grant is ‘tax-funded’ – this is conventional short-hand, which unfortunately has come to be used as a means of justifying austerity without further discussion. Government does not literally spend the money it collects in taxes. Taxes are a necessary part of macroeconomic regulation, but the government is in no way limited in its spending by the amount of taxes it collects and should not use its deficit as a simple, undebatable, technocratic excuse to curtail the supply of affordable housing. (By the way, the government deficit is twice what was pledged, but I have not noticed a corresponding rise in inflation or storm of bond vigilantes). Off-shore ownership distorts the London property market and creates a haven for money-laundering (and these allegations should be the subject of market study and attention) but I don’t think this needs to be settled in order to address the shortage of affordable housing. I am very troubled by the lack of transparency of these viability studies and fear they are subverting well-intended efforts, or worse, diverting effort from other potentially better schemes.
Thanks for the comment John. I see what you are saying, but I don’t agree that tax avoidance is a red herring. Debt can’t solve everything and at some point people need to pay taxes. If large property investors get away with avoiding their obligations that means more of the burden falls on the rest of us. How much extra you spend on top of the taxes collected (through borrowing) is a different question