
Roman Abramovich, the billionaire Russian oligarch and former owner of Chelsea FC, could be facing a bill of up to £1 billion from HM Revenue & Customs (HMRC) for unpaid taxes. This revelation comes from a detailed analysis of leaked documents, which suggest his offshore companies failed to pay tax on the profits generated by an intricate overseas investment structure.
The documents-the court filings-provide a look into how Abramovich managed his vast fortune, estimated at $6 billion or £4.8 billion. Almost half of this was placed in over 200 hedge funds, managed by some of the world’s top financial houses. The investments went through a web of complex entities registered in Cyprus and the BVI, the files reveal.
The network was still functioning at least as of 2022, when Abramovich, along with several other Kremlin figures, was hit with sanctions by western countries because of Russia’s invasion of Ukraine. The leaks indicate that, although the money was channeled through companies based in BVI, a senior executive familiar with Abramovich and based in the UK since 2004 oversaw those investments.
According to the analysis, if key investment decisions were made in the UK, then Abramovich’s companies could owe more than £500 million in tax. With interest and penalties factored in, HMRC might be entitled to as much as £1 billion in unpaid taxes.
Although the files are quite voluminous, parts of it could be missing; however, serious questions arise over whether UK tax should have been paid. Rumors also state that Chelsea FC might have also benefited from hedge fund investments through some of these companies, as they financed some other ventures under Abramovich’s business empire, including the football club.
It falls under the umbrella of the series *Cyprus Confidential*, compiled from the biggest ever leak of financial information about the Mediterranean tax haven, the Guardian and partners have been reviewing since 2022.
The revelations are likely to fuel calls for a review of Abramovich’s tax affairs, especially at a time when UK Chancellor Rachel Reeves is grappling with funding crucial public services. The chair of parliament’s cross-party group on responsible tax has called for HMRC to “thoroughly investigate” the case.
Abramovich’s Hedge Fund Network
The deal that shot Abramovich to the billionaire lists was the 2005 $13 billion sale of his Siberian oil and gas business to Gazprom. However, a lot of money left Russia because Abramovich had bought luxury property in London and the south of France, bought a valuable collection of art and even acquired a football club. He also made significant investments – mainly through the company Keygrove Holdings Limited, registered in the British Virgin Islands.
Two Cypriot-based trusts, the Sara Trust, and from 2010 onwards, the HF Trust, were the owners of Keygrove. Both listed Abramovich as their sole beneficiary until he was replaced by his five children in 2022. The more than dozen BVI companies that Keygrove controlled collectively invested hundreds of millions of dollars in various hedge funds across the world.
Although such offshore companies didn’t pay any UK corporation tax, the leak *Cyprus Confidential* certainly throws serious doubt over whether it was taxed by the UK.
Abramovich’s “Right-Hand Man”
The leaked documents also highlight the role of Eugene Shvidler, a long-time associate of Abramovich, in managing the investments. Shvidler, who had chaired Sibneft and later worked with Abramovich’s family office, Millhouse, is described as Abramovich’s “right-hand man.” He moved to the UK in 2004 and became a British citizen in 2010 under the country’s golden visa scheme.
The main question is whether Shvidler was in control of the investments at all. Over 50 “general power of attorney” documents gave him decision-making power from 2004 till 2009 on behalf of the BVI companies. However, his hold on the companies continued till past that date based on court document filings related to a 2023 US case.
He was stated as the main personality on whose advice all the investment decisions were being taken, while the other directors would “rubber-stamp” the decisions of Shvidler. This brings a very important question, which is if these decisions were taken in the UK, then the companies might be liable to pay UK taxes. As reported by tax law experts, Shvidler’s procedure apparently indicates “central management and control” through the UK, which would make the companies liable to UK tax.
Tax Experts Weigh In
Tax experts believe the evidence strongly suggests the companies should have been taxed in the UK. Rita de la Feria, a professor of tax law at the University of Leeds, said that control exercised by Shvidler in the UK creates a compelling case for the companies’ UK tax liability.
Further calculation would indicate that the profits the Keygrove structure has been accumulating between 2004 and 2018 might be up to $3.8 billion. If such amounts were subject to UK tax, the liability would be approximately £536 million. With interest and penalties, the total could range from £651 million to £1 billion.
The Potential Impact on Chelsea FC
This research suggests indirectly that hedge funds also brought Chelsea FC in profit. There are also core companies of Keygrove where loans are rendered toother connected businesses that channel this moey toward the parent entity of Chelsea FC.
The cross-party parliamentary group on anti-corruption and responsible tax, chaired by Joe Powell MP, has also demanded an in-depth probe to determine whether taxes are payable from Abramovich’s companies. Concerns have also been raised regarding the £billion escrowed proceeds of Abramovich’s forced sale of Chelsea FC, allegedly for reconstruction in Ukraine.