The management of B&M have domiciled the discount chain, which debuted on the London Stock Exchange at a value of £2.7bn, in Luxembourg.

The decision to tax domicile in Luxembourg, known for its low corporate taxes, could raise eyebrows, following controversies about other businesses that have adopted a similar practice.

Chairman Sir Terry Leahy has placed his investment in the firm through a fund registered in tax haven the Cayman Islands, it has emerged.

B&M, which sells products ranging from lamps, trampolines and board games, floated last week, putting the founders – brothers Simon, Robin and Bobby Arora – in line for a £1bn windfall.

According to the prospectus, ‘the company is a fully taxable company resident for tax purposes in Luxembourg’, the Daily Mail reported. It added that B&M paid £6.9m in ‘income tax expenses’ on sales of £1.2bn for 2014.

The Daily Mail reported Leahy is a senior advisor to US private equity firm Clayton Dubilier & Rice (CDR) which owns 60% of B&M, and has connections to the Cayman Islands.

B&M’s prospectus said: ‘Sir Terry Leahy has an interest in the shares held through CD&R Holdco as a result of his interest in CD&R Fund VIII.’

The prospectus said that CD&R Holdco, also referred to as CD&R European Value Retail Investment, is ‘a Cayman Islands limited partnership owned by the CD&R Investors, which is managed by CD&R’.