Matalan founder John Hargreaves has lost a long-running court battle over a multimillion-pound tax bill.

The businessman, who is based in Monaco, has been ordered to pay capital gains tax on his sale of £231m of Matalan shares in May 2000.

John Hargreaves

John Hargreaves floated Matalan on the stock exchange in 1998 and moved to Monaco in 2000

HM Revenue and Customs had been chasing Hargreaves for £84m but after interest is added, the final amount owed could surpass £130m, according to The Sunday Telegraph.

HMRC, which has been in dispute with Hargreaves over his tax status for almost two decades, welcomed the ruling at the Upper Tribunal – the highest court that oversees tax cases.

Hargreaves floated Matalan on the London Stock Exchange in 1998 and moved to Monaco in March 2000. 

Four days after arriving in the principality, he submitted documents to HMRC informing it of his tax haven status. 

Hargreaves did not fill in the capital gains pages in his tax return because he no longer considered himself a UK resident, court documents showed. 

He sold a tranche of his Matalan shares in May 2000, two months after leaving Britain.

Hargreaves said in his tax return that he would spend “no more than two months per annum” in the UK, but court documents showed that he continued to work three days a week at Matalan’s Liverpool HQ. He also stayed at the same house he had lived in before moving to Monaco.  

HMRC opened an investigation into Hargreaves’ tax affairs in 2004 and in January 2007, decided he owed £80m in capital gains tax plus a further £4m in income tax.

The entrepreneur initially argued that he was not liable to pay tax since he was no longer a UK resident but court documents reveal Hargreaves later accepted “he had been resident and ordinarily resident in the UK in the 2000/01 tax year”.

However, Hargreaves then argued the tax bill was invalid because HMRC had taken too long to launch its investigation – grounds on which he won a previous case in 2019. 

His latest appeal was based on the belief he filed tax returns correctly, meaning HMRC had no basis on which to begin a probe into his taxes. 

Hargreaves paid £35m to HMRC in 2018 and has sued PwC, the accountancy firm that advised him on his relocation to Monaco. He is now “actively considering” an appeal against the latest ruling.

HMRC said it “welcomes this long-awaited ruling, which supports our use of discovery assessments in these high-value cases, and we are committed to ensuring that everyone pays the right tax at the right time to help fund our vital public services”.

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