Councillors in Lancaster are calling for a boycott of the city’s Canal Corridor developer after alleging the company has been avoiding paying tax in the UK.
Green Party councillor Tim Hamilton-Cox said he has found evidence that British Land owns its property in the Canal Corridor site through a Jersey property unit trust.
But British Land said the accusation is incorrect and appears to “misunderstand how the tax system works”.
In 2014, Coun Hamilton Cox put forward a motion to full council, which read “that the city council should not contract with companies which deploy tax avoidance devices. By continually making exceptions and thereby depriving the exchequer of tax revenues, we impact on the ability to fund adequately essential public services.”
So far, the council has not adopted the motion, but Lancaster MP Cat Smith said she was “glad the issues had been brought to light”.
Coun Eileen Blamire, leader of Lancaster City Council, did not wish to comment on British Land’s tax affairs, but said: “Coun Hamilton-Cox and the Green Party have always opposed any development of the Canal Corridor site.
When the planning application comes in, they will have every chance to have their say at a full council meeting.
“A mixed development including retail, food, drink and leisure as well as housing is being suggested.
“Voters can decide whether they want to keep car parks or bring a development to Lancaster that will bring jobs, not just building jobs, but businesses and a very large number of jobs that are needed.”
Coun Hamilton-Cox said: “Of course I, and the Greens, want to move on from the dereliction that has blighted the area for decades.
“It’s ridiculous of Coun Blamire to claim otherwise. It’s not a question of if Greens want development but how it’s effected.”
A spokesperson for British Land said: “No tax payment has been avoided in Lancaster.
“Regardless of place of company registration, being a UK property, Canal Corridor North is subject to the UK tax regime.
“We are happy to confirm that all relevant taxes were paid when we acquired this property and on an on-going basis tax is paid on the income from this and all our properties in line with Real Estate Investment Trust (REIT) rules. Commercial property is commonly held in a REIT structure which was introduced in 2007 by the UK Government to ensure a wider and more diverse ownership of property. Shareholders receive rental income, after costs, directly in the form of dividends and therefore pay the tax. British Land paid an upfront tax charge of more than £300m to convert into a REIT and since that time has paid more than £1.5bn in dividends on which our shareholders have paid tax.”
Coun Hamilton-Cox responded by saying that whether or not British Land is structured as a REIT is entirely beside the point and that it was sidestepping the issue of why it chose to place its Canal Corridor property holding in a Jersey Property Unit Trust.
Lancaster City Council said that it was “simply scoping whether there is a potential viable scheme on this site.
A spokesman said: “If it wishes to proceed in the future, it will be for the full council to decide.”