How does Nando's avoid paying tax in the UK? | Guardian Animations

Summary

This video script explores how Nando's, a popular UK restaurant chain, uses an intricate web of offshore companies and tax havens to minimize its tax liabilities. The money spent on their chicken travels through entities in places like Jersey, Malta, and the British Virgin Islands, ultimately benefiting a South African family trust. By leveraging methods like image rights royalties, offshore loans, and complex corporate structures, Nando's legally reduces its tax bill. Despite paying some UK corporation tax, it could have contributed more, raising questions about the ethics of tax avoidance in light of UK financial pressures.

Takeaways

• 😀 Nando's is a popular chain in the UK known for its spicy chicken, but its financial structure involves complex offshore practices.
• 😀 The £7.34 spent on chicken in the UK travels through a network of tax havens, including the Isle of Man, Guernsey, the Netherlands, Luxembourg, Malta, and the British Virgin Islands.
• 😀 A significant portion of Nando's profit ends up in Jersey, a tax haven, in a trust benefiting a family of South Africans.
• 😀 Nando's uses image rights royalties to legally reduce their UK tax bill, with £20 million being collected by a Dutch entity called Total EBV.
• 😀 The company also funnels rent payments through offshore intermediaries, including a UK company and a Netherlands entity.
• 😀 Nando's finances its restaurant fit-outs via offshore loans, shifting £5 million in profits to a Guernsey entity called Nando's Leasing Limited.
• 😀 Despite paying £12 million in corporation tax, Nando's could have paid nearly £18 million if not for their offshore practices.
• 😀 Nando's complex corporate structure is ultimately headed by a Luxembourg-registered partnership.
• 😀 The financial practices of Nando's are legal but could be seen as controversial, especially amid rising pressures on UK tax revenues.
• 😀 Nando's is also linked to the offshore ownership of a historic estate in Wiltshire, which is registered under an anonymous offshore company in the British Virgin Islands.
• 😀 While Nando's has paid all applicable taxes when purchasing properties, their use of offshore structures allows for the potential to avoid future capital gains and inheritance taxes.

Q & A

What is Nando's, and why is it significant in the UK?

Nando's is a popular restaurant chain in the UK known for its spicy chicken. It has become a go-to spot for millions of Brits who enjoy their signature peri-peri chicken.

How does Nando's manage its finances in a way that reduces its tax bill?

Nando's reduces its tax bill by utilizing a complex network of companies and tax havens. This includes using image rights royalties, offshore loans, and paying rent to companies based in low-tax jurisdictions like the Netherlands, Malta, Guernsey, and Luxembourg.

What is the role of tax havens in Nando's financial structure?

Tax havens play a central role in reducing Nando's tax liability. Profits from the UK operations are funneled through a chain of companies in low-tax jurisdictions such as Jersey, Luxembourg, and Malta. This allows them to legally avoid paying higher taxes in the UK.

How much money is involved in Nando's tax optimization strategy?

Nando's has structured its finances in a way that funnels over £750 million into a trust benefiting a South African family. They also collect over £20 million through image rights royalties via a Dutch entity.

What is the purpose of the offshore loan to Nando's Leasing Limited in Guernsey?

The offshore loan to Nando's Leasing Limited, based in Guernsey, helps to move an additional £5 million in potential profits out of the UK, further reducing their taxable income in the country.

How does Nando's justify its use of offshore financial structures?

Nando's justifies its use of offshore financial structures by claiming that all their activities are legal and in full compliance with tax laws. They state that they have paid all applicable taxes when acquiring property and conducting business operations.

How does the use of offshore companies benefit Nando's when it comes to property ownership?

Nando's, through anonymous offshore companies in the British Virgin Islands, can potentially avoid capital gains and inheritance taxes on properties like Spy Park in Wiltshire, which they own through a family trust.

How much tax did Nando's pay last year, and how could that change without offshoring?

Nando's paid £12 million in corporation tax last year. However, without its offshoring strategy, they could have been liable to pay around £18 million in taxes, which is nearly double.

What impact does Nando's tax strategy have on UK tax revenues?

Nando's tax strategy, which involves shifting profits through tax havens, contributes to reduced tax revenues for the UK, especially given the pressure on the UK's tax coffers due to various public spending needs.

What is the public reaction to Nando's offshoring practices?

While everything Nando's is doing is legal, there is a possibility that some customers may find their use of tax havens as controversial or as 'spicy' as their chicken, given the ethical implications and the strain on the UK's tax system.