The Guardian can reveal that HM Revenue and Customs has agreed to relocate tax officials into a new office complex in Newcastle owned by major Conservative party donors through an offshore company based in a tax haven.
The proposed new home in the north-east of England is part of a regeneration scheme developed by a British Virgin Islands BVI entity controlled by billionaire property tycoons David and Simon Reuben.
The deal will see officials at the government department responsible for preventing tax avoidance working from a site owned by a subsidiary of a company based in a secretive offshore tax jurisdiction.
The family members and businesses of Reuben donated a total of 1.9 million to the Tories. The brothers have been reported to have shared a table with Boris Johnson at an exclusive Tory party fundraising dinner earlier this week.
On Tuesday, officials including Cabinet Office Minister Steve Barclay announced that HMRC had agreed a 25 year lease with one of the Reuben brothers companies.
According to the Sunday Times'rich list, the brothers are the second richest family in the UK. Jamie Reuben's son is a close ally of the prime minister and has served as a Tory party treasurer. Since Johnson entered Downing Street, he has donated more than 750,000 to the party.
The Reuben family has a significant presence in Newcastle in recent years and is part of the controversial Saudi Arabia-led consortium that acquired Newcastle United football club in October.
The family has used BVI companies to hold its UK business interests, which include a luxury London property portfolio and a string of racecourses, according to company filings.
A spokesman for HMRC said the office complex in Newcastle is owned and will be developed by a UK company, Reuben Brothers Newcastle Limited. Companies House filings show the company's sole shareholder when it was incorporated earlier this year was Taras Properties Limited in the BVI.
In 2013, Taras Properties acquired the site and transferred ownership of the land to the UK company in June this year for 10 m, according to Land Registry records. The BVI company owns several large plots of land in central Newcastle in the area surrounding HMRC's planned offices.
A spokesman for the Reuben brothers confirmed that the UK company is held by Taras Properties but insisted the subsidiary operates and pays taxes as a UK company HMRC spokesman said the Reuben brothers company would be subject to normal UK tax regulation. The lease payments and any gains on the sale are subject to UK tax, they said. HMRC is happy that the deal represents the best value for the taxpayer. There is no suggestion that the Reuben brothers are doing any wrong and owning UK property through offshore companies is perfectly legal.
The bill, first published in 2018, is intended to clamp down on the use of offshore companies to obscure owners identities and their source of funds.
The aim of combatting offshore tax avoidance is to combat offshore tax evasion and avoidance, and earlier this year the department unveiled plans to crack down on offshore tax avoidance by targeting UK-based entities that are facilitating the sale of avoidance schemes using tax havens.
In response to the move, Dame Margaret Hodge, a Labour MP and Chair of the cross-party parliamentary group on anti-corruption and responsible tax, said it was outrageous that HMRC should be using taxpayers money to benefit someone that relies on offshore structures based in tax havens.