Alan Sugar faces call to clarify UK tax status

Alan Sugar is under pressure to clarify his tax status in the UK after he took a leave of absence from the House of Lords and paid himself a £390mn dividend.

The British entrepreneur and star of the UK version of The Apprentice received the payment from his main holding company, Amshold Limited, in 2021, as part of financial arrangements over the past five years.

A person familiar with Sugar’s finances said the arrangements included plans for Sugar to give up his UK tax residency.

A spokesman for Sugar declined to respond when asked if the entrepreneur was still a resident of the UK for tax purposes, saying only that he paid UK taxes.

Non-UK residents do not have to pay taxes on dividends from UK companies, but can only live in the UK for around 90 days per year, or fewer depending on their ties to the UK.

They are also only taxed in Britain on income sourced in the UK, and not on income or capital gains generated anywhere else in the world. Usually they cannot actively serve as Members of Parliament or in the House of Lords, and must seek a leave of absence or step down.

Sugar was granted a leave of absence from the House of Lords in January.

It appears Amshold Limited did not distribute a significant cash dividend between 2017 and 2021, when it paid the £390mn windfall sum.

The accounts showed Amshold declared two small dividends in 2018 and 2019 that totalled £1.1mn.

The dividend paid in 2021 would have triggered liability for as much as £160mn of dividend or income tax. The payout was one of the highest awarded to a British entrepreneur. Denise Coates, the founder of Bet365, received salary and dividends that totalled £469mn in 2020, which made her one of the highest-earning corporate figures in the world.

Sugar’s spokesman said: “We are instructed to tell you that Lord Sugar is a UK taxpayer and will remain so. We have not asked you to write about our client, and as such we are not prepared to act as your editor. Please do not ask any further questions, as they will not be answered.”

Margaret Hodge MP, the chair of the parliamentary group on responsible tax, called on Sugar to clarify his tax status, adding: “Alan Sugar has a public role, both as a lawmaker and a business icon and mentor.”

The putative £160mn tax liability is nearly three times the £58.6mn in tax Sugar paid in 2017, when he published a photograph of a cheque to HM Revenue & Customs on social media to publicise his large tax contribution.

A former Labour donor, Sugar was made a lifetime peer by Labour in 2009 and given a ministerial role as Gordon Brown’s “enterprise champion”. 

By 2015, however, he had quit the party — as it shifted further to the left — and by 2019 he had become a crossbench peer and was endorsing Boris Johnson’s Conservative party.

Non-resident tax status is separate to so-called “non-dom” status, through which people can avoid some inheritance tax and taxes on foreign income, but may live in the UK for 365 days a year.

A number of high-profile British entrepreneurs have established residency outside the UK, allowing them to reduce their UK tax liabilities. These include Virgin Atlantic boss Sir Richard Branson, who resides in the BVI, and inventor Sir James Dyson, who switched his residency to Singapore in 2019 and then back to the UK two years later.

It is also possible to become a so-called “tax nomad”, meaning that the person does not establish residency for tax purposes in any country.

Amshold Limited — which is named after Sugar’s initials Alan Michael Sugar — is a “property trading and investment” group and provides “management services”, according to its accounts. Sugar controls an empire of prime real estate in central London and elsewhere. The group reported net assets of £108.6mn last year.

The group declared a dividend of £500,000 in 2019. The accounts also show an “in-specie” or non-cash dividend of £75mn that year — a reference to the transfer of shares in one of the group companies, Amsprop REAT Ltd, to Sugar. Amshold also declared a dividend of £600,000 in 2018. The group paid no dividend in 2017 or 2020.

Sugar has been outspoken on tax issues. He told Radio Times magazine in 2014: “You’ve got to pay tax, it is as simple as that. I don’t want to live a life dodging taxmen. I could have put my money in tax-avoidance schemes or hedge funds, but the only hedge fund I’ve ever invested in is a Black & Decker.”

One of Sugar’s companies, Amscruise Limited, which was registered in Malta in 2015, was included in the Paradise Papers, a 2017 data dump on offshore tax schemes. Sugar used the vehicle to buy his superyacht, the Lady A, for an undisclosed sum the same year.