The Cost Of Hands’ Tax Haven

Guy Hands’ move from London to Guernsey for tax incentives has almost halved profits at Terra Firma, the private equity firm he founded and purchased EMI with.

Hands, who holds a majority stake in Terra Firma, moved to the Channel Island tax haven as a protest against recent increases in capital gains tax and income tax. He reportedly hasn’t returned to the UK since March 2009.

Terra Firma has taken a hit over Hands’ move to Guernsey because the firm has vacated one of the two floors it rents at its London headquarters overlooking the Thames and Tower Bridge and is now sub-letting it at a loss.

The opening of the Guernsey office has reportedly cost the private equity group more than £2 million in exceptional charges and write-downs, reducing its profits by 43 percent to £1.87 million. Turnover inched up from £47.2 million to £47.8 million.

Terra Firma Capital Partners is 100 percent owned by London 58 Limited, a Cayman Islands-registered company controlled by Hands.

Apart from EMI, the private equity group also owns cinema chain Odeon UCI.

Hands is engaged in a legal fight with Citigroup over EMI, which he has struggled to turn around since buying it for £4.2 billion in 2007.

Citigroup has a further month to respond to a lawsuit filed by Terra Firma, accusing the US bank of tricking it into buying EMI by giving false information in the auction. It’s already denied the charge.