Private equity owners of Game Group used tax havens for payments
The private equity owners of video games retailer Game used tax havens in the two years they owned it, accounts have revealed.
US buyout group Elliott Advisors snapped up Game Group after it collapsed into administration in 2012. It set up Game Digital in April 2012 in a deal masterminded by financier Henry Jackson, and the company was floated in June this year.
Yesterday Game said it broke into the black, with annual pre-tax profits of £7.3million compared to a £15.4million loss. Sales rose 31 per cent to £861.8million.
Accounts filed yesterday demonstrated how the owners paid hefty interest payments into tax havens.
During the two years to the end of July 2014 the company reported operating profits of £21.5million.
But the firm paid out £28.3million in payments to ‘related parties’ mainly based in tax haven Luxembourg.
By taking high-interest loans from holding companies based in the haven, the company was able to move money out of the UK and away from tax authorities. The scheme was unwound before the company was floated in June.
In the documents, Game (up 6p at 286p) claims that none of the money left the company because the interest payments were converted into shares in the new company before the float. Jackson was a director of Capitex, the Luxembourg-owned holding company that controlled Game before the float.
Its latest accounts are overdue, but in accounts up to July 2012 the company said it paid £1.2million in fees to ‘two entities… including an entity in which Mr Jackson has an economic interest’. It is believed payments continued until Jackson, who was previously involved with Comet before its collapse, left as a director this February.
James Shinehouse, a business partner of Jackson’s who left Capitex this June, was paid £30,000 a month for being a director as well as ‘fees for consultancy services’, which were paid on an hourly rate.
Elliott Advisors owned around 60 per cent of Game after the float, and recently sold down to 48.3 per cent. Elliott and Jackson declined to comment.