In the light of the recent BBC Panorama Report on the so-called Paradise Papers that raised concern about tax avoidance through offshore accounts of large companies, seems to have alerted the Care Quality Commission.
An investigation by the Financial Mail has found that some firms involved in the care industry – many of which receive public money directly from local authorities to pay for residents’ care – have links to offshore tax-haven territories including the Cayman Islands, Luxembourg, Gibraltar and the Channel Islands.
The revelations coincide with a battle for control of the country’s second biggest care home provider, Four Seasons, controlled by Guernsey-based tycoon Guy Hands.
The company has until December 15 to satisfy a £26 million interest payment on its enormous debts.
The Care Quality Commission are to clampdown on large companies and in future Britain’s care home providers will be forced to declare their links to offshore tax havens. The clampdown comes amid growing concerns over the future of Four Seasons, one of the biggest operators in the market.
The CQC have said that from April it will ask firms to lift the lid on what are in some cases highly complex ownership structures – and to reveal the identities of the moneymen behind them.
A spokeswoman for the Care Quality Commission said the care market is ‘much more global than it was ten years ago and we need to be more transparent. We need to develop regulatory policies and want to get a better oversight of providers.’
She added that the CQC wanted to know who are the ultimate owners, and ‘who has influence and control. We need a better understanding of the ownership, of the investors and directors, and to make that public.’
The ownership of some groups passes through multiple layers of bizarrely named companies before ending up with a business or trust in a tax haven.
Among the so-called Big Five, Barchester is owned by a Jersey-based company. Four Seasons is owned by Hands’ Terra Firma, with an office in Guernsey. HC-One has links to the Cayman Isles. Its chairman Dr Chai Patel is director of a Cayman-domiciled FC Skyfall Topco Ltd.
In addition, second-tier groups, including Akari and Orchard Care, which own more than 100 homes between them, operate through a labyrinth of companies. Akari’s ownership funnels through a dizzying array of firms before resting with Caymans-based Csp Iv LP.
Orchard is controlled by a Guernsey-registered outfit along with ASO LUX 3 S.A.R.L, a mysterious Luxembourg-based enterprise.
And some care homes under the Bondcare and Care Worldwide brands are controlled by Gibraltar-based trustees.
Is the CQC right to be concerned about care home ownership?
Currently the Care Quality Commission as part of the registration and inspection process requires providers to have in place, a business plan and evidence on how the service is to be funded. This is to ensure that the service has enough capital to run the business for a considerable time, and to protect the wellbeing of residents from risk should the company become bankrupt. In which case, they will have to move.
The problem with larger companies is much more serious. It is obviously more difficult to establish the financial credibility of some larger providers. Otherwise we are left to conclude they would have done something about it by now. What is even more concerning is given the state of the care industry at this point in time, it would be extremely difficult to relocate such large numbers of residents, and the resulting upheaval to people’s lives
I work from the standpoint that most management and staff in the care sector give their best to residents, and do not receive financial rewards that equate with their level of commitment and effort.
It is morally indefensible for larger companies to take advantage of the offshore tax system when the care industry is suffering as a result of underfunding.
BBC Panorama Report on the so-called Paradise Papers and the Daily Mail Report on some larger home owners who use offshore accounts has raised the alarm bell with the care Quality Commission.
CQC has a right to be concerned. It is very much a safeguarding and risk issue. Given the overall position and reducing profitability of the care home industry. It may be difficult to relocate large numbers of residents, should any of the bigger companies go bust. It is imperative that the CQC establishes the financial credibility of these larger companies who use offshore accounts.
Albert Cook BA, MA & Fellow Charted Quality Institute
Bettal Quality Consultancy