Business

Invest NI-backed Antrim mouldings firm linked to tax-avoidance scheme

 Springfarm Architectural Mouldings (SAM)
 Springfarm Architectural Mouldings (SAM)  Springfarm Architectural Mouldings (SAM)

A HIGH-growth Antrim manufacturing firm named in the so-called Paradise Papers probing aggressive tax avoidance schemes - and in which Invest NI is a preferential shareholder - insisted that it "conducts all its business affairs in a strictly legal manner" and has "fully complied with all obligations to HMRC".

Springfarm Architectural Mouldings (SAM), which makes MDF skirting boards and architraves and which last year had sales of more than £22 million, is among a number of businesses in Northern Ireland named in the 13 million documents leaked to an international consortium of investigative journalists.

The papers have linked the company to a tax avoidance scheme where it is alleged that in 2014 it gave away a property valued on its balance sheet at £4 million for just £1 to what it described as "an unconnected third party" in Mauritius.

SAM Mouldings - whose managing director Richard Holmes is also an Ulster Unionist councillor on the Causeway Coast & Glens Council - had bought the land in Antrim from Stormont's Department of Enterprise for £280,000 in 2000.

 SAM Mouldings' managing director Richard Holmes
 SAM Mouldings' managing director Richard Holmes  SAM Mouldings' managing director Richard Holmes

Documents in the Paradise Papers were probed by the BBC's Nolan Show, which claims that SAM Mouldings' owners Sam McCrea MBE and his wife Julienne had control of that Mauritian company and had effectively "given" the multi-million pound property to themselves in all but name.

The couple were listed as "investment advisers" to the company, but the leaked files show that at one stage Sam McCrea wrote to the company in Mauritius questioning why a payment was made without his or his wife's permission.

Springfarm Architectural Mouldings director Sam McCrea MBE
Springfarm Architectural Mouldings director Sam McCrea MBE Springfarm Architectural Mouldings director Sam McCrea MBE

In other documents, Sam McCrea allegedly advises that the Mauritian company buys shares from himself.

The taxpayer-funded Invest NI, which since 2008 has offered £608,444 in financial assistance to SAM Mouldings of which £431,007 has been drawn down, has also been a preferential shareholder in the company since 2000 (in the days when it was LEDU).

Those preference shares do not grant Invest NI voting rights in any company decisions, and the return on preference shares is limited to repayment of the original investment and an agreed rate of return. In this case that is 5.5 per cent a year.

There is no evidence that anything illegal has occurred in this or the majority of the cases highlighted in the leaked Paradise Papers.

But the revelation that wealthy individuals and companies are effectively hiding their money in tax havens and exploiting offshore schemes to avoid tax has caused widespread anger.

In a statement to the Irish News, the company said: “Springfarm Architectural Mouldings Ltd conducts all business affairs in a strictly legal manner. We have fully complied with all obligations to HMRC. We will be making no further comment on this matter.”

Invest NI said it was "aware of the property transfer in question", adding that this was taken into consideration when approving the most recent project at SAM Mouldings, which as been in business since 1990 and employs 160 people at its Antrim plant.

It said: "Our assistance depends on the viability of the business and the total value added to the Northern Ireland economy.

"Springfarm Architectural Mouldings has continued to grow in terms of both exports and employment targets and is meeting the agreed repayment schedule for the preference shares.

"A company’s tax planning is a matter between it and HMRC. If it transpires that information provided to us as part of our approval process has been misleading and would have resulted in a different decision being made, we will review the specific case, as would be normal practice."

When contacted by the Irish News Mr Holmes - who has served on the audit, environmental services and leisure/development committee on the Causeway Council - said: "The company has made a statement on its own personal affairs and I have nothing else to add."