As Duncan Bannatyne wrote in his Business Matters column in our March issue, he has taken issue with fellow entrepreneur James Caan’s non-domiciled resident tax status leading the fiery Scot to issue an ultimatum to his fellow Dragons – he will not invest alongside any Dragon that does the show using offshore companies.
“I have already decided it would be difficult to invest with James as Hamilton Bradshaw [Caan’s UK private equity company] is owned by a Cayman Island company,” said Bannatyne.
Following research Bannatyne has discovered that Hamilton Bradshaw’s sole shareholder is a company called HB Advisors Limited registered in the Cayman Islands.
“I am not going to invest alongside anyone on Dragons’ Den if the money is coming from an offshore company either directly or indirectly,” he added.
“I am not feeding the coffers of the Cayman Islands or British Virgin Islands.”
Bannatyne, worth a reported £320m, and Caan, credited with a £65m fortune, had struck up a successful partnership on the show and hold three joint Dragon investments. (The Two pictured above with Sharon Wright, the founder of MagnaMole, one such joint investment)
But the business relationship is on the rocks. Bannatyne insists he has nothing against Caan personally, but it is clear that the two have fallen out. When they last met, Bannatyne offered his hand but he says Caan just shook his head and walked past.
“I am very angry that James did not take my hand. As far as I am concerned he has said he will not talk to me. It’s his issue,” said Bannatyne.
The publicity will undoubtedly give an unexpected boost to the show, which starts filming shortly. The panel of Bannatyne, Caan, Theo Paphitis, Deborah Meaden and Peter Jones remains unchanged and the BBC seems unconcerned that Bannatyne is setting new rules on who he will work with. A spokesman said that the show did not rely on the panellists getting on.
“Dragons’ Den is not a team effort. It is all about entrepreneurs pitching to individual Dragons in the hope of winning backing for their ideas, and five hard-headed investors looking for the best deal,” she said.
It does appear that the other Dragons are moving to take advantage of the situation as fellow Dragon Peter Jones used his social media Twitter account last week to rebuild bridges with Bannatyne. The pair previously had a frosty relationship in front of the cameras.
Bannatyne says he believes that UK-born entrepreneurs are at a disadvantage to non-domiciled residents who have made their fortune in Britain but can fund their lifestyles from monies held overseas that do not attract UK tax. He wants the rules changed.
Non-doms can live in the UK but have affiliations with another country where they were either born or their parents were born.
They do not pay UK income tax or capital gains on income earned or capital generated overseas, although tax does fall due if any money is brought into the UK.
The Government changed the rules on non doms in April 2008, requiring the estimated 65,000 residents here to pay a £30,000 charge if they wanted to continue to keep their overseas assets out of the UK tax net. Some 4,000 paid the charge in the first year, HMRC figures show.
Bannatyne thinks the Government did not go far enough. “They do not seem to have tightened the rules,” he said.
“Someone can come here two years-old and take advantage of our education system and health-care system, then they turn 18 and they can take their money offshore. In my opinion they are saving tax on money earned in Britain. The next Government needs much stronger rules for any new non-doms registered in the UK from the end of this year.”
He added: “I am trying to get people to understand the extent of the problem. I have mentioned it to Gordon Brown and he is aware of the situation.”
Caan declined to comment on the bust-up, but stated: “Hamilton Bradshaw is a UK- registered company, paying UK tax on all its income.”
He has previously confirmed his non-dom status.
With aspiring entrepreneurs preparing to pitch their ideas next week at the start of filming, the timing of Bannatyne’s broadside raises the question whether he wants the BBC to make last-minute changes to the Dragons.
“I have no issue who is on the show and who is not,” he said.
“It’s not my decision. I will work with anybody on the understanding that the [investing] company is a British company and it’s not owned by a company in the Cayman Islands or British Virgin Islands.”
We have also asked our LinkedIN Discussion group & Facebook group: If you were on Dragons’ Den and both Duncan & James made you an offer, would you turn down James because he is a non-dom? Please also add to the comments below: