For those who found the vintage Chateau Lafleur at £1,600 a bottle not quite British enough there were pints of Lancashire ale poured by flat-capped barmen at a mock pub called The Frack Inn.
The lavish event on 6 December 2016 at Ineos’s new headquarters in London was a conspicuous display of patriotism. Invitations bore Union Jacks and the theme was red, white and blue, all to celebrate the British-born chemicals giant’s return to the UK after six years of tax exile in Switzerland.
“We are Brits, aren’t we? It’s where we started and it’s where our hearts lie,” said Ineos’s pro-Brexit billionaire owner, Sir Jim Ratcliffe. The 68-year-old painted the move as a vote of confidence in an economy reeling from the summer vote to leave the European Union.
Ineos’s homecoming burnished Ratcliffe’s reputation in Britain. It was the first step in a campaign by the chemicals company’s founder to transform his image from a little-known businessman into a high-profile supporter of sport, charity and Brexit.
After years spent shunning the limelight, Ratcliffe began courting government ministers, poured hundreds of millions of pounds into British cycling and sailing teams, and revealed plans to build a successor to Land Rover’s iconic Defender, which he said could create 10,000 British jobs.
The campaign seemed to work. In July 2018, just over a year after Ineos’s return to London and two months after The Sunday Times Rich list declared him Britain’s wealthiest man, Ratcliffe was knighted in the Queen’s Birthday Honours list for services to business.
Now an investigation by SourceMaterial has found that the reality of Ineos’s repatriation might be somewhat less patriotic than Sir Jim has made out.
"If we'd known he was going back, he wouldn't have got it"
Not only have high-profile projects such as the Land Rover replacement been shifted abroad but Ineos as a whole has paid less tax proportionately in Britain since its return. Since 2016 the group has paid only about £67 million a year to the Treasury—at the same time moving hundreds of millions of pounds offshore.
It isn’t just corporate profit that Ratcliffe has moved out of the UK. Just months after the Frack Inn bash, he and a key lieutenant began scouting for residential properties in Monaco. The Ineos billionaire has subsequently declared Monaco to be his primary place of residence on financial forms filed in the US and in Britain.
The move offshore, while perfectly legal, could have profound consequences, potentially enabling Ratcliffe to accept billions of pounds in future Ineos profit completely tax free.
British citizens who base themselves offshore are normally not permitted to receive honours. Our evidence suggests that Ratcliffe’s plan to move to Monaco, which only became public after he was knighted in June 2018, was set in motion well before that date.
A source close to the honours committee, the 14-strong group which reviews nominations for honours such as OBEs and knighthoods, told us that Ratcliffe may well never have been knighted had the Monaco move been known.
“He came back to Britain and was duly promoted and everyone said this was great because he was one of the biggest self-made entrepreneurs. Then when he buggered off I personally was incandescent,” the source said. “If we’d known that he was going back, he wouldn’t have got it.”
It’s an episode which could alter how Britain recognises and rewards its wealthiest citizens for good.
The source told us that the body’s economy subcommittee—one of 10 units that review recommendations for awards submitted to the Cabinet Office—has since inserted a new clause into its procedures allowing it to refer recipients who decamp to tax havens to the forfeiture committee, which has the power to rescind honours.
The new rule, the source told us, is known internally as the ‘Ratcliffe clause’. A cabinet office spokesman denied that any formal changes had been made to forfeiture rules.
Fracking for plastics
In just over two decades, Ineos has quietly and rapidly expanded to become a titan in petrochemicals. Founded in 1998, Ratcliffe’s creation is now a sprawling network of some 400 subsidiaries, including one which owns a pipeline delivering 40 per cent of the UK’s North Sea oil output. Its annual sales of over $61 billion are equivalent in size to the economy of a mid-sized country like Costa Rica or Oman.
As well as being huge, Ineos is divisive. It feeds its production plants with US gas obtained by fracking, a technique that pumps high-pressure chemicals into rock and is banned in the UK. It’s an “outdated” business model that is bad for the climate and floods the world with new plastics that could have come from recycling, says Andy Gheorghiu, an environmental consultant and campaigner.
Despite its size, many of Ineos’s finances remain unavailable to public scrutiny as Ratcliffe has kept the company private. Unlike public companies, private companies have far less stringent filing requirements.
Once labeled “the biggest company you've never heard of”, Ineos and its brand are now everywhere. In 2019, Tour de France-winning Team Sky became Team Ineos, while the runner Eliud Kipchoge broke the two-hour marathon barrier under the Ineos flag. A year earlier, Ratcliffe handed a £110 million funding package to Sir Ben Ainslee’s British yachting team. And in 2020, Ineos rose above other Formula 1 sponsors to become a third-shareholder in Mercedes Formula 1 in a deal thought to be worth £100 million.
To its supporters, Ineos’s funding has been transformative. For Ineos’s critics, however, the big-name sports sponsorships are proof that Sir Jim is “sports-washing” his oil and gas company’s reputation.
“Ineos is about fracking, plastics and pollution of our climate and oceans,” Jen Robinson, a barrister representing environmental campaigners, wrote to Kim Anderson, the world sailing president, in 2018. “Your decision to permit the participation of any team sponsored by INEOS undermines World Sailing’s commitments to respecting and safeguarding our environment.” Despite the protests, Ineos was permitted to carry out the sponsorship.
A legendarily tough negotiator, Jim Ratcliffe has never been one to back down from a threat.
In 2010, hard-hit by the financial crisis and battling for survival, Ineos asked the British government for a grace period to pay a VAT bill of £350 million. When it refused, Ratcliffe and his executives paid the bill and packed their bags for Rolle on the shores of Lake Geneva.
Ineos remained in Switzerland for six years, costing the Treasury hundreds of millions of pounds in lost tax. Only when a new business-friendly Conservative-led government unveiled plans to cut corporation tax from 20 per cent to 17 per cent was Ineos lured back to London amid a wave of publicity.
“Our new base in London reflects our British roots,” Ratcliffe said in 2016. “We have immense confidence in Britain’s economic future. The current business climate makes siting our new headquarters in the UK an easy decision.”
Those listening to Ratcliffe might have taken his words to mean that Ineos would pay considerably more tax in its new home country.
Close examination of Ineos’s finances tells a different story. Despite the grand opening in Knightsbridge, the company did not fundamentally alter its corporate structure. It simply added an Isle of Man entity, Ineos Limited, on top of the previous parent company in Switzerland, Ineos AG. One secretive offshore company had effectively been superseded by another.
Since then, the tax Ineos pays in the UK appears barely to have changed. The company paid an average of £39 million a year in UK tax during its Swiss exile. After returning, it has paid an average £67 million, according to estimates based on a review of more than 100 Ineos UK subsidiaries. Ineos says it made a global profit of £4.3 billion in 2019 before interest payments, tax and other charges are deducted.
Proportionally, the amount paid by Ineos in the UK has actually decreased from 22 per cent during the years of Swiss exile to just 13 per cent in the three years since its return for which figures are available.
Ineos's UK tax bill compared with its total tax bill
How has Ineos kept its tax bill so comparatively low? Our investigation revealed a pattern of intricate strategies to shift profits towards low-tax jurisdictions. While the measures are all legal, critics say they have allowed Ratcliffe to have his Brexit cake and eat it: to project himself as the patriotic businessman while moving billions in taxable wealth offshore.
One mechanism Ineos uses to move money to low tax jurisdictions is the “management fees” it pays Ratcliffe and Ineos’s two minority shareholders, Andy Currie and John Reece (both billionaires in their own right).
Since the 2016 move back to London, Ineos has paid the trio nearly half a billion pounds in fees—more than twice what the company paid over the same period in UK tax—via an entity in Switzerland, corporate filings show. The effect has been to reduce the amount of taxable profit declared by the UK companies.
And despite the return to London, Switzerland is where Ineos continues to register much of its intellectual property. Since formally opening its UK headquarters, Ineos has not applied for a single patent from the UK.
Switzerland, meanwhile, has accounted for about a fifth of the company’s patent applications even since the repatriation, meaning that millions in royalties on Ineos’s patented technology can be routed offshore rather than taxed in the UK—even in cases where the engineers who developed the technology are British.
Ineos has also continued to declare profits from other parts of its business in Switzerland even after moving its headquarters back to London.
Its Styrolution business, for example, sells more than €5 billion of plastics like polystyrene a year. Of more than 2,000 employees with LinkedIn accounts that work for Styrolution around the world, just 12 say they are in Switzerland, an analysis of the website suggests. Yet Switzerland is where Ineos has booked 60 per cent of the group's profit in the last two years.
LinkedIn is not a company HR roster and at best an indication of where employees are based. But by routing the sales through a Swiss entity, Ineos Styrolution SA, the group appears to divert cash to a low tax jurisdiction and away from the countries where the profit was arguably generated. Our analysis suggests that this structure saved at least €70 million in corporate tax in 2017—mostly in countries such as Germany.
“One of the basic principles of international taxation is that taxes should be applied where economic activity takes place,” said George Turner, director of Tax Watch UK. “Companies should not be able to simply move profits offshore by shifting paperwork.”
Table: share of Ineos patent filings by by the country of subsidiary making the patent filing
Other potentially aggressive—but legal—methods used by Ineos to lower its tax bill include shifting €632 million to a convoluted corporate structure in the island tax haven of Malta, a move that could have saved the company around €200 million had the EU not intervened to close that particular loophole first.
Ineos declined to answer our questions about the details of its tax arrangements. "The UK Group does not engage in artificial transactions the sole purpose of which is to reduce UK tax," Ineos says in legal information on its website.
An Ineos spokesman said: “Ineos is a large business with entities in many geographies and jurisdictions. It is legally compliant everywhere it trades and it pays all taxes due,” Responding to questions about Ratcliffe’s move to Monaco, Ineos said: “Ineos does not comment on the personal affairs of its owners.”
It wasn’t just Ineos’ corporate tax bill that stayed low after the company’s move back to London.
Ratcliffe, whose personal fortune is now estimated to top £12 billion, had himself been a tax exile during Ineos’s years in Rolle. When in 2016 he forfeited that status and returned to the UK It should have been a windfall for HMRC.
But within months of Ineos’s return from Switzerland, Ratcliffe appears to have set in train plans to move to Monaco, where he could potentially enjoy money from Ineos free of British tax. Sir Philip Green took advantage of apparently similar circumstances in 2005 when he avoided tax on £1.2 billion in BHS dividends by paying them to his wife, a resident of the principality.
News of Ratcliffe’s move to Monaco first surfaced in late 2018. But we have learned that plans were put in place before then—perhaps even before he had been awarded his knighthood.
In the spring of 2017, only months after Ineos’s Knightsbridge fanfare, Ratcliffe and Andy Currie, Sir Jim’s fellow Ineos shareholder, anchored off Cap Ferrat on the French Riviera for the Grand Prix that year. Currie told an acquaintance they were also scouting for properties.
Early the following year, an entity called Ineos Monaco Limited was incorporated, with an official filing describing its role as a provider of operational strategy and management for the entire group. It suggested that Ineos was pivoting its corporate structure to funnel management fees up to Ratcliffe and his fellow shareholders in Monaco.
By May 2019, Ratcliffe was still denying the move. “I don't live in Monaco”, he told the Sunday Express.
But in a March 2019 filing to the US Securities and Exchange Commission, Ratcliffe gave his “principal business address” as Ineos Monaco’s office in a residential apartment block called Le Splendido. He listed his home address as an even more exclusive property overlooking the Port Hercule, where his 79-metre yacht Hampshire II has been moored frequently since 2018.
Superyacht moorings in the principality are almost unobtainable for non-residents.
Reece, 63, his finance chief, has the apartment below in the same block. Currie, 65, his operations specialist, is listed as having a property a short stroll uphill from the port.
“There are two places where you can be guaranteed to be telling the truth: one is in court, the other is in an SEC filing,” a source close to Ineos’s plans told us.
Around the same time, Ineos subsidiaries embarked on a series of odd-looking transactions. They began paying each other large extraordinary dividends, passing billions of pounds up the corporate tree towards their ultimate holding company in the Isle of Man owned by Ineos’s three shareholders—Ratcliffe, Currie and Reece.
The one-off dividend payments would potentially allow them to move billions of pounds offshore and save around £850 million in UK tax, our analysis shows. The plan could see “decades of wealth generation leave the UK overnight”, according to a source with knowledge of Ratcliffe’s plans.
Without seeing Ratcliffe's tax returns, we can't be sure of his precise tax status. But the source familiar with Ratcliffe’s plans said the Ineos billionaires intended to relocate to Monaco for as long as it took to shift dividends to the principality and cash in (though UK tax law means that might mean having to stay five years to avoid being taxed on their return).
Even among Ineos’s advisers, the plans created tension.
In 2019 Ineos asked its auditor, PwC, to state publicly that Ratcliffe was not resident in Monaco, we understand. Having seen the SEC filing, however, the accountancy firm refused, triggering a row that led to its resignation. Ineos and PwC declined to comment on the separation.
Ratcliffe, a wiry 6-foot-4-inch ultra-marathon runner with swept-back silver hair, has built Ineos in his own image.
“They gave everyone a fitness tracker and gave everyone a diet plan,” one former worker at a company taken over by Ineos in 2015 told us. “The people who were going to succeed with Jim had to be a bit like him”.
Being like Jim meant emulating “no-nonsense northern businessmen” who “don’t suffer fools gladly”, according to The Alchemists, Ratcliffe’s life story published shortly before his knighthood. At Ineos, “spades are called bloody shovels”, he says.
Ineos’s roots go back to 1992 when Ratcliffe, then a 40-year-old employee with a firm of venture capitalists, spotted an opportunity to snap up a chemicals business being sold off by BP. Rather than urging his City bosses to acquire it, he and a group of friends convinced the banks to lend them enough to buy it themselves, listing their new company, Inspec, on the stock exchange.
Ratcliffe, with two young children and a mortgage, put his house on the line. But the business flourished and in 1998 he repeated the trick to create Ineos. In 2005, Ineos swallowed Innovene, another BP chemicals arm, in a $9 billion deal that saw it triple in size overnight.
It was a testament to Ratcliffe’s negotiating skills and the first in a series of mega-transactions that would by 2018 make him Britain’s richest man.
“You wouldn’t have an easy ride. He’s certainly no pushover,” Peter Marshall, an investment banker who came up against Ratcliffe in crunch refinancing talks during the financial crisis, told us. “But he does it in a non-aggressive way. I’ve been in a lot of negotiations on deals where people can be aggressive, they can be loud. You don’t get any of that with Jim.”
After a degree in chemical engineering, chosen over mechanical engineering because “I didn’t want to get my hands dirty”, Ratcliffe was rejected for a graduate job at a BP chemicals plant because of his eczema. It was a slight he would carry with him: “I did finally get to work for BP Chemicals,” he later said. “But only after I bought it”.
Instead he quickly retrained as an accountant and it was with numbers rather than chemicals that he would forge his career. An accountancy position in pharmaceuticals led to a master’s degree at the London Business School and then a job in London with a US venture capitalists Advent International, and the investment opening that was the first step to Ineos.
Today, Ineos’s strategy still owes more to Mayfair than Manchester. It entails buying unloved companies by taking on heavy bank debt, then boosting their efficiency with tough cost controls. Company cars and credit cards are cancelled, IT bills slashed, expenses monitored. Middle managers are laid off in droves.
“It’s all about money, and the numbers. Money and generating equity return,” Ratcliffe writes.
“They run a very, very tight ship,” the former worker told us, recalling the culture shock when Ineos took over. “We’re talking about virtually counting the paper clips.” For that worker, it quickly became clear that jobs, as well as paper clips, were at stake.
“Jim came in and chatted to everybody and said, ‘We probably won’t be keeping everybody.’ He was quite upfront about it. ‘We’re gonna give this business three years, see if we like it. If we don’t like it, we’ll sell it. If we do, we’ll stay in it.’”
The laser focus on costs was in marked contrast to Ratcliffe’s personal style. He would fly entire executive teams to a Botswana safari lodge for a meeting, or take favoured bosses heli-skiing in Sweden on a whim, the former worker said.
Despite his meteoric rise, Ratcliffe long preferred to keep his profile low, earning the nickname Dr No after Ian Fleming’s reclusive Bond villain. “Jim does not like the limelight,” said one associate interviewed for a 2014 profile. “He’s even got the light in his fridge turned off.”
But the shy tycoon would find himself on the front pages when he became a hate figure for trade unions in one of the UK’s most bitter industrial disputes, as striking Grangemouth workers distributed ‘wanted’ flyers featuring his face and paraded outside his bankers’ City headquarters with a giant inflatable rat.
“The episode was a humiliating blow,” he later recalled. And perhaps in response, the once-retiring businessman has in recent years paid closer attention to his image.
In 2018, when Ratcliffe topped the Sunday Times Rich list, officially becoming the UK’s wealthiest person, it was in controversial circumstances.
He opened his private company’s books on a one-off basis to give just a brief snapshot of Ineos’s accounts, leaving some at the newspaper uneasy at what seemed to be a calculated public relations push to coincide with the release of his book just a month before he was knighted.
Since then, Ineos has reverted to type, says Robert Watts, who compiles the Rich List. “The unusual level of disclosure we saw in 2018 has unfortunately not been repeated,” said.
Ineos declined to comment about the details of Ratcliffe’s tax affairs. As scrutiny of his knighthood increases, he may now be discovering a nostalgia for the shadows.