DENTED: The image of the Infosys first family comprising of founders Narayan Murty and his wife Sudha and their two children, has been marred by an ugly controversy over non-payment of taxes in the UK
It is not widely known that Akshata, daughter of Sudha and Narayan Murty of Infosys, is married to Rishi Sunak who is the chancellor of the exchequer (Finance Minister) of the UK. Akshata, who gets a dividend of more then a billion pounds on her Infosys shares, has been accused of avoiding taxes in the UK.
By Anna Mikhailova
The taxman has been urged to investigate whether the Chancellor’s wife broke the terms of her non-dom status by giving her UK company £4.3 million in interest-free loans. Tax experts said the personal loans to Akshata Murty’s venture capital firm, Catamaran Ventures UK, fall into a ‘grey area’ of the rules and last night called for HM Revenue & Customs to investigate.
The loans could ‘circumvent’ the basis of her non-dom status if they were found to give her ‘monetary or non-monetary returns’ – whether through profits or by exerting influence – it was claimed. Individuals can give loans to British companies tax-free even if the money comes from earnings abroad that have not been required to pay UK taxes.
Accountants said they can be a way for non-doms to bring money into Britain without having to pay tax on it. Last night Ms Murty declined to answer questions about the loans, the bulk of which were given in 2019 and 2020.
A spokesman for Rishi Sunak’s wife said she had ‘followed the letter of the law and complied with all rules in her arrangements’. On Friday, Ms Murty agreed to pay UK tax on her global fortune in a bid to save her husband’s political career. In a dramatic U-turn, the Indian heiress she would no longer apply to pay tax on a ‘remittance basis’, which allows non-doms to avoid UK tax on foreign earnings in return for a £30,000 annual fee. She said: ‘I understand and appreciate the British sense of fairness and I do not wish my tax status to be a distraction for my husband or to affect my family’.
She is still set to save money on inheritance tax by retaining India as her formal ‘place of domicile’.
Being a non-dom on a remittance basis means that foreign earnings, investment income and capital gains are not liable for UK taxes as long as those funds are not spent in the UK. This means if she kept the money in India for tax purposes, Ms Murty would be exempt from paying anything in Britain. However, using the money to give a loan to her own company was a ‘grey area’ of the rules that raised questions, a tax expert said. The loan could provide her with ‘monetary or non-monetary returns’, or show a commitment to the UK.
Ms Murty is the sole director and shareholder of Catamaran Ventures UK, which invests in start-up companies.
She co-founded the firm with Mr Sunak in 2013 but he resigned his directorship and gave up his stake when he became an MP in 2015. The company’s unaudited accounts describe her loans as ‘long term’ and interest-free but do not give any details about the terms or repayment schedule.
Since 2018, Ms Murty’s loans to the firm increased from £732,499 to £4.3 million in the latest accounts to December 2020. Ms Murty’s father, N R Narayana Murthy, is one of the world’s richest men, with a net worth of more than £3 billion after co-founding tech giant Infosys in 1981.
Much of Ms Murty’s income is likely to derive from her 0.91 per cent Infosys stake which would have paid her a dividend of about £11.6 million last year. Without her non-dom status, she would have had to pay £4.4 million tax on this in the UK.
Asked to clarify what happens to a non-dom’s remittance basis arrangement if they give a loan to a UK company, a spokesman for HMRC declined to comment. ‘They are archaic and belong to a bygone era,’ he added. ‘Non-dom status must be abolished.’
The Mail on Sunday can also reveal that Ms Murty’s fashion business, while inspired by Indian culture, had its design team and factories based in New York. In comments made when launching the since-collapsed Akshata Designs, Ms Murty revealed she had a US focus from the start, described it as an ‘international company’ and planned to have her label sold ‘in stores all over America’ as well as one shop in New Delhi.
The brand’s website at the time of its launch said: ‘Akshata is based on a collaborative process that begins in India […] These materials are brought to New York, where a design team creates patterns and samples that highlight the beauty and uniqueness of the raw materials. The clothing and accessories are then produced at several factories in New York and New Delhi.’
In interviews uncovered by this newspaper, Ms Murty also revealed her husband encouraged her to start Akshata Designs, and that his ‘vintage ties’ were one of the things that inspired her designs.
Her fashion website biography in 2011 described her as a ‘Londoner’ who was ‘excited about exploring the rich history and culture that London has to offer for her young daughters.’
She said the ‘concept’ of the brand was to ‘use indigenous crafts as the basis for a fashion label, beginning with India and ultimately expanding to other traditions around the globe.’ Ms Murty developed the business plan for Akshata Designs while at California’s Stanford University, where she met Mr Sunak. She unveiled her first and only collection in 2011. Last night The Mail on Sunday put ten key questions to Mr Sunak and Ms Murty. They were mostly not answered. A spokesman for the Chancellor said: ‘As required under United States law and as advised, he continued to use his green card for travel purposes.
Upon his first trip to the US in a government capacity as Chancellor, he discussed the appropriate course of action with the US authorities.
‘At that point it was considered best to return his green card, which he did immediately.
‘All laws and rules have been followed and full taxes have been paid where required in the duration he held his green card.’
Courtesy : Daily Mail