It has exclusive shops, fabulously luxurious homes and a glamorous cultural scene, but this is not what has made London the destination of choice for the world's multi-billionaires. For the ultra-rich few, this country is now a virtual tax haven, which is why more and more princes, tycoons and oligarchs are making it their home. James Meek sets out to uncover the secrets of Britain's seriously wealthy
Monday April 17, 2006 The Guardian
It would be only a year before anything resembling socialism in power vanished from Westminster. Yet to the guests gathered for the farewell garden party at 12 Kensington Palace Gardens, London, one day in 1978, such an outcome must have seemed unlikely. The aristocratic residents, the Cholmondeley family, hereditary Lord Great Chamberlains, were selling up and moving out after six decades. The future seemed to belong to the trade unions, to the Soviets - who had begun acquiring diplomatic premises in the street in the 1930s - to the Arabs and Iranians, squelching with money after the 1973 surge in oil prices, and to a horde of spotty, uppity, lefty graduates contemplating the staid notion of a mortgage in the dingy enclaves of Notting Hill, Camden and Islington.
A generation later, the fact that the aristocrats had nothing to worry about is the least surprising aspect of what we know. What is remarkable is that the very manifestations of upper-class anxieties turned out to be the means which would not only secure the private possession of wealth in Britain but inflate it, in the early years of the 21st century, to staggering new levels.
The trade unions, arguably, paved the way for Margaret Thatcher's wealth-friendly government in 1979. The oil money that began pouring out of Britain into Iran and the Gulf in 1973 began almost immediately to tip straight back: the buyers of 12 Kensington Palace Gardens from the Lord Great Chamberlain were the Saudi royal family, who still own it. The scary Soviets turned into free-spending Russians who, like the Arabs before them, are bringing the billions they earned from the west for their raw materials, back to the west. Those graduates turned into Blairites and Cameroons, stars of the bar, the arts and the media, with school fees and million-pound houses. As for the Marquess of Cholmondeley, he's still up there: number 666 on the Sunday Times Rich List last year. In other words, he's only borderline super-rich.
London has attracted the extremely rich from all over the world as a place to live and tend money at least since the 19th century. Today, the impression is growing - subjective, anecdotal, hard to pin down yet confirmed by those who deal regularly with the very wealthy - that gigantic fresh waves of private wealth are breaking on Threadneedle Street and Kensington. The wealth may ebb and flow, but it always leaves something behind for those many, many Londoners whose business it is to make money out of money.
"It's very difficult, objectively, to say how much bigger the wealth management market in London is, because of privacy. But it certainly is bigger," says David Harvey of Step, the Society of Trust and Estate Practitioners, a London-based global association of tax lawyers and financial advisers whose members, scattered across the business centres and tax havens of the world, are unashamedly dedicated to helping wealthy families keep their riches from the taxman.
"New York is obviously very stable, but most of the other big centres would have questions over them," says Harvey. "Tokyo's gone through a period of depression. Singapore is relatively new. Shanghai, you would question that, and Germany was until recently seen as a tax-heavy jurisdiction. If you're looking to avoid tax legally, you're as well going to London as anywhere else."
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full: http://money.guardian.co.uk/tax/story/0,,1755287,00.html
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Colin Brace
Amsterdam