It means that the company allegedly "cheats the UK treasury out of about £500,000 a year," reports The Sunday Telegraph (as it reduced the company's UK profits by £2 million for the year ending December 31, 2013) - a process that American coffee chain Starbucks was criticised for engaging in last year.
"What's odd about Ms Westwood's arrangements is that the rights were held in the UK, but were then transferred out of the UK. The transfer means that the deed is no longer subject to UK tax," Jolyon Maugham QC, a leading tax barrister, told The Sunday Telegraph. "And that's tax avoidance by any sensible definition."
The revelation has also raised questions about the relationship between Westwood and the Green Party, with the party being accused of hypocrisy for accepting a donation of £300,000 from Westwood, given its calls for a staunch Tax Dodgers Bill that would "outlaw such payments to offshore companies in jurisdictions including Luxembourg", and Westwood being criticised for apparently supporting a political party whose agendas she allegedly doesn't adhere to.
"Vivienne Westwood Ltd and all the companies belonging to the group pay all the required taxes in all the countries in which they trade or operate, in accordance to audited financial statements," read a statement from Vivienne Westwood Ltd. "All British entities based in the UK paid the required taxes. Within the UK, Vivienne Westwood Limited paid £780,228 of taxes in 2013 and £1,250,858 of taxes in 2012. Profits, as per the decision of the board of directors, were invested in the structure and in the international development of the company. The donation of £300,000 to the Green Party was made by Dame Vivienne Westwood personally and not by the Vivienne Westwood Group."