Luke Holland ■ Making a killing from care
Foreign investors who own UK care homes are charging exorbitant fees while shifting millions of pounds into tax havens. That is the finding of a new report by the Center for International Corporate Tax Accountability and Research (CICTAR) which shows the Canadian government pension fund PSP Investments, which controls more than 60 UK care homes, is shifting profits offshore and declaring losses in the UK while demanding £200 a day in fees from thousands of residents.
Darkness at Sunrise: UK Care Homes Shifting Profits Offshore focuses on two companies controlled by the PSP; Gracewell Healthcare and Signature Senior Lifestyle, both of which are run by management company Sunrise Senior Living. The report presents a concrete example of what is likely to be a much broader pattern of predatory corporate behavior in a sector that is dominated by private equity firms with a track record of aggressive tax planning.
The study comes at a timely and troubling moment, as the Coronavirus pandemic has thrown decades of underfunding of the sector into stark relief. Financialisation of the UK care industry has enabled private equity firms to extract many millions of pounds from the economy while prejudicing the wellbeing of residents and undermining the labour rights of workers.
For example, US real estate company Welltower – which is a minority partner in the homes examined – made an estimated £64 million from them in 2019. What’s more, the firm owns some 120 UK care homes in total. As explained by the report’s author Jason Ward: “Profits reported to shareholders reveal what is usually kept hidden – complex corporate structures using tax havens artificially create losses to avoid UK tax.”
In Canada, meanwhile, PSP Investments owns the second largest care home operator, Revera, which is now facing scrutiny over Covid-19 deaths and growing calls for public ownership.
The pernicious impacts of financialisation, and in particular of private equity firms, in the UK care sector has also been examined in episode 96 of the Taxcast, and Nick Shaxon’s book The Finance Curse.
Tax Justice Luxembourg responds to #OpenLux
Tax Justice Network partnership with Federal Inland Revenue Service of Nigeria explores new audit tool
New study and tool for assessing risks of illicit financial flows in Latin America
Data havens: how to tackle the new digital race to the bottom
Big Tobacco, big tax abuse
Taxing Wall Street: the Tax Justice Network December 2020 podcast
Tobacconomics: Measuring the value of cigarette taxes
The Corporate Tax Haven Index: a Joint Research Centre audit
$427bn lost to tax havens every year: landmark study reveals countries’ losses and worst offenders
The State of Tax Justice 2020
20 November 2020