Ingenious Jersey taxpayers do not pay tax and do not break the law – tax avoidance at its legal best

The Jersey Royal Court has overturned a £2.42 million tax bill against a company that sold shares in a Jersey property business – and in doing so, acknowledged that the island’s law may have a “loophole through which the ingenious taxpayer can pass”.

• B Limited v The Comptroller of Taxes 30-Jul-2025 = Taxation - reasons for allowing appeal and the set aside of the Assessment
• https://www.jerseylaw.je/judgments/unreported/Pages/%5b2025%5dJRC194.aspx

In his judgment, Commissioner Sir William Bailhache, who had been sitting with Jurats Le Cornu and Powell, said:

• “In my judgment, there is nothing absurd in the legislation as drafted, containing what some might think to be a loophole through which the ingenious taxpayer can pass to avoid an assessment.
• “There are many professional advisers who specialise in seeking such things.
• “Nonetheless, unless what is done falls foul of the anti-avoidance provisions in the Law, the consequences are as they are.”

• “It may be an inconvenient result for the Comptroller but it lies within his hands to persuade the Treasury Minister to propose an amendment to the legislation.”

B Limited is part of the B Group based in Jurisdiction B, which is involved in property development and

• On 3 July 2015, it acquired 100% of the shares in the Company for £7.2 million.  The Company at that time owned a site at Property D, St Helier. 
• During 2016-2017, it constructed a seven-storey commercial office premises on the site and effective from May 2017, the offices were leased to several businesses for periods of between fifteen and twenty-one years.
• It sold its shares in the Company on 1 November 2019 for £39.6 million. 
• It is said that because the Company’s accounting period goes to 30 June 2020, the Assessment comes in the 2020 year of assessment.

• The Comptroller of Taxes treated the £32m gain as a taxable part of the Income Tax Law, which covers profits from property development.
• The assessment relied on an article which says particular shareholdings giving an “exclusive right to occupy” property can be taxed like direct property disposals.
• While the Comptroller argued this allowed him to tax B Limited’s sale, the Royal Court disagreed.

The Royal Court

• It found that that owning all the shares in a company does not itself give a shareholder the legal right to occupy its property.
• Said the particular article the Comptroller had referred to was aimed at share transfer flats anyway, not general company ownership of real estate.

In his judgment, Commissioner Sir William Bailhache, who had been sitting with Jurats Le Cornu and Powell, said:

• “In my judgment, there is nothing absurd in the legislation as drafted, containing what some might think to be a loophole through which the ingenious taxpayer can pass to avoid an assessment.
• “There are many professional advisers who specialise in seeking such things.
• “Nonetheless, unless what is done falls foul of the anti-avoidance provisions in the Law, the consequences are as they are.”

The ruling stated that,

• Under current legislation, profits from selling shares in property-holding companies cannot be taxed as direct land disposals
• Unless the shares themselves confer occupancy rights.

Sir William continued in the judgment:

• “It may be an inconvenient result for the Comptroller
• But it lies within his hands to persuade the Treasury Minister to propose an amendment to the legislation.”

The appeal against the bill was allowed, and the £2.42m assessment set aside.

• https://www.bailiwickexpress.com/news/court-highlights-tax-loophole-as-2-4m-assessment-overturned/
• Judgement https://www.jerseylaw.je/judgments/unreported/Pages/[2025]JRC194.aspx

Looking at recent developments, I have noted that.

• The IFC1 building in Jersey, Channel Islands — a seven-storey commercial office development completed in March 2017 and leased to multiple tenants on 15 to 21-year terms.

This may or may not be the same building associated with the above case; however, the following publicly sourced information is shared for information purposes.

IFC1 Acquisition in Jersey

• In November 2018, KFO acquired IFC1, a seven-storey Grade A office building in St Helier, Jersey, for £43.7 million.
• The building was developed by the States of Jersey Development Company (JDC) and completed in March 2017.
• It comprises 69,405 sq. ft of environmentally sustainable office space and is multi-let to six blue-chip tenants on long leases (15–21 years)

• Name: IFC1 (International Finance Centre 1)
• Location: St Helier, Jersey
• Developer: States of Jersey Development Company (JDC)
• Completion: March 2017
• Size: ~69,405 sq ft of Grade A office space
• Sale: Acquired by Klesch Family Office (KFO) in November 2018 for £43.7 million
• Klesch described the investment as a vote of confidence in Jersey’s economy, especially in the context of post-Brexit growth

Klesch Group & Jersey

• Klesch Group Holdings Limited is registered in St Helier, Jersey:
• Address: PO Box 280, 1st Floor, 13 Broad Street, St Helier, JE4 9TN

The offices on the 1st Floor, 13 Broad Street, St Helier, JE4 9TN, Jersey, are associated with several entities linked to the Klesch Group, a global industrial commodities and investment firm. Here's a breakdown of the known occupants:

Known Entities at This Address

1. Klesch Group Holdings Limited
• Registered office: PO Box 280, 1st Floor, 13 Broad Street
• Industry: Business Support Services
• Key Principal: Philip James Kellett
• Company Profile
2. Klesch Property Limited
• Legal Entity Identifier (LEI): 2138004ITO2VFFC19834
• Registered at the same address
• Active status under Jersey jurisdiction
• LEI Registration Details
3. Klesch Family Office PCC
• LEI: 213800OG1BFC3LAFDT41
• Also registered at PO Box 280, 1st Floor, 13 Broad Street
• Active status, incorporated in 2008
• LEI Info

1. References
1.  www.dnb.com
2.  opencorpdata.com
3.  www.lei-lookup.com
4.  d2re.co.uk

About KFO

• The Klesch Family Office is part of the broader Klesch Group, which focuses on industrial commodities, energy, and financial investments.
• KFO appears to act as a private investment vehicle for the Klesch family, targeting high-value real estate and strategic assets.
• The IFC1 acquisition was described as a vote of confidence in Jersey’s economy and the post-Brexit UK market, with Gary Klesch expressing optimism about Britain’s future outside the EU.

Broader Investment Philosophy

• Gary Klesch has a history of acquiring undervalued or distressed assets, particularly in heavy industry and energy.
• His investment approach often involves turnaround strategies, long-term asset holding, and opportunistic acquisitions.

The Klesch Family Office (KFO) is a private investment entity associated with A: Gary Klesch, a well-known American-born financier and industrialist.

 Who Is Gary Klesch?

• Full Name: A. Gary Klesch
• Born: 1947, Cleveland, Ohio
• Nationality: Anglo-American
• Education: BA in Political Science, John Carroll University (1968)
• Career Highlights:
• Youngest-ever partner at McDonald & Company (age 24)
• Director of Capital Markets Policy under President Gerald Ford (1975)
• Played a key role in US financial deregulation and corporate bailouts (e.g., Lockheed, NYC)
• Founded Quadrex in 1983, focusing on Euromarkets and leveraged buyouts
• Established the Klesch Group in 1990, specialising in distressed asset investing  

 References

• en.wikipedia.org = https://en.wikipedia.org/wiki/A._Gary_Klesch
• everything. Explained. today https://everything.explained.today/Klesch_Group/
• www.dnb.com https://www.dnb.com/business-directory/company-profiles.klesch_group_holdings_limited.bb9eddcb28a47321da5fdc874652e4db.html
• www.bailiwickexpress.com
• www.commercialnewsmedia.com https://www.commercialnewsmedia.com/archives/83036
• www.ogier.com https://www.ogier.com/news-and-insights/deals/ogier-advises-on-437m-ifc-deal/