Businessman Baljit Singh Bhandal has lost a claim against the tax man after the world’s most expensive house was seized in a money laundering and VAT fraud investigation.
Updown Court, a huge 100-room mini-palace in Surrey was once valued at £80 million, but was seized during an HM Revenue & Customs (HMRC) tax evasion investigation in 2001.
The compliance inquiry concerned non-payment of VAT and duty on alcohol sold from a bonded warehouse.
Bhandal was accused of money laundering and fraud, but the case collapsed because he fled the country for the USA on a false passport and his warehouse manager was revealed as a police informant.
Bhandal has since returned to the UK and started a court claim for compensation against HMRC after the house was sold by a receiver.
Fraud ruling
The businessman claimed he had bought the property to develop as an investment and lost £66 million as a result of the failed court proceedings.
Lawyers for HMRC claimed Bhandal was not entitled to the cash because he had bought the house as a result of profiting from criminal activity.
In the High Court, Mr Justice Collins told Bhandal he had reviewed the evidence of the original court case and considered he had obtained the cash to buy Updown Court by fraud and that his decision was beyond reasonable doubt.
Bhandal’s legal team told the judge that he had earned commission from honest business transactions. The figure was around £23 million, which represented earnings of between 5% and 8% on sales of hundreds of millions of pounds made by the warehouse.
However, the judge dismissed their claims as ‘infeasible’ on the evidence he had seen.
Unsatisfactory witness
“Such large profits are entirely consistent with involvement in diversion fraud. There was also no evidence of Bhandal having registered for VAT or paid tax, as he claimed,” said the judge.
He went on to explain that he viewed Bhandal as an unsatisfactory witness who could not be believed.
As a result, he decided the house was acquired on the proceeds of crime.
Updown Court sits in a 58 acre estate and besides palatial reception rooms, has 24 bedrooms, a 50 seat private cinema and six swimming pools.
In 2010, the property was a film set for the Matt Damon film Green Zone, standing in as a palace in Baghdad.
