BHS

8 BHS
14. In his evidence to us, Sir Philip rejected the idea that the dividend payments had been
at the expense of subsequent investment. He said that £600 million was invested in BHS in
the years after the dividends were paid. 21 Regardless of this, it is clear that during Green’s
ownership, BHS’s tangible fixed assets diminished in value—from £430 million in 2000
to £183 million in 2014; 22 i.e. Sir Philip did not invest enough to maintain the value of the
company.
Figure 2: BHS Gross and Net Investment 2000–2014 23
80
BHS, Gross and net investment in fixed assets (£million)
60
40
20
0
-20
-40
-60
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
net investment after depreciation
gross investment
15. Another way in which Sir Philip was able to boost BHS’s profitability in the short-term,
while ultimately increasing payments to other Green family companies, was through the
sale of property. In 2001, BHS Group sold a number of BHS stores to Carmen Properties Ltd
(Carmen) as part of a sale-and-leaseback arrangement. Ten stores were sold to Carmen—a
Jersey-registered company owned ultimately by Lady Green 24 —for £106 million. BHS Ltd
then paid rent to Carmen for the use of these properties. They were ultimately sold back
to BHS as part of the sale to RAL for only £70m (with the proceeds of the sale going to
Lady Green as the sole beneficial owner) but, over the lifetime of the sale-and-leaseback
arrangement, rent of £153million was paid by BHS to Carmen. 25 The arrangement would
have acted to reduce profits earned in the UK on which tax was payable. It would also
have had tax benefits for the Green family, given that Carmen Properties was registered
in Jersey. 26
16. Sir Philip Green’s family accrued incredible wealth during the early, profitable
years of BHS ownership. Over the duration of their tenure, significantly more money
21 Q 1782
22 Analysis of BHS Accounts Tangible Fixed Assets Notes 2000–2014
23 BHS Ltd Company Accounts 2000–2014
24 Letter from Lady Green, 4 July 2016
25 BHS Group Accounts Related Party Note 2002–2008; BHS Ltd Accounts Related Party Note 2009–2014
26 BHS would have recorded the rent it paid as an expense that could have been offset against tax. While Carmen
Properties would have paid tax on rental income as a non-resident landlord, Lady Green would not have paid tax
on any profits taken from Carmen, given that it is a Jersey-based company.