Aristocrat linked to Pippa Middleton loses tax fight over £43million Hampstead house deal

17:30 03 July 2014

Alexander Spencer-Churchill arrives for a dinner to celebrate the work of The Royal Marsden hosted by the Duke of Cambridge at Windsor Castle.

Alexander Spencer-Churchill arrives for a dinner to celebrate the work of The Royal Marsden hosted by the Duke of Cambridge at Windsor Castle.

PA Wire/Press Association Images

An aristocrat who was romantically linked with Pippa Middleton has lost a battle with the taxman after helping to seal an astonishing £43million property deal with a Russian oligarch.

Alexander Spencer-Churchill – a distant relative of Winston Churchill – has been ordered to hand over a slice of his cash windfall for brokering the sale of a palatial home in Hampstead.

The remarkable case has exposed a world in which astronomic deals can be struck at lightning speed – if you move in certain circles and eat at the right restaurants.

Mr Spencer-Churchill had known for a while that his shooting chum – multi-millionaire property tycoon Anthony Lyons – was keen to sell the seven-bedroom, two swimming pool house in Lyndhurst Road, the First-Tier Tax Tribunal heard.

The pair were having dinner at exclusive Mayfair restaurant Scott’s when they spotted super-rich Russian Andre Goncharenko.

It was well known in high social circles that he was looking for a London home.

They made contact and, that same evening, Mr Goncharenko drove past the house and offered £43million for it on the spot.

Mr Spencer-Churchill described the offer as “astonishing” – far in excess of the property’s market value – but the Russian had been gazumped in the past and contracts were exchanged within 48 hours, said Judge Howard Nowlan.

“Considerable haggling” followed between estate agents and others as to who should earn what share of the £500,000 commission on the 2010 deal and Mr Spencer-Churchill eventually received just over £108,000 of the pot.

Mr Spencer-Churchill, a nephew of the Duke of Marlborough and distantly related to Sir Winston Churchill, has ever since insisted that he did nothing more than help out a friend and that the money he received was purely gratuitous.

However, Revenue and Customs was equally adamant that he had expected a success fee and was liable to pay 20 per cent VAT on his earnings.

Now, after a legal struggle, HMRC has won payment after Judge Nowlan ruled that Mr Spencer-Churchill was acting “in the course of business”.

There had been no formal contract between the aristocrat and Mr Lyons and the deal had been a “one-off” but Judge Nowlan said the friends had reached a “handshake agreement” that Mr Spencer-Churchill would be paid for his efforts in pushing through the sale to Mr Goncharenko.

He added: “There had clearly been some deal between Mr Lyons and Mr Spencer-Churchill... and it was clearly implicit in that deal that Mr Spencer-Churchill would perform some introductory role in relation to the sale of Lyndhurst Road and, if his role did result in a sale, then he would be entitled to a substantial cash payment.

“Mr Spencer-Churchill’s whole role was deliberate, business-like and very much designed to generate a fee receipt and, with luck, a top-up payment as Lyndhurst Road had been sold at such a premium price.”

Describing the case as “rather unusual”, Judge Nowlan concluded: “Mr Spencer-Churchill’s activity was not some activity in the course of ‘social engagements’ or pleasure.

“We conclude that his role in this case was one where he and others expected from the start to earn fees for the provision of a service, a role that was entirely commercial.”

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