A LONG-SERVING councillor has called on the local authority to conduct an inquiry into the acquisition of the Lowood Estate following the revelation that the sale went through a tax haven.

Hawick and Hermitage councillor David Paterson has criticised the local authority as it emerged that the £9.6m of taxpayers’ money used to pay for the purchase ended up in two Cayman Islands accounts, where businesses do not pay transaction tax.

Landowner Alexander Hamilton, who sold the estate to the council, was paid via Lowood Estates Ltd and Genesis Trust & Corporate Services Ltd,  both of which are based in the British overseas territory.

On the other hand, Borders taxpayers face paying a £422,250 land and buildings transaction tax, as well as a £30,000 VAT bill, which along with other fees and charges brings the cost of the purchase up to nearly £11m.

Scottish Borders Council also confirmed that the cost of temporary borrowing for the purchase sits at £780,000, assuming the loan is paid off over a ten year period.

Appearing at a meeting of Scottish Borders Council in Kelso, on Thursday 16 May, councillor Paterson asked: “Will the council be scrapping the deal regarding the Lowood Estate, which was agreed with a company based in the Cayman Islands?

“I am convinced that the vote, which was extremely close, would have been much different.”

Mid Berwickshire councillor Mark Rowley, who serves as the administration’s member for business and economic development, fielded the question: “The council negotiated the acquisition of the Lowood Estate with agents representing the Hamilton family.

“As a public authority, Scottish Borders Council was required to provide the information requested by [former councillor] Mr Farquhar.  

“The information has been publicised in a way that, in our view, and my own personal view, is entirely inappropriate.

“The council believes that private individuals, in this case the Hamilton family, should not be subject to this level of scrutiny regarding how they conduct their entirely personal financial and legitimate tax affairs, which is a matter for them.

“The council remains of the view that the robust business case on which the decision to acquire Lowood for economic development purposes was based still stands.  

“The purchase of the site, which is now in public ownership, will provide good long term value for the taxpayer, creating jobs, new homes and delivering economic benefits.

“The transaction is now complete, and cannot be reversed.”

The Lowood Estate, which sits alongside the River Tweed in Tweedbank, is earmarked for a 300-home development within walking distance of Tweedbank train station.

Council officers believe that the site, as part of a wider Tweedbank development plan, will create 180 permanent jobs, and a similar number during the construction phase.

The site has also been earmarked for a 300-home housing estate.

The council estimates that developing the estate would cost an extra £90m on top of the price of the land but would potentially generate £150m of gross value added for the region’s economy.

In a follow up to his question, councillor Paterson called for an inquiry into the purchase: “How many councillors knew about these tax circumstances before the vote? I certainly didn’t.

“Councillors should instruct the chief executive to carry out an immediate inquiry into this whole episode, and to find out who knew what, and when?

“If councillors knew about this tax situation, I think the vote would have been much different.”

To which councillor Rowley replied: “I think that’s entirely conjecture. The matter of the fact is that this council now own that significant asset.

“It is in our ownership and our control and it is of strategic value, which is a very good thing.

“I think the mischief making around this is really unfortunate, not least as some of the comment that has gone to the public domain has been provided by the adjacent owner, which is and Isle of Man-registered company.”

The deal agreed in December was for the remaining 110 acres at Lowood still in private hands to add to 190 acres bought from then owner Constance Hamilton using compulsory powers by the former Roxburgh County Council in the early 1970s to create Tweedbank.

The land now belongs to Lowood Tweedbank, a company set up and owned by the council.

However, concerns have previously been raised about the value of the land and the price Scottish Borders Council paid for it.

The Scottish Government’s district valuation service, which is a body offering impartial advice on how public money is spent, reportedly told the council the property was not worth as much as the council paid.

The report from the district valuer has remained confidential, and Scottish Borders Council is still refusing to reveal how much the service said the land was worth.