One of the biggest ticket touts operating in the UK set up an offshore business in the Isle of Man to avoid paying tax, the Paradise Papers show.
Leaked documents reveal that Canadian Julien Lavallee set up in the tax haven when he expanded into the UK.
Lavallee obtained hundreds of tickets for premium gigs by acts such as Adele, Ed Sheeran, Drake and Metallica.
A statement from his lawyer said Lavallee’s Canadian company Ticketaria operated within the law.
He said it carried out “all its activities in accordance with the laws and rules of the jurisdictions in which it operates and sells”.
Lavallee makes his money by harvesting tickets for big concerts and events online before selling them on for many times the original price.
A series of sell-out concerts by Adele were among the high-profile gigs targeted by Lavallee last year.
Documents seen by the BBC, along with The Guardian and Canadian media partners, reveal that within minutes of the tickets going on sale, Lavallee and his entourage snatched up 310 seats, worth £30,000, charged to 15 different names, in 12 different locations.
The tickets were then sold on for about £40,000 on resale sites such as Stubhub.
Some of Lavallee’s purchases happened within seconds of each other, leading to suspicions he may be using so-called automated “bot” technology, which are illegal in the US and in the process of being outlawed in the UK.
Reg Walker, director of the security firm Iridium Consultancy, said his company had warned StubHub about Lavallee’s methods.
He said: “The speed of the transactions – this isn’t somebody sitting there typing details over and over again.
“Even if you had a dozen people sitting there typing their details over again, you would not get these results. It’s simply not feasible.”
StubHub is a website owned by the online auction house eBay that allows genuine fans and professional ticket touts to resell concert tickets, usually at marked-up prices.
Despite being warned of concerns about Lavallee, it continued to treat him as one of its “top sellers” – a select group with sales of over $250,000 who are offered benefits such as discounts on fees.
Meanwhile, it emerged on Friday that the offices of StubHub and Viagogo were raided as part of a probe into suspected breaches of consumer law in the “secondary ticketing” industry in the UK.
Officials from the Competition and Markets Authority seized information about the companies’ relationship with prominent ticket touts.
A spokesperson said: “StubHub holds all sellers to a very high standard and requires they follow all relevant laws.”
“We at StubHub will continue to support legislation that prohibits the use of bots to procure tickets as well as other consumer-friendly legislative proposals that support fans.”
Viagogo did not return requests for comment.
Documents from the Paradise Papers show that Appleby, the firm at the centre of the massive leak, created a “brass plate” or shell company in the Isle of Man designed to expand Lavallee’s lucrative business into the UK, while avoiding tax.
A “new business file” held by Appleby said: “The client is looking to expand their operations into the European market and has identified the Isle of Man as the ideal platform to launch their services.”
Emails show Appleby advised Lavallee that having an Isle of Man presence could “negate the issue of UK tax,” despite his earnings coming from concerts here.
A business plan he submitted to Appleby also shows that Lavallee planned to employ someone in the UK but changed his mind when he was told this would incur British taxes.
An Appleby manager warned Lavallee that he could be “deemed to have a permanent place of business in the UK and … deemed tax resident in the UK and incur liabilities accordingly”.
Lavallee’s lawyer subsequently consulted the accountancy firm KPMG and changed the plans, according to Appleby files that said someone would instead be “engaged as a consultant on an arm’s length basis so as to [not] give rise to a place of business in the UK”.
Stub Out the Touts
The documents make clear that Lavallee also believed he could acquire tickets from concert promoters and venues directly, bypassing avenues open to fans.
In Scotland, The Daily Record has been running a campaign for a year called Stub Out the Touts.
The newspaper’s Mark McGivern told the BBC they had discovered one example where “super scalper” Lavallee had 300 tickets for sale on StubHub for a Take That concert.
Mr McGivern said: “From the outset Julien Lavallee is breaking the terms and conditions. He is getting 300 tickets for one gig when the limit is four.
“The primary and secondary ticket agencies seem to tolerate that.”
“The secondary ticket market sells millions of tickets every year and is riddled with people who just want to take those tickets away from regular fans and put the price up.
“Ordinary fans just get priced out.”
Soon after his ticketing operation hit the headlines in the Daily Record, Appleby dropped Lavallee as a client.
He set up with another registered agent in the Isle of Man called Middleton Katz.
BBC Scotland visited the offices of the company and was told by people at the address they had never heard of them.
The day after the visit from the BBC, Middleton Katz applied to have the company dissolved.