SCOTTISH Borders Council has confirmed it paid for the controversial Lowood Estate purchase via offshore businesses based in the Cayman Islands.

Through a freedom of information request, the local authority confirmed it paid the £9.6million cost of the land to Lowood Estates Ltd and Genesis Trust & Corporate Services Ltd,  both based in the British overseas territory, where businesses pay no tax on transactions.

Borders taxpayers on the other hand, who are footing the bill for the purchase of the Lowood Estate, 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.

The freedom of information request was made by former Hawick councillor Andrew Farquhar, who said: “To be honest I’m puzzled by this.

"I’m a taxpayer, my income is taxed then I pay council tax to Scottish Borders Council for their services.

“So I’m puzzled as to why we’re dealing with offshore businesses, which avoid tax, when we have to pay tax ourselves.

“I think there’s a lot of controversy about this: is the council getting best value? There’s a number of recommendations saying that this is not best value, including the opinion of the district valuer, who valued the land at below the price that was paid for it.  

“Of course, the council will not say what that valuation was.

“There are far too many questions here and we have an administration that is not asking enough questions on our behalf.”

SBC this week released a statement which read: “As a public authority Scottish Borders Council was required to provide the information requested by Mr Farquhar.  

“Mr Farquhar and Mr Chisholm [who published the story on his blog] has now chosen to publicise this information in a way that, in our view, is entirely inappropriate. 

“The council believes private individuals should not be subject to this level of scrutiny regarding how they conduct their personal financial and legitimate tax affairs.

“We remain 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 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.

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.