The Financial Times has exposed the arrangement after an investigation. The paper has run the story on its front page this morning, as well as running a full-page feature headlined "The TV company tax trail that leads to a shabby office in an island haven".
It says that he has cut his tax bill by running his broadcasting business --mostly based around paid-for porn channels -- in Jersey, above an Indian restaurant.
Desmond's adult TV business includes TVX Europe, Portland Enterprises and RHF Productions, which run channels including the Fantasy Channel, Red Hot All Girl and Red Hot Euro 40+ Wives. The porn business is one of the most profitable in his empire, unlike his adult magazines, which make little cash and he has been trying to offload.
While the newspaper reports that colleagues of Desmond say the arrangement is all above board, tax experts are questioning the legitimacy of claiming that the company is run out of Jersey when Desmond is based in London. The FT says he has cut his corporate tax bill by more than £2m through the operation.
Desmond is currently looking at the possibility of buying the Telegraph Group, owner of the Daily Telegraph, following the news that parent Hollinger International is considering a sale of the assets. He would face stiff competition from other newspaper proprietors, including arch-rival Daily Mail & General Trust, as well as scrutiny from the Competition Commission.
As well as his porn channels, the drum-playing Desmond owns magazines including OK!, Asian Babes and Big Ones International.
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