TERRY SMITH'S CAR COLLECTION IS MOVING TAX-FREE TO MAURITIUS

(Bloomberg) -- A rare McLaren F1 roadcar, an Aston Martin model that James Bond drove, and a vintage Fiat restored for a British television show.

Those are part of a huge private collection of more than 200 cars, many housed in the UK, that are now preparing to make a tax-free journey to Mauritius.

Behind the collection is Terry Smith, a darling of UK retail investors through his Fundsmith business and who has lived on the island in the Indian Ocean for years.

A recent law change in Mauritius means the multi-million-pound collection can be imported without paying duties.

It’s all linked to a company in Mauritius set up to exhibit cars and where Smith is a director, according to regulatory filings. It was awarded a special certificate, which is necessary to be exempt from duty, by the island’s Economic Development Board, a government agency that counts Smith as a member of the board.

The project means the fund manager will have his prized cars close to his home, rather than thousands of miles away, while Mauritius gets a museum that it hopes will prove a tourist attraction. Tax exemptions for museums are commonplace around the world, though Mauritius is better known for its beaches than cultural attractions.

In response to a series of questions from Bloomberg News last week, Smith issued a press release and confirmed that he planned to move the collection and build a museum, known as Milestones, which could cost as much as 6 billion Mauritian rupees ($129 million).

The cars are estimated to be worth well over £20 million, according to documents seen by Bloomberg News, and their relocation would further cut his ties with Britain and underline his growing presence in Mauritius.

He’s already moved a large part of his financial interests, and much of his wealth, including most of the stake he holds in Fundsmith, is now tied to a foundation in the Seychelles. The Bloomberg Billionaires Index calculates that Smith has built a personal fortune of over $1 billion.

Smith, 71, rose to fame for managing the £24 billion Fundsmith Equity Fund, the UK’s largest for retail investors, which has returned more than 400% since its inception in 2010.

Smith’s Relocation

But despite his UK success and devoted follower base there, Smith relocated to Mauritius about a decade ago and became a citizen of the island a few years later.

Now, he’s decided to bring his cars.

The announcement about the collection came after the Mauritian government amended a law in 2022 to exempt from customs duty any vehicle imported to be an exhibit in a motor museum, of which the island had none at that date.

To secure the exemption requires what’s known as a premium investor certificate from the EDB. It says these are aimed at helping pioneering industries and innovative technologies, but also “such targeted economic activities as may be recommended by the EDB.”

Milestones Limited, an entity registered in Mauritius in 2021 and of which Smith is a director, got such a certificate in early 2022, Sachin Mohabeer, deputy chief executive of the EDB, told Bloomberg in a telephone interview. Mohabeer said that although the museum falls outside the normal business areas for a certificate, it was a first of its kind and the board decided it would diversify the country's tourism offering.

The tax law was changed several months later, in August of that year. The Ministry of Finance didn’t respond to multiple requests for comment.

In a letter to Bloomberg, Smith’s lawyers confirmed there was contact between Smith and Mauritian authorities on the matter, but they denied there was any lobbying. They added that even if Smith had lobbied authorities, that is “not in itself either illegal or immoral.”

Alongside government officials and former central bankers, Smith is a rare non-Mauritian member of the EDB board of directors, but the EDB says it has processes in place to deal with conflicts of interest.

According to Mohabeer, when an EDB board member has connections to a project under review, decisions are taken without the relevant director in the room, and this applied in the case of Smith. The ministry of finance, which also has directors on the EDB board, has the final say. Smith’s lawyers said he “has not acted improperly.”

“Since several EDB members are involved in business locally, in a small economy in Mauritius it is inevitable that conflicts of interest will arise.” Smith’s spokesperson said in an email. “The EDB has a policy to govern such conflicts which was adhered to.”

According to Smith’s statement, Milestones is owned by Star & Key Foundation, which is funded by him. He has donated the cars to it and will supervise the operation of the 14,000 square meter museum.

Construction of the facility is expected to be completed in 2026 and it will open “as soon as possible thereafter.”

‘Serious Collector’

Smith wasn’t always a car collector, but once he began, he quickly developed a passion, according to people who know him. He started looking for vehicles that had appeared in his favorite British movies or which were rare or in some way important.

He once even appeared on the British television show “Salvage Hunters.” Introduced by one of the presenters as “a guy called Terry” who is a “serious collector,” he agreed to pay £40,000 for a blue Fiat 130 coupe.

Smith wanted to build a car showroom in the UK some years ago, but abandoned that idea, according to people familiar with his thinking. His spokesperson said that many locations were considered.

“I have a lifelong interest in cars and want this amazing car collection to be shared by the people of Mauritius and attract tourists to the island which I have made my home,’’ Smith said in a statement. “This is a collection of seminal cars.”

It includes a car dating from 1903, as well as models linked to famous movies: an Aston Martin DB5 – as James Bond drove in Goldfinger – as well as a 1968 Ford Mustang, made famous by the Steve McQueen car chase in Bullitt. The McLaren F1, one of just 106 produced, had a number plate TS F1 when it was displayed at an English motor show.

--With assistance from Neil Callanan.