How Michael Platt, the master of hedge funds, lost a tax battle worth £200 million

Michael Platt created one of the top hedge funds in the world by taking advantage of a fascination with data

The billionaire has become well-known due to an encounter with HMRC.

"I detest losing money above all else. It's losing money that kills you. It's not the real loss. In 2012, Michael Platt of BlueCrest Capital Management noted, "It's the fact that it messes up your psychology."

According to The Times, "imagine how furious he is at losing a high-stakes 200 million battle with HMRC over the employment status of some of his traders." BlueCrest's appeal was dismissed by the Supreme Court, which decided that payments made to some of BlueCrest's "partners" constituted "disguised salary" and should be subject to taxation.

Platt was so furious that he launched a broadside, saying that the UK is "no longer a serious contender as a place to do business" due to the taxman's tendency to change goalposts and guidance rules. The publicity-shy financier from Preston, Lancashire, who has gone "under the radar" to create one of the top hedge funds in the worldnow better described as his multibillion-dollar private family officeexhibited a rare loss of poise in public.

Limited liability partnerships in the financial services sector may be affected by the decision. However, according to the Financial Times, industry peers and City attorneys agree that BlueCrest had created a "particularly aggressive" compensation plan. Given Platt's track record of pushing the boundaries in all financial matters, this is not surprising.

However, a man who has spent "the best part of two decades cultivating a reputation as one of the industry's most private figures" with only the occasional slip-up has received "unwanted publicity" as a result of the ruling. In the back of a New York taxi in 2019, he was caught boasting about his wealth, saying, "I'm the highest-earning person in the world of finance."

How much money does Michael Platt have?

Platt has undoubtedly had remarkable success. He is among the richest people in Britain, according to Forbes, with a private net worth of £20.9 billion. However, he has long since moved to a country with lower taxes. Days before the UK government's new top income tax rate went into effect in 2010, he relocated the group's headquarters to Guernsey.

"Platt's empire, built on mathematical precision and unrelenting secrecy, is a study in controlled opacity," according to The Capital Review in Singapore, one of BlueCrest's international outposts, along with New York and Dubai. Despite ceasing to trade publicly in 2010, Platt has continued to be "deeply involved" in strategy, risk management, and hiring decisions.

His "obsession with data and asymmetry, the idea that small mispricings could yield outsized returns if traded with precision," is the "signature" of the company. He is described by former coworkers as "a man who reads numbers like prose, analytical, detached, and surgical."

Michael Platt's wealth-building process.

According to Platt's own story, his grandmother was the one who first introduced him to the world of hedge funds. His mother worked in administration, and his father was a civil engineering lecturer. He was born in 1968 and had a practical yet academic background. However, his grandmother taught him the fundamentals of investing and gave him shares when he was a teenager. The Telegraph reports that after graduating, he worked for JPMorgan as a managing director of proprietary trading before starting BlueCrest in 2000.

According to The Capital Review, the initial years were "explosive." By the mid-2000s, BlueCrest was handling over £10 billion, and it continued to profitably navigate the financial crisis of 2008-2009. Platt's ability to "quantify instincts" and his unwavering determination contributed to the firm's success.

In the end, traders were ranked, rewarded, and brutally replaced in a hard-charging culture that insiders referred to as a "meritocracy of terror." According to the FT, the "one opponent his firm has struggled to beat" is HMRC, which is infuriating for a man who detests losing.