How hedge fund wizard Michael Platt lost a £200m tax battle
“I hate losing money more than anything. Losing money is what kills you. It is not the actual loss. It’s the fact that it messes up your psychology,” Michael Platt of BlueCrest Capital Management observed in 2012.
So, just imagine how angry he is at losing a high-stakes £200 million battle with HMRC over the employment status of some of his traders, says The Times. The Supreme Court has thrown out BlueCrest’s appeal, ruling that payments to some of BlueCrest’s “partners” were effectively “disguised salary” and should be taxed accordingly.
Platt was so livid he launched a broadside, declaring that the UK is “no longer a serious contender as a place to do business” because of the taxman’s propensity to shift guidance rules and move goalposts. It was a rare loss of composure in public from the publicity-shy financier from Preston, Lancashire, who has flown “under the radar” to build one of the world’s leading hedge funds – now more properly described as his multi-billion-dollar private family office.
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The ruling has implications for limited liability partnerships across the financial-services industry. Still, the consensus among City lawyers and industry peers is that BlueCrest had devised a “particularly aggressive” remuneration structure, says the Financial Times. That’s no surprise given Platt’s history of pushing the envelope in all matters financial.
But the judgment has brought “unwanted publicity” to 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 lapse. In 2019, he was filmed bragging about his wealth in the back of a New York taxi: “I’m the highest-earning person in the world of finance”.
What is Michael Platt’s net worth?
Platt’s success has certainly been extraordinary. Forbes puts his private worth at $20.9 billion, placing him among Britain’s wealthiest, although he has long since decamped to more tax-friendly climes. In 2010, he moved the group’s headquarters to Guernsey, days before the UK government’s new top rate of income tax took effect.
“Platt’s empire, built on mathematical precision and unrelenting secrecy, is a study in controlled opacity,” says The Capital Review in Singapore – one of several BlueCrest international outposts, including New York and Dubai. Platt himself stopped trading publicly after 2010, but has remained “deeply involved” in strategy, risk allocation and personnel decisions.
The firm’s “signature” is his “obsession with data and asymmetry – the idea that small mispricings could yield outsized returns if traded with precision”. Former colleagues describe him as “analytical, detached and surgical – a man who reads numbers like prose”.
How Michael Platt built his fortune
In Platt’s own account, it was his grandmother who set him on the road to hedge-fund wizardry. Born in 1968, his background was academic yet practical: his father was a lecturer in civil engineering, his mother worked in administration. But it was his grandmother who gave him shares as a teenager and taught him the basics of investing. After graduating, he joined JPMorgan where he became a managing director of proprietary trading, notes The Telegraph, before founding BlueCrest in 2000.
The early years were “explosive”, says The Capital Review. By the mid-2000s, BlueCrest was managing more than $10 billion and went on profitably to surf the volatility of the 2008-2009 financial crisis. The firm’s success was partly down to Platt’s trading acuity – he had a knack for “quantifying instincts” – and also sheer drive.
The upshot was a hard-charging culture where traders were ranked, rewarded and ruthlessly replaced; insiders called it a “meritocracy of terror”. How galling for a man who hates to lose, says the FT, that the “one opponent his firm has struggled to beat” is HMRC.
This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
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