THE new business and romantic partner of Tory peer Michelle Mone marketed tax-avoidance schemes branded “morally repugnant” by her party.

Douglas Barrowman ran an Isle of Man firm offering employee benefit trusts or EBTs to UK residents before their use for tax avoidance was outlawed by former Conservative Chancellor George Osborne.

The Glasgow-born businessman hit the headlines late last year after a Channel 4 documentary featured his two super-yachts, including the 183ft Turquoise, which is said to have cost £50 million and has a staff of 13.

Mr Barrowman’s firm, AM Limited, stopped providing EBTs in 2010 after a crackdown on what the Tories called “disguised remuneration” in their landmark 2011 Finance Act.

These are the same kind of instruments Rangers FC plc used for its players before it was liquidated.

AM Limited or AML was an “umbrella” company which acted as an employer to independent contractors, partly paying them in loans, so reducing their income tax.

Its website in 2008 said its schemes enabled contractors “to take-home over 80 per cent” of their income.

It added: “AML provides a real employment alternative for contractors who don’t want the administrative burden of self- employment or working through a PAYE umbrella structure.”

Some people who in the past used EBTs provided by AM Limited have received letters from Her Majesty’s Revenue and Customs (HMRC) warning them that their tax affairs are under investigation.

Asked about AM Limited, an HMRC spokesman said: “We have repeatedly and clearly set out our view that these sorts of arrangements simply don’t work, and we are investigating and closing down use of these schemes. HMRC strongly advises anyone who has used such a scheme to come forward and settle their affairs.

“Scheme users will avoid the costs of litigation and minimise any interest and penalties due on underpaid tax if they do. On behalf of the honest majority, who choose to play by the rules, we are cracking down hard on the small minority who try to get out of paying their fair share.

“HMRC has robust compliance procedures to identify and take targeted action against any identified attempt to avoid tax.”

AM Limited, which is registered at the HQ of Mr Barrowman’s Knox Group empire in Douglas, Isle of Man, has not traded since 2010, before the tax rules changed.

Its website, created in 2012, has been updated several times since but was taken offline after The Herald began making inquiries about the business.

When asked to comment on AM Limited or its EBTs, Mr Barrowman’s spokesman issued a statement suggesting the entrepreneur was now focusing on tech investments. He said: “The Knox Group of companies is a successful group of independent businesses employing staff worldwide.

“The group provides a range of financial and professional services, incorporating investment, wealth management, fiduciary, accounting, tax advisory and financing to both corporate and high net worth clients.

“Hard working, self-employed contractors and freelancers have also taken our advice which was fully compliant with the legislation at the time. In addition, The Knox Group of companies offers asset management and family office services to a diverse and expanding client base.

“The Group also includes a property investment, management and development arm, as well as private equity which will focus on Tech investments in 2017.”

It is understood that AM Limited is satisfied that its EBTs were entirely compliant with legislation at the time they were issued. It is also understood that AM Limited has continued to exist in order to support previous clients.

The lingerie firm that Lady Mone, who is also from Glasgow, set up with her former husband Michael, MJM International, also used such schemes to the value of more than £500,000 before the rules changed and before the business started to rack up losses. Lady Mone, a reality TV star as well as a Conservative peer, last year formed a new firm called MMI Global Limited with Mr Barrowman’s Isle of Man-based Knox Limited, part of his Knox Group.

Lady Mone is one of three directors of MMI Global Limited, alongside two senior figures from within the Knox empire, Luke Webster and Sandra Robertson.

Mr Webster is managing director of Knox Private Office and Ms Robertson one of its directors.

According to its website, Knox Private Office offers a “tailored advisory service to ultra-high net worth individuals, entrepreneurs and their families” and “tax planning services to both corporate and personal clients”, including help buying super-yachts and property in Belgravia.

Mr Barrowman was last year named in the Panama Papers, the massive leak of documents from a Central America law firm, as the beneficiary of an offshore company in the British Virgin Islands (BVI). He declined to comment. Again, there is no suggestion of unlawful activity and The Herald has been told that the BVI company was set up for a business transaction that did not take place.