THE business and romantic partner of Tory peer Michelle Mone has relocated a tax avoidance business to Panama.

As The Herald revealed last year, Douglas Barrowman used an Isle of Man firm called AM Limited to market controversial employee benefit trusts or EBTs to UK residents before they were outlawed.

The business, part of his Knox Group, has since been renamed Watchdale Limited and was this week formerly removed from the Isle of Man registry because it had been redomiciled to Panama

The Herald asked Knox Group to explain why the business had been moved to the central American country, which is routinely described as a tax haven and secrecy jurisdiction, though there is nothing unlawful about registering companies there.

The group, which is based in the Isle of Man capital, Douglas, did not respond to our questions before we went to print.

AM Limited stopped providing EBTs after a crackdown on what the Tories called “disguised remuneration” in their landmark 2011 Finance Act.

EBTs are best known in Scotland as the instruments Rangers FC plc used for its players before it was liquidated.

A spokesman for Mr Barrowman last year said that the entrepreneur - who was born in Glasgow - had refocused his energies on other investment opportunities.

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

AM Limited, which had been called or AML and Aston Management Limited, 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."

However, 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. An HMRC spokesman last year said he strongly advised anyone who used such schemes "to come forward and settle their affairs".

The lingerie firm that Lady Mone, who is also from Glasgow, set up with her former husband Michael, MJM International, also used EBTs to the value of more than £500,000 before the rules changed and before the business started to rack up losses.

Mr Barrowman and Lady Mone, a reality TV star as well as a Conservative peer, have recently started a new business selling flats in the Middle East for the cryptocurrency bitcoin.

Mr Barrowman was 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). Last year he declined to comment on this. 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.