The London-based company behind the world's biggest dating app, known for its lavish parties featuring scantily clad dancers, is facing an investigation by Her Majesty's Revenue and Customs (HMRC) over its corporate tax bill.
Badoo, part of the matchmaking empire controlled by Russian-born tycoon Andrey Andreev, is under investigation for its tax payments for the years 2013 to 2016, The Daily Telegraph can reveal.
The news comes as Andreev, whose fortune has been estimated at £1 billion ($1.8 billion), talks up plans to take the company public in a New York listing that could value it at several billion dollars.
Badoo's London-based founder, 44, has been described as "the most mysterious businessman in the West".
Born in Moscow, the bulk of his fortune comes from the dating app he founded when he was 32.
Today, Badoo claims to have far more users than Tinder and is available in 190 countries.
According to an analysis of company filings, Badoo is structured with more than a dozen subsidiaries as well as other investments. Its parent company is listed as World Vision, a company -incorporated in Bermuda, which in turn is controlled by Rimburg International, a company domiciled in the British Virgin Islands.
Badoo Trading Limited executives admitted that the company expected the investigation would "more likely than not" incur a financial adjustment over its tax affairs. A separate entity, Badoo Limited, also said it was under investigation.
The company reported turnover of £144 million for the year ending December 2017, up from £107 million in the previous 12 months, for a reported loss of £5.6 million. Badoo said the loss was "primarily due to the marketing focus of the business".
Multiple Badoo spokesmen and a spokesman for HMRC declined to comment. EY, the company's auditors, declined to comment. The company's accounts said its auditors received £195,000 in 2017 and £145,000 in 2016.
Badoo's previous accounts stated it owed £52,000 in tax in 2016 and £195,000 in income tax in 2015.
Several tech companies have been forced into adjustments by HMRC in recent years. "HMRC has been ramping up its efforts in diverted profits tax and transfer pricing," said Graham Poole, director of tax at the law firm -Hogan Lovells. "It has made it quite clear there will be a renewed focus -going forward."
Badoo's dating app is particularly popular as a rival to Tinder in countries like Russia, Brazil, Mexico and France. But its rise has been followed by -accounts of hedonistic parties, said to have left some staff uncomfortable, and that may have contributed to resignations. The app is part of a "swipe left/swipe right" dating empire controlled by -Andreev. His dating businesses include a majority stake in female-focused dating app Bumble, itself estimated to be worth $US1 billion ($1.3 billion). Bumble's founder Whitney Wolfe Herd has previously proclaimed Bumble to be a "feminist company". Other ventures include gay dating app Chappy and over-50s app Lumen.
Bumble and Badoo make a somewhat unlikely alliance. One source close to the companies described the deal as "hypocritical". Andreev is a 79pc shareholder in Bumble, which has exploded in popularity as an app where women can make the first move to message potential matches to take them on dates. The sites are said to share many engineering functions internally.
Badoo is on the record as having a lavish, perk-heavy corporate culture. A recent profile with three Badoo employees in Elle extolled a "drool-worthy buffet... laid out three times a day... tables filled with all-you-can-eat sweets, stationery and branded swag".
But it is also understood to have a heavily sexualised environment, particularly at its parties. According to one account, members of the engineering team at the company named product releases after porn actresses. A source with knowledge of the incident described the culture as "toxic".
The tax investigation into comes as Badoo draws closer to an initial public offering in New York. Andreev has talked up the possibility of a public listing for Badoo for several years, and last month said he had spoken to JP Morgan about a deal.
While Badoo is, according to the company, the world's largest dating app with more than 400m users, Andreev said that Bumble would be the "umbrella brand" for any listing.
Bumble, meanwhile, has been drawn into a legal dispute over patents with Match-owned Tinder over the "swipe" functionality of the apps. Tinder sued Bumble, which then countersued for $US400m in damages. The case is still ongoing.
Badoo has spent recent months flooding journalists' inboxes with light-hearted stories - such as putting an end to an epidemic of "ghosting", or ignoring potential dates, and including live-streaming chats "Badoo Live".
"We're younger and faster than Match," said Andreev in an interview with Bloomberg. "We deserve a better market cap."
While it may feel young, fast and free-spirited, even innovative at times, Badoo will have to convince investors it has changed for the better - or risk being left behind.