9 Jul 2014

Celebrity investors named in £1.2bn tax avoidance scheme

George Michael, Katie Melua and four members of the Arctic Monkeys are among more than 1,600 people who have been named in a £1.2 billion tax avoidance scheme.

Celebrities accused of tax avoidance

The number involved reportedly makes it the largest avoidance scheme marketed.

A secret database leaked to The Times revealed that investors including top businessmen, celebrities, criminals, NHS doctors, party donors, legal professionals and a judge tried to shelter the sum through the Liberty tax strategy. The scheme – which was legal – is due to be challenged in court by HM Revenue & Customs next March.

Katie Melua

‘Swift action’

The newspaper claimed that bestselling singer Melua sought to shelter £850,000 through Liberty in 2008. She was nominated for Christian Aid’s Tax Superhero Award in 2010 after telling The Telegraph she paid “nearly half of what comes to me in taxes”.

Lawyers for Melua have subsequently responded saying she had invested in Liberty at the suggestion of her accountants but repaid the sheltered tax to HMRC and so had not avoided tax. A spokesman for Melua, 29, said: “When HMRC stated they were reviewing the scheme, she paid the tax to HMRC in full. Accordingly, HMRC are not out of pocket and she has not avoided any tax liability.”

It forces up taxes on people who are too poor or too honest to use such schemes. Joseph Stead

Joseph Stead, senior economic justice adviser at Christian Aid, said: “To be frank, finding celebrities we could use as examples to endorse our tax campaign was an uphill struggle as we have no idea about the tax status of most. Katie, however, seemed ideal because of her public pronouncements on the subject.”

However, the Treasury say they are taking “swifter action” against it by increasing the number of intelligence staff to identify and deal with avoidance by wealthy individuals and designing new legislation that minimises the scope for it to happen. Thus it is likely that Liberty members will have to pay back hundreds of millions of pounds before the hearing.

‘Large tax demands’

Members include Take That singer Gary Barlow, along with Howard Donald, Mark Owen and their manager Jonathan Wild invested £66 million into two partnerships styles as music industry investment schemes, according to reports. While BBC presenter Anne Robinson, who invested £4 million, are both likely to receive large tax demands in the coming weeks. They will only get the money back if HMRC loses the upcoming tribunal.

Michael, one of the world’s best-selling music artists, reportedly attempted to shelter £6.2 million in income from record and tour sales after paying £443,000 in fees to Leeds-based company Mercury Tax Group who ran the scheme.

I would feel feel enormously unhappy about paying 50 per cent tax to another Tory government. George Michael

In 1996, the singer is said to have told The Big Issue that he would “pay 50 or even 60 per cent to a Labour government. I think Labour are going introduce a special George Michael tax”. His investments in Liberty were made seven years ago, while Labour was still in power, the paper reports.

David Beckham

‘Indiscriminate and unfair’

Four members of Brit Award-winning band the Arctic Monkeys are believed to have each paid between £38,000 and £84,000 in fees to shelter between £557,000 and £1.1 million. Alex Turner, Jamie Cook, Nick O’Malley and Matt Helders declined to comment.

And there were more names exposed after the newspaper reported yesterday that sport stars such as David Beckham, Steven Gerrard and Wayne Rooney had all invested millions of pounds in Ingenious media, a company that provides tax-efficient film investment schemes. The company said in a statement that paying back the money before any hearing was “indiscriminate and unfair”.

I regard tax evasion, and indeed aggressive tax avoidance, as morally repugnant. George Osborne

George Osborne condemned tax avoidance in 2012 as “morally repugnant” and David Cameron criticised celebrities, such as comedian Jimmy Carr and Barlow, saying it is not “morally right”.