Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/money/article/a597527
Taxman takes on Take That in avoidance clampdown
HM Revenue & Customs is trying to close down a tax scheme in which members of the pop band Take That invested at least £26 million, according to The Times.
HM Revenue & Customs (HMRC) is trying to close down an investment scheme in which members of the pop band Take That invested at least £26 million, according to The Times.
Gary Barlow (pictured), Howard Donald and Take That manager Jonathan Wild invested in the scheme, run by a company called Icebreaker Management Services. They are among 1,000 investors who have contributed £480 million to 62 partnerships in music industry investment schemes.
HMRC will try to close the partnerships' structure at a tax tribunal in November, according to the paper. 'We have taken firm action to protect the Exchequer from unacceptable tax loss,' a HMRC spokesman told The Times.
'We do not accept that the Icebreaker tax avoidance schemes have the tax effects their promoters claim.'
Icebreaker denied the partnerships were designed to avoid tax. 'Icebreaker LLPs are all commercial businesses in which the LLP members work actively together in order to produce creative and artistic material and create taxable profits,' a lawyer for the firm told the paper.
The new follows HMRC's announcement that it was investigating a further tax scheme, Jersey-based K2, reportedly used by TV comedian Jimmy Carr (pictured below) to shelter £3.3 million.
According to The Times over 1,000 people used the scheme, expecting to pay as little as 1.25% tax on their earnings. K2 is understood to have helped people avoid £168 million in tax.
HMRC said: ‘This scheme, K2, was already under investigation by HMRC. If, as is alleged, it depends on the use of loans it will not work. HMRC are looking into this. If the scheme does work technically, HMRC will challenge it in every way available to them. Government does not intend anyone, no matter who they are, to get away with paying less than they should.'
According to The Times K2 works in three stages. First a person becomes an employee of K2, then their original employer pays their salary to K2 which pays the member a minimum wage and loans them the balance through a Jersey-based trust. As the loan, which could technically be recalled, is not taxable the member only pays tax on the minimum wage.
Miles Dean, founder of Milestone International Tax Partners said: ‘I do not know how a scheme like this could work for an entertainer from a UK tax point of view. Under revenue rules income earned as a performer or sportsperson is derived by virtue of them being that person. It cannot be circumvented via a corporate structure. I expect the revenue could have a field day on this.'
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.