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Top 10 stars who've fallen foul of the taxman
by Alex Steger on Dec 23, 2013 at 13:03
Former England and Manchester United football managers Sven-Goran Eriksson and Alex Ferguson may have seen a film scheme they backed defeated by HMRC in court, but they are not the only stars to have had their tax affairs scrutinised by the taxman. Click through for our pick of celebrity tax scrapes.
Sven Goran-Eriksson and Alex Ferguson
Former England and Manchester United football managers Sven-Goran Eriksson and Alex Ferguson are amongst the highest profile investors in Eclipse 35, a tax scheme that was last week defeated in the Upper Tax Tribunal.
HM Revenue & Customs’ (HMRC) case against the scheme, which claimed to enable its partners to obtain tax relief on their general income, has been long-running. The taxman had won a case against Eclipse in the First Tier Tribunal in 2011, arguing the scheme did not work. After that decision was appealed, HMRC has now secured a further victory.
The judgment means anyone who used the scheme to avoid tax will now have to pay tax on income from the scheme, meaning they will be left worse off than if they had never used it.
A post-football career that has seen Paul ‘Gazza’ Gascoigne battle drink, pies, the chairman of Kettering Town, and the police who tried to stop him taking Raoul Moat on a fishing trip, took a turn for the mundane when in February 2011 the High Court ordered him to pay HM Revenue & Customs (HMRC) more than £30,000. However, the taxman's bankruptcy petition against the former England star was later dismissed at the High Court, after the judge in the case heard he had reached agreement with his creditors.
Ah, Kerry Katona, a life that mirrors Gazza’s as it veers from the ridiculous to the tragic. In 2008 the former Atomic Kitten singer and reality TV star was declared bankrupt after failing to pay the final £82,000 of a £417,000 tax bill. Katona had been fighting an HMRC petition but ran out of time to find the necessary funds.
Famed for their work raising money for the world’s poorest and persuading people to part with their cash, members of U2 were less keen to part with their own cash when Ireland’s Tax & Customs changed its tax rules.
In 2006 a rule change capped artist income tax exemption at £223,000, prompting U2 to move its royalty company, U2 Ltd, to a finance house in the Netherlands.
OK, maybe this shouldn't be classed as a scrape with the taxman, but U2 singer Bono has nevertheless been forced to defend the group's tax arrangements.
The band, which earned £192 million the year before the tax change, now uses the same finance house as The Rolling Stones.
Famed for tearing off bats’ heads with his teeth, it appeared Ozzy Osbourne and wife Sharon had bitten off more than they could chew with the US tax authority, the Internal Revenue Service (IRS).
In 2011 it emerged the couple had run up tax debts of around £1 million. The authorities filed documents that showed the Osbournes owed $1,743,123 (£1,065,000) for 2007 and 2008.
The Blade and White Men Can’t Jump star was sentenced to three years in prison in April 2008 for ‘wilfully failing to file a tax return’.
Despite 31 character references from friends, including fellow actors Denzel Washington and Woody Harrelson, the US prosecutors, the IRS, accused Snipes of failing to file a tax return for three years during which he was alleged to have earned in excess of $13.8 million (£8.5 million).
The IRS said during that time, from 1999 to 2001, Snipes would have been liable to pay $2.7 million in tax, although he claimed he owed $228,000.
Snipes began serving his sentence at the end of 2010 and was released in April this year.
The director of Taxi Driver and Gangs of New York was hit with a $2.85 million (£1.76 million) bill in the US for unpaid taxes, interest and penalties in March 2011.
Scorsese’s financial woes were reported to have been related to his dealings with ‘celebrity accountant’ Kenneth Starr, whose clients included actors Wesley Snipes, Sylvester Stallone and Al Pacino.
Starr was jailed for seven-and-a-half years earlier this year for defrauding his clients in a $33 million Ponzi scheme.
In 1989 comedian Ken Dodd was accused and acquitted of tax evasion at Liverpool Crown Court. The trial revealed that he kept very little money in the bank but more than £300,000 in suitcases in his attic.
Dodd was defended in the case by the high profile barrister George Carman, who told the court: ‘Some accountants are comedians, but comedians are never accountants.’
The three-week trial benefited Dodd by raising his profile and he enjoyed an extended run at the London Palladium.
Everything was going well for infamous US gangster Alphonse Gabriel ‘Al’ Capone: he was running speakeasies and casinos, bootlegging alcohol, and getting mixed up in the Valentine’s Day massacre. Then the taxman caught up with him.
In 1931 Capone was indicted for income tax evasion for the years 1925-29. He was also charged with the misdemeanour of failing to file tax returns for the years 1928 and 1929.
Despite an attempt to bribe the jury, Capone was sentenced to 11 years in prison, a stretch of which he spent in the equally infamous Alcatraz prison.
Another, albeit temporary and fictional, inmate of Alcatraz prison was actor Nicolas Cage, star of The Rock (in which he was imprisoned on Alcatraz Island) and Face Off. In the real world, Cage has avoided prison but has had real-life run-ins with the IRS.
In August 2009, he was hit with a $6.2 million (£3.8 million) tax bill by the IRS for unpaid federal tax for 2007.
That was not his first brush with the taxman. In 2008 the IRS ordered him to pay $1.8 million in taxes relating to 2002-04, which he challenged, resulting in him paying around $660,000.
His second encounter has forced him to sell some of his many properties to pay the bill and he has subsequently fallen out with his business partner and investment adviser.