Three members of Take That face a huge tax bill after a tribunal ruling.
Gary Barlow (pictured), Howard Donald and Mark Owen, along with manager Jonathan Wild were reportedly among a 1,000 people who invested in a £66 million Icebreaker Management Partnership, which was pitched as a music industry investment scheme.
However, The Times revealed that tribunal Judge Colin Bishopp deemed the partnership had been set up to help dodge tax
The four men are directors of Larkdale LLP, one of the 50 partnerships sets up by Icebreaker designed to benefit from tax relief allowed to those who contribute to the arts.
According to the tribunal, Larkdale reported a £25 million loss shortly after the quartet invested, meaning this loss could be offset against tax.
The four could be forced to repay a reported £20 million.
‘The underlying, and fundamental, conclusion we have reached is that the Icebreaker scheme is, and was known and understood by all concerned to be, a tax avoidance scheme,’ Bishopp said.
HMRC said it would not tolerate any abuse of the system in a strongly worded statement.
‘HMRC has put in place generous reliefs to support genuine business investment and our tax reliefs for the creative industries work well, enabling the UK's world-class film, television and video production companies to compete on the global stage,’ it said.
It added: ‘But we will not tolerate abuse of the system by people trying to dodge their tax obligations.
‘HMRC will continue to challenge in the courts anyone who engages in tax avoidance schemes... [These people] risk not only the high cost of these schemes but also lay themselves open to penalties and, potentially, prosecution.’
Chief secretary to the Treasury Danny Alexander told The Times: ‘People who don’t pay the taxes they should undermine the economy, damage our public services and place and extra, unfair burden on hard working families and companies who play by the rules.’
The news comes as HMRC tightens it clampdown on tax avoidance. It is estimated around 17,000 people every year will have their accounts raided under new rules set out in the chancellor’s Budget earlier this year.
MPs have expressed concern HMRC could take money straight from the accounts of innocent people without a court order.
'Prior to these rules, some taxpayers did take an inordinate amount of time to pay tax that was legally due. That is unfair to other taxpayers and frustrating for HMRC,' Andrew Watters, director and tax specialist at law firm Thomas Eggar said. 'If these powers come into force, there is likely to be the odd mistake and some people will suffer serious and unfair consequences.'
Watters added: 'So the question is whether we want a system which focuses on protecting the majority and accepts that some unscrupulous individuals will abuse the system; or a system which focuses on protecting the state from unscrupulous individuals and which accepts this will occasionally cause collateral damage to the innocent.'