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10 top celebrity tax avoiders
by James Phillipps on Jul 09, 2014 at 14:45
A spate of celebrities have been among the investors in tax avoidance schemes closed down by HMRC recently and we look at how the A-listers tried to cut their bills.
Sir Michael Caine
The double Oscar-winning actor is among the 1,600 people who tried to shield £1.2 billion in Liberty, an aggressive tax avoidance scheme.
Documents leaked to the Times revealed that Caine, along with George Michael, Anne Robinson and singer Katie Melua poured money into the scheme, which was run by Mercury Tax Group.
George Michael reportedly sought to shelter £6.2 million, Melua £850,000, Caine £600,000, while the Arctic Monkeys collectively looked to reduce tax on around £1 million.
Earlier this week it was revealed that David Beckham was among a number of celebrities and sports stars that are facing a £520 million tax bill after Ingenious Media issued a warning to around 1,300 investors in one of its film partnerships.
The list also includes Wayne Rooney, Steven Gerrard, Andrew Lloyd Webber, Bob Geldof and Gary Lineker, who each invested a minimum £100,000 in Ingenious Film Partners 2 LLP.
Ingenious is fighting the HMRC, saying the scheme qualified for tax breaks under rules set up by the previous government, pointing out it had helped fund blockbusters such as Life of Pi, Avatar and Girl with a Pearl Earring.
Former athlete Colin Jackson was among the investors in Sparkdale LLP, which HMRC closed down after branding it a ‘known tax avoidance scheme’.
The BBC broadcaster, along with a number of dentists and the partners of a Cardiff law firm, invested in the music partnership, which claimed losses of £9.4 million to be written off against tax.
Sparkdale was another scheme managed by Icebreaker, which has long been in the sights of HMRC.
Former Radio One Breakfast Show DJ Chris Moyles accepted ‘full responsibility’ for joining a tax avoidance scheme that was later closed down by HMRC back in February.
Moyles, who earned £500,000 a year at the BBC poured money into NT Advisor’s Working Wheels scheme, a car dealership that ran up huge losses which investors would write off against tax.
Around 450 celebrities, fund managers and other high earners were said to have backed the scheme between 2006 and 2008.
Gary Barlow and the other former Take That members could be forced to pay back millions in tax after a judge ruled an offshore scheme they invested in was tax avoidance.
Barlow, who is worth more than £50 million, Howard Donald, Mark Owen and their manager Jonathan Wild are believed to invested up to £66 million in two music partnerships run by Icebreaker Management.
A judge shut down 51 of the company’s partnerships, but Barlow, who was awarded an OBE in 2012 for services to the entertainment industry and charity, has been tight-lipped on just how much he will to pay. He is also facing a separate bill for investing in Liberty, an aggressive tax avoidance scheme.
The former England manager and former Manchester United boss Sir Alex Ferguson were among the high profile investors in Eclipse 35, a tax scheme which the HMRC managed to close down this year.
After a three year battle, Eclipse was finally defeated the partnership in the Upper Tax Tribunal in January.
Eclipse raised around £50 million and borrowed £790 million, which it mainly paid to Disney to buy long-term film rights. However, HMRC branded the scheme ‘an abuse of reliefs’ leaving investors with a tax bill on the income they have received.
Comedian Jimmy Carr had the smile wiped off his face then he was ordered to pay back £500,000 in corporation tax that he avoided using a controversial offshore scheme called K2.
Carr apologised back in June 2012, saying an adviser told him that he cut reduce his tax bill to just £10,000 for every £1 million earned.
The contrite 8 out of 10 Cats presenter later branded the move ‘a terrible error of judgement’.
The all-action adventurer was among the wealthy individuals that backed a maritime treasure hunt scheme that claimed tax relief on losses from investments in ship wreck salvage companies.
Run by Robert Fraser Group, the scheme also attracted City investor David Harding and Stephen and Julie Pankhurst, the founders of website Friends Reunited.
It raised more than £110 million but was challenged by HMRC back in 2011.
The former members of pop group Liberty X were among the wealthy investors who invested in the bizarrely named Tower MCashback 1 and 2 partnerships, which the supreme court ruled against in 2011.
The £1.5 billion case centred around a software company called MCashback, which investors put money into to try and claim back special software-related tax relief. The generous terms of the relief enabled them to chop £40 off their tax bills for every £25 invested.
HMRC fought a four-year case to get the scheme closed underlining its determination to stamp out such abuses.
The Blade and Demolition Man star was released from prison in April after being banged up for three years for ‘wilfully failing to file a tax return’.
US prosecutors ruled that he failed to file a tax return for three years, during which time he is estimated to have earned over $13.8 million (£8.5 million).
The IRS said he was liable for $2.7 million, as opposed to the $228,000 Snipes claimed he was owed.
The judge was unimpressed by the 31 character references he produced, which included fellow thespians Denzel Washington and Woody Harrelson, and he was sent down in late 2010.