Day of reckoning for celebrities busted in $2b tax-avoidance scheme
GEORGE MICHAEL, four members of the band Arctic Monkeys, Sir Michael Caine and a loan shark convicted of rape are among more than 1600 people who tried to shelter £1.2 billion (NZ$2.3b) through one of Britain’s most aggressive tax-avoidance schemes.
Investors in the Liberty tax strategy – who include top businessmen, criminals, celebrities, QCs, National Health Service doctors, party donors and a judge – can be exposed after a secret database of members was leaked by sources concerned at Liberty’s manipulation of Britain’s tax code.
Singer Katie Melua sought to shelter £850,000 through Liberty in 2008.
Two years later, she was nominated for Christian Aid’s Tax Superhero Award after publicly stating that she paid ‘‘nearly half of what comes to me in taxes’’.
In the same year that Melua invested in Liberty, the Georgiaborn singer, who took British citizenship in 2005, told a newspaper that she was happy to pay tax in Britain because she had ‘‘seen what it is like living in a country where people don’t pay tax and have poor services in terms of health and education’’.
Yesterday lawyers for Melua said that she had invested in Liberty at the suggestion of her accountants but repaid the sheltered tax to Revenue & Customs and so had not avoided tax.
About 1600 investors secretly poured money into Liberty between 2005 and 2009, making it one of the largest avoidance schemes marketed. It generated huge artificial ‘‘losses’’ overseas which members could then use to avoid tax on other income.
Revenue & Customs has spent more than a decade investigating Liberty, which was legal, but is due to challenge the scheme in court only in March next year.
Nevertheless, under new Treasury rules due to be brought in this month, Liberty members will have to pay back hundreds of millions of pounds in disputed tax before the hearing.
Members including Gary Barlow, the Take That front man who invested £4.46 million, and Anne Robinson, the BBC presenter, who invested £4m, are likely to receive large tax demands in the coming weeks.
They will get the money back only if Revenue & Customs loses the upcoming tribunal.
Barlow also faces a separate tax bill over his involvement in a sec- ond tax-avoidance scheme called Icebreaker, which was defeated by the courts in May.
Michael sought to shelter £6.2m in record and tour sales after paying £443,000 in fees to Mercury Tax Group, the Leeds company that ran the scheme.
In 1996, a year before New Labour came to power, Michael told The Big Issue that he would ‘‘feel enormously unhappy about paying 50 per cent tax to another Tory government’’.
He added: ‘‘I’d pay 50 or even 60 per cent to a Labour government. I think Labour are going to introduce a special George Michael tax.’’
The singer’s investments in Liberty were made about seven years ago, however, during the Labour government. He embarked on a three-year world tour about the same time.
Michael’s publicist said his ‘‘busy schedule’’ meant that he could not respond to questions.
Four members of Arctic Monkeys, the Brit Award-winning band, each paid between £38,000 and £84,000 in fees to shelter between £557,000 and £1.1m. Alex Turner, Jamie Cook, Nick O’Malley and Matt Helders declined to comment.
Paul Nicholson, a loan shark who raped, blackmailed and assaulted poverty-stricken clients in Cheshire, used Liberty to avoid tax on £1.4m of illicit earnings before being jailed in 2009.
Nicholson was introduced to the scheme by BWCS Partnership, a Cheshire-based tax practice whose clients include Barlow.
Revenue & Customs is clamping down on tax avoidance, which costs the economy more than £5b a year.
Chancellor of the Exchequer George Osborne has condemned aggressive avoidance as ‘‘morally repugnant’’ and Prime Minister David Cameron criticised celebrities who avoid tax, including comedian Jimmy Carr and Barlow.
Caine, the star of Zulu and Batman Begins, used Liberty in an attempt to shelter at least £600,000, according to internal Mercury Tax Group documents.
He has threatened to move to the US if the government raised taxes above 50 per cent.
The actor joined Cameron during the 2010 general election campaign to launch the Tory leader’s plan for all 16-year-olds to complete voluntary service.
A spokesman for Caine said: ‘‘We have no comment to make for or on behalf of Michael Caine.’’
Former Tottenham Hotspur and England midfielder Darren Anderton invested £500,000, and former Bolton Wanderers captain Kevin Davies was also a member.
Davies said that the details of his tax affairs obtained by The Times were ‘‘inaccurate’’ but did not deny investing in the scheme.