PM rejects calls to strip Barlow of his OBE
DAVID Cameron yesterday insisted that Gary Barlow should be allowed to keep his OBE, despite a court ruling that he had invested in a massive tax avoidance scheme.
The Take That star – and prominent Tory supporter – has faced a barrage of criticism, with MP John Mann branding him ‘unethical’ and others calling for him to hand back the honour. But Mr Cameron believes the measure is unnecessary.
The Prime Minister went on to say that the singer, who lives in his Witney constituency and campaigned alongside the Tory leader during the 2010 general election, ‘has done a huge amount for the country’, adding: ‘He has raised money for charity, he has done very well for Chil- dren in Need. The OBE was in respect of that work and what he has done.’
Barlow, 43, his manager Jonathan Wild and his bandmates, Howard Donald and Mark Owen, poured £66million into Icebreaker Management – which styled itself as a music industry investment scheme.
However a judge ruled last week that it was in fact a tax shelter designed to help the super-rich avoid paying income tax. The group, of which Barlow was the biggest investor, is now likely to face repaying £20million to the taxman.
Margaret Hodge, the Labour chairman of t he Commons public accounts committee, has suggested that Barlow should ‘show a bit of contrition’ by giving back his OBE.
And the Prime Minister, appearing on ITV’s Good Morning Britain, said: ‘Clearly this scheme was wrong and it is right that they are going to have to pay back the money.’ He
‘Aggressive tax avoidance’
also insisted that he was against ‘aggressive tax avoidance schemes’, adding: ‘If people go after these schemes they are making everyone else pay higher taxes as a result.’
But he stopped short of repeating his attack on the comedian Jimmy Carr, who he described in 2012 as ‘morally wrong’ for using a tax avoidance scheme.
During the 2010 election campaign, the Take That star appeared with Mr Cameron at a school in Cheshire. Asked if he was backing the Conservatives, he replied:’ I would not be here if I was not.’
A recent video shows Mr Cameron saying: ‘We did a school thing and he was so charming. A really lovely man.’ And London Mayor Boris Johnson has said: ‘He shouldn’t have to hand his OBE back.’
But many of his f ans have expressed anger online, with one Twitter user posting: ‘Gary Barlow is a total disgrace. If he doesn’t respect our country enough to pay into it, then he shouldn’t deserve the respect an OBE brings.’
GARY BARLOW, star of the pop group Take That, has written 13 number- one singles and 23 top-ten hits. He has been a judge on The X Factor, received an OBE and earned untold millions. Like the rest of us, he hates paying taxes.
But unlike most of the rest of us, he — along with band-mates Howard Donald and Mark owen — entered a scheme devised by his accountants to save a bob or two. or, in his case, a million or two — which a judge has now ruled to be unlawful.
‘Icebreaker’ was supposedly designed to promote the music industry, but in reality only to generate losses its supporters could set against income tax.
The chair of the Commons Public Accounts Committee, the tirelessly sanctimonious Margaret Hodge, urges that Barlow should show his contrition by handing back his OBE. The Prime Minister disagrees, saying yesterday that the star got his gong for charity work, which has nothing to do with his tax affairs.
Disgust
What is certain is that a host of taxpayers up and down Britain read this story with a sigh of disgust, because it highlights a harsh reality. The old saying is untrue, that the only certainties in life are death and taxes: for the super-rich only the former applies.
Income tax was introduced in 1799 by William Pitt to fund the Napoleonic Wars. When these ended victoriously, in 1816 Lord Brougham led a parliamentary campaign to have all records of the imposition destroyed, so that no future governments could ever again do anything so nasty.
But they did, of course — it was brought back in 1842 — and we have been moaning and paying ever since.
Yet that applies only up to a certain threshold. one of the privileges of breaking through the multi-million wealth barrier is that paying taxes becomes more or less voluntary.
only the middle classes must bear inheritance taxes, for instance. If your total assets amount to £1 million or less, you probably don’t dare give the money away, because — to quote the old joke — you trust the Revenue more than your relations.
But if you have £10million, or £100million, then it seems no hardship to give some, or even most of it, to the next generation while you are alive.
As for income tax, the rich have several options for legally reducing or eliminating their liability.
They can afford to put most of their money beyond the Revenue’s reach abroad, along with themselves for most of the year, like tycoons Sir Philip Green and Sir Richard Branson, and many movie stars.
or for those with a lot of foreign earnings, there is ample scope to park everything you do not need to pay the daily in supposed hands-off trusts for the benefit of your children — like Bernie Ecclestone, as we learn from his German bribery case.
The final possibility is to carry on living here, while employing craftier accountants than Her Majesty’s Revenue and Customs. Some of the cleverest and best-rewarded numbercrunchers in the land earn their daily crust by sitting in offices with computers and huge books on tax law, working out ways in which people like Gary Barlow can avoid paying the 45 per cent top rate.
This is tough on everyone else. As David Cameron and George osborne often say, the more the rich escape paying their whack, the greater the burden that falls on the rest of us. But in the starry circles in which Gary Barlow moves, hardly anyone talks about anything else except how to dance a fandango around the Revenue.
When a City acquaintance of mine was named and shamed for participating in a tax scam not unlike that used by Barlow, I said something to a mutual friend about being shocked. He responded laconically: ‘Sad, yes. Shocked, no.’ In the City, he said, anyone who pays anything like the full rate of income tax is thought to be an idiot.
Most people who work in finance, especially investment businesses like private equity, arrange their huge rewards so that these are taxed as capital gains — at 28 per cent, less than most people earning an average wage pay — rather than as income.
It stinks that so many City folk, already grotesquely highly rewarded for often meagre talents, also get away with murder on the tax front.
Football clubs employ an army of financial wizards to help players avoid taking anything like a full hit on their earnings. They are assisted in this by the reluctance of juries to convict either sports stars or entertainers, even if they get into the law courts.
This makes it a good thing t hat decisions about t he acceptability of tax schemes are taken by tax tribunal judges and not by fan clubs. one judge last year addressed a racket in which radio DJ Chris Moyles was involved, named Working Wheels.
Stunt
At the height of his fame, Moyles and others claimed to have worked as self-employed car dealers. The star had paid £95,000 in fees to the creators of Working Wheels, but would have saved half-a-million or so if the stunt had been successful.
Even nastier was the Cup Trust, which was exposed last year. This was a charity devised solely to provide a tax-avoidance vehicle for its subscribers, which raised £176million but gave just £155,000 to good causes. The Charities Commission is also investigating 12 other organisations whose good faith seems doubtful.
The real damage done by people like Gary Barlow, and the accountants who work for them, is that they dirty the water for everyone else. Barlow was exploiting one of several schemes created by the Treasury for the important purpose of promoting investment in risky business start-ups.
one of Britain’s major economic problems is that i ndividuals and banks are reluctant to put cash into new ventures. Thus, the Government offers incentives to do so. But every time the system is abused to support tax rackets, the Chancellor becomes less sympathetic — and real investment takes a hit.
The rich are not about to get honourable about tax any time soon. The bad part is that when HMRC finds it tough to collect its share from footie stars, Russian non- dom oligarchs and Monaco-based tycoons, its inspectors descend l i ke mafia hit squads on ordinary citizens.
Draconian
The stories are endless — of small businessmen and staff suffering traumas at the hands of the Revenue. New, bitterly controversial legal powers will allow HMRC, when it has a claim for unpaid tax, to seize the cash from an individual’s bank account. The victim can only appeal retrospectively.
Few of us would worry if such draconian powers were to be unleashed only against big crooks, big avoiders. But the l i ttle people will certainly become its victims, because they are easy meat. That is why this measure seems so wrong.
As for Gary Barlow, Margaret Hodge seems mistaken to suggest that he should return his OBE, for the reasons David Cameron makes.
Hodge often rides a high horse about other people’s misdemeanours, but anyone who studies her own pretty shoddy political career will know she should take no moral line about anything higher than a kerbstone.
The right place to hit Barlow is through his wallet, with a whacking cash penalty.
Did I hear you say something about loving his music; about giving the nice lad a break?
Just remember that every time the legion of stars and bankers dodges a tax bill, the rest of the country must take up the slack and pay their rightful share.