Tax avoidance still hitting the headlines as new scheme is investigated
More famous faces are under scrutiny from HM Revenue and Customs after allegations surfaced that celebrities such as David Beckham were involved in a tax avoidance scheme. The latest investigation to hit the headlines has been focussed on an investment company called Ingenious Media who have had to warn their investors that they are likely to be receiving some contact from HMRC.
A number of celebrities and high profile figures have been implicated in the scheme, including David Beckham, Gary Linekar, Davina McCall, Ant and Dec and even a member of the Bank of England’s Financial Policy Committee, Dame Clara Furse. They have been warned that they could be facing demands for unpaid tax to the tune of up to £520 million between all the investors who could be pursued.
The scheme followed a fairly typical method of avoiding tax, in as much as the investors were offered the chance to become directors of partnerships which showed early losses of £1.3 billion. Ingenious Media’s clients were then able to offset the losses against their other incomes, reducing their tax bills through illegitimate means.
Many of these investments were in the British film industry, which allowed them to take advantage of film tax relief, and although Ingenious is adamant that the investment opportunities they offer are legitimate, their investors could fall foul of the new rules on collecting avoided tax. This means that anyone thought to be involved in illegitimate methods for reducing their tax bills will be expected to pay back the tax they are accused of avoiding before a ruling has been made in their case.
Settlement offers may allow those accused to pay less, but they will only be available for limited periods and will usually only be on offer until tax demand notices are issued. Court battles to resolve cases can be long and protracted, so settlement might be an attractive option to those who would rather not wait for the results of a tribunal which is scheduled for November 2014.
The controversial recovery measures mean that even cases which are in dispute can see those accused of avoiding tax having their money tied up for significant lengths of time before getting a definitive result. Despite asking for a ruling on their investments in 2011, they claim that HMRC has been delaying the process whilst collecting over £1 billion in tax revenue from the company from films such as Life of Pi, The Best Exotic Marigold Hotel and Avatar.
Read our plain English guide for more information on Offshore Tax Schemes:
- Offshore Schemes
- Offshore Companies
- EBT – Employee Benefit Trusts
- Offshore tax schemes or UK Limited company