Members of Take That invested £26million in a scheme that HM Revenue & Customs believes is designed to avoid tax, it was claimed last night.
Gary Barlow, Howard Donald, Mark Owen and their manager, Jonathan Wild, are among 1,000 people who contributed £480million to 62 partnerships in music industry investment schemes that act as tax shelters for wealthy individuals, according to The Times.
HMRC is attempting to shut down the partnerships, run by a company called Icebreaker Management Services, at a tax tribunal in November. Barlow – who was recently made an OBE – and company could face paying back millions of pounds if it is successful.
'Seeking haven': Fellow Take That stars Mark Owen (left) and Howard Donald (right) are also said to have invested in the scheme, which HM Revenue & Customs is attempting to shut downA spokesman for HMRC said: ‘We do not accept that the Icebreaker tax schemes have the tax effects their promoters claim.’ They said one Icebreaker scheme had already been successfully challenged.
Icebreaker denied that its partnerships were designed to avoid tax. It said they were intended to invest money in the music industry for profit by producing ‘creative and artistic material and [creating] taxable profits’.
More... Millionaire stars who avoid tax 'no better than benefit cheats' says Cabinet Minister: Comedian under fire over scheme that cuts bills to as little as 1% 'As bad as benefits cheats': Minister attacks Jersey tax avoidance scheme that Jimmy Carr 'has £3.3m in' HMRC to target civil servants paid as 'companies' to dodge tax The tax break that lets top paid bankers, civil servants and BBC stars cut their tax rate to just 20% 'Taking shelter': Take That member and X Factor judge Gary Barlow (pictured) is one of 1,000 people who have contributed £480million in partnerships in investment schemes designed to avoid tax, it has been claimedCompanies House records show that the three Take That members and their manager joined two Icebreaker partnerships in March 2010 and September 2011.
In the first, they put in £5.2million of their own cash and borrowed another £20.8million. The partnership registered a loss in the year to April 2010 of £25.2million, which accounts show as ‘available for discretionary division among members’.
According to The Times, Matt Hodson, working on behalf of Icebreaker, told an undercover reporter that the men had also invested in a second partnership, which has not yet filed accounts.
Lawyers representing Barlow, Donald, Owen and Mr Wild said the men had paid significant amounts of tax. They confirmed that their clients were investors in the two partnerships, but believed they were legitimate enterprises and not tax-avoidance schemes.
There is no suggestion that other members of Take That were investors – and it is not known whether those that did were aware of the tax benefits when they invested in the partnerships.
But the revelation comes after it emerged that comedian Jimmy Carr is one of thousands using a legal off-shore scheme to pay as little as 1 per cent income tax.
Carr, who has publicly mocked tax avoidance schemes, is believed to be the largest beneficiary of a Jersey-based accountancy arrangement said to shelter £168million a year from the taxman.
He puts away £3.3million a year via the K2 tax scheme, which is used by more than 1,000 tax avoiders, it was claimed.
K2 works by transferring salaries into a Jersey-based trust, which lends investors back the money.
Because the loan can technically be recalled, it is not subject to income tax.
MUSIC TO THEIR EARS: HOW THE RICH AVOID PAYING TAX ON INVESTMENTSA typical Icebreaker partnership collects around £10million from about a dozen investors and uses the funds to buy music rights in upcoming and established artists.
Icebreaker can help investors to save more in tax than they put into the scheme with losses being offset by a wealthy investor against other income earned during the previous three years.
Investors can bump up this tax relief by taking out offshore loans arranged by Icebreaker.
For a minimum investment of £40,000 into an Icebreaker partnership, boosted by an offshore loan of £160,000, a member can generate £77,520 of tax relief.
A person who invests £200,000 in cash can earn £1million tax free.
