HMRC scored a major tax avoidance victory on Friday as a tax tribunal ruled against a controversial Partnerships scheme used by around a thousand wealthy individuals, including Take That stars Gary Barlow, Howard Donald and Mark Owen. The scheme (part of a marketed avoidance attempt called Icebreaker Partnerships), was ostensibly an investment vehicle for the stars’ multi-million pound fortunes – however was designed to never turn a profit and so reduce participants’ tax liabilities substantially.
Judge Colin Bishopp said in his ruling:
“The underlying, and fundamental, conclusion we have reached is that the Icebreaker scheme is, and was known and understood by all concerned to be, a tax avoidance scheme.”
“No serious and even moderately sophisticated investor, or one with a competent advisor, genuinely seeking a profit, even one willing to engage in a high-risk venture, […] would rationally have chosen an Icebreaker partnership.”
The Take That trio, thought to have some £66 million sunk into the scheme, will now be liable to pay avoided tax Back For Good to the tune of some £20 million. The furore surrounding the scheme intensified over the weekend, with MP Margaret Hodge calling for Gary Barlow to be stripped of his OBE – however David Cameron urged a little Patience, pointing out that Barlow has done “a huge amount” for the country.
The scheme ran from March 2010 when the Take That men – along with band manager Jonathan Wild – became directors of Larkdale LLP, which subsequently posted losses of some £25 million. Although the scheme continued for over fours years the bandmates discovered on Friday that It Only Takes A Minute for aggressive tax avoidance to backfire. In all the Icebreaker schemes accounted for fifty such partnerships, the directors’ of which will all now be forced to repay owed tax – certainly not their Greatest Day.
Fellow bandmates Jason Orange and Robbie Williams were not involved in the investments. It is not yet clear whether the men will appeal the decision.
Photo by vagueonthehow