Charity disapproves of ‘tax hero’ celeb’s tax affairs

The charity Christian Aid has expressed disappointment at newspaper reports that one of its high profile backers, singer Katie Melua, participated in an aggressive tax avoidance scheme

Melua was one of 1,600 investors including celebrities, senior lawyers, NHS doctors and businessmen who sought to shelter an estimated total of £1.2bn through the Liberty tax strategy which generated artificial losses offshore which members could then use to avoid tax on other income.

Melua put £850,000 into Liberty in 2008. Two years later she was nominated for Christian Aid’s Tax Superhero Award after stating in an interview: ‘I pay nearly half of what comes to me in taxes, but I know I'm paying to live in a country with lots of amazing qualities. I have 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.’

Joseph Stead, senior economic justice adviser at Christian Aid, said that companies, and individuals, often make the right noises about paying tax, but don’t live up to them.

‘This is why we have been campaigning for greater transparency on tax. To be frank, finding celebrities we could use as examples to endorse our tax campaign was an uphill struggle as we have no idea about the tax status of most. Katie, however, seemed ideal because of her public pronouncements on the subject.’

In a statement, lawyers for Melua said that she had invested in Liberty at the suggestion of her accountants but repaid the sheltered tax to HMRC and so had not avoided tax.

HMRC has spent more than a decade investigating Liberty and is due to challenge the scheme in court in March next year.

New rules mean that participants in high profile aggressive tax avoidance schemes are likely to receive tax demands over the next few months from HMRC as they are now required to pay upfront if the amount is in dispute.

This includes members of another scheme called Icebreaker which saw around 1,000 investors, including Take That star Gary Barlow, put money into partnerships ostensibly designed to exploit intellectual property rights.

Earlier this year, a judged ruled that Icebreaker partnerships had the main aim of securing tax relief for members.

This week Rebus Group announced the launch of the Rebus Icebreaker Settlement Entity (RISE), an action group to help Icebreaker investors in agreeing any outstanding tax liabilities, arranging a time period for settlement and taking appropriate action against those who may have mis-sold the investment originally.

Rhys Thomas, director at Rebus Management Services, said: ‘The court decision in May of this year saw all tax reliefs claimed, denied, leaving investors facing tax liabilities from previous years, together with interest and possible penalties.

‘This means life-changing liabilities for most people. From the possibilities of mis-selling, right the way through to refusing to communicate with investors, investors have essentially been left in the dark, by Icebreaker, and completely abandoned at a time when they need reassurance the most.’

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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