Nobody likes paying tax, so when the super rich face tax bills running into millions, it’s no surprise they do their best to avoid tax.
How The Super Rich Avoid Tax – But Not Always!
Celebrities Caught By HMRC’s Crackdown To Avoid Tax
Roughly 1% of Americans control 40% of the country’s wealth. Money provides them with choices, among them, how best to avoid tax and keep all that money away from the Government. The US economic system offers no shortage of loopholes, allowing the super rich to short change Uncle Sam. The superb illustration further down this article illustrates 10 ways the super rich avoid tax.
Here in the UK, the Government is committed to closing as many tax loopholes as possible, aimed at those who avoid tax. It’s already saved billions for the UK tax payer, much of it coming from artificial tax avoidance schemes. These types of schemes are favoured by the rich and famous, keen to avoid tax. Here are a few examples that didn’t quite make it past HMRC’s tax avoidance crackdown.
DJ Chris Moyles wasn’t heard to say “Ullo John, Gotta New Motor”. Though he did admit his naivity on Twitter in joining a tax avoidance scheme claiming he was a second-hand car dealer in his spare time. HMRC successfully won a battle against the scheme, worth £290 million.
It wasn’t their greatest day when Gary Barlow and his Take That mates learned they were facing tax repayments of £20 million. They were among thousands of investors who used a company called Icebreaker, which a Tribunal ruled was set up entirely for tax avoidance purposes.
Along with George Michael, Michael Caine and around 1,600 other people, Anne Robinson wasn’t the weakest link named in the £1.2 billion Liberty tax avoidance scheme. It generated artificial losses offshore, which investors could use to avoid tax on other income.
Singer songwriter Katie Melua was left singing for her supper after sheltering £850,000 through the Liberty tax avoidance scheme, as HMRC sent out accelerated payment notice orders worth £250 million. The Artic Monkeys also sheltered between £557,000 and £1.1 million in Liberty.
Comedian Jimmy Carr famously had the smile wiped off his face, as he announced he would pay £500,000 in tax, after leaving a Jersey-based tax avoidance scheme. Around 1,000 people used K2, paying as little as 1.25% on their earnings. K2 allegedly helped people save £168 million in tax.
Top BBC presenters Fiona Bruce and Jeremy Paxman made the headlines when it was revealed their income could be cut by 25%. They were being paid through personal services companies, allowing them to pay Corporation Tax at 21% rather than higher rate Income Tax.
Following bad publicity, Bradley Wiggins cycled swiftly away from a scheme, stating he hadn’t claimed any tax relief. The scheme was designed to allow investors to pay no tax by investing around £100,000 but claiming tax relief on £1 million, as the investment was supplemented by a £900,000 loan.
Star footballer David Beckham was definitely not playing cricket when he invested with Ingenious Media. The company behind the scheme warned 1,300 investors they may be asked to repay all the tax they’d saved, perhaps with interest, as it was allegedly pure tax avoidance.
Sven Goran Eriksson
Football managers Sven Goran Eriksson and Alex Ferguson were among 300 investors who got a good kicking over a failed film scheme. They faced £1 million tax bills, which were up to seven times more than their original investments, when HMRC decided the tax reliefs claimed didn’t work.
Olympic hurdler Colin Jackson was for the high jump when it was disclosed he could be required to pay back tax he didn’t pay under the Icebreaker scheme. He and 10 others in his partnership claimed losses of over £9 million to offset against their tax liabilities. HMRC has another idea.
Attempting to survive on more money by paying less tax, adventurer Bear Grylls joined other investors in a £110 million underwater treasure hunt business. Under the scheme, a complicated loan arrangement apparently allowed him to claim up to twice the sum he invested.
10 Ways Rich People Avoid Tax In America
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