Tribunal rules against stars' Icebreaker investments
MEMBERS of the pop group Take That are facing sizeable tax bills after their Icebreaker investment vehicle was shut down in a first-tier tax tribunal.
Associates of Icebreaker Management Services invested in 62 music partnerships, with losses incurred by the partnerships offset against an investor’s income.
Investors augmented tax relief by taking out offshore loans prepared by Icebreaker. As a result, an investment of £40,000 in the company and a loan of £160,000 from it, would generate about £77,520 in tax reliefs the government had intended would support those in creative industries.
In total £336m was invested in Icebreaker, making the total amount of tax sheltered £134.5m.
Gary Barlow, Howard Donald and Mark Owen along with manager Jonathan Wild were among about 1,000 people who put money into schemes purportedly supporting the music industry.
There is no suggestion that band-mates Jason Orange or Robbie Williams were involved.
Tribunal judge Colin Bishopp ruled the partnerships were run solely as tax avoidance schemes.
“At best, and leaving the tax advantages out of account, investment in an Icebreaker Partnership was speculative; realistically it could only be viewed as likely to lose money,” Bishopp said in summing up.
“It is, in our view, conspicuous that all the Icebreaker partnerships… had no realistic prospect of ever generating sufficient revenue from their trading activities to meet the guaranteed payments. Only a small proportion of projects of the kind pursued by the Icebreaker partnerships can be expected to make significant profits although any one project might make very large profits.”
In a statement, Liberal Democrat chief secretary to the Treasury Danny Alexander said: “People who do not pay the tax that they should undermine the economy, damage our public services and place an extra unfair burden on hardworking families and companies who play by the rules.
An HMRC spokesman said:”This scheme aimed to create tax losses out of nothing, unchallenged it could have cost the taxpayer £120m in lost tax.
“Tax avoidance schemes generally don’t work, leaving the user facing a tax bill together with the costs of the scheme.
“We won’t hesitate to challenge aggressive avoidance schemes through the courts.”
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