Liberty tax dodge: George Michael named in secret files

Jul 9, 2014

Database leaked to The Times also names Sir Michael Caine and Katie Melua in £1.2bn Liberty tax scheme

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George Michael, Sir Michael Caine and Katie Melua are among 1,600 people who tried to keep £1.2bn out of reach of the Revenue through one of Britain's biggest tax-avoidance schemes.

The Liberty scheme helped its clients to generate substantial artificial "losses" offshore, which members used to avoid tax on other income.

A secret database of its members, leaked to The Times, includes celebrities, leading business figures, NHS doctors and a judge. Also named is Paul Nicholson, a loan shark who raped and assaulted impoverished clients in Cheshire.

George Michael attempted to shelter £6.2m in income from record and tour sales after paying £443,000 in fees to the Leeds-based company that ran the scheme. The Wham star stated in 1996 that he would happily pay "50 or even 60 per cent" in tax to a Labour government, yet his investments in Liberty were made seven years ago, while Labour's was in power.

The Times draws attention to similar statements by the singer Katie Melua, who sought to shelter £850,000 in the scheme in 2008.

"In the same year that Melua invested in Liberty, the Georgia-born singer, who took British citizenship in 2005, told a newspaper that she was happy to pay tax in Britain because she had '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'," the paper reports.

Sir Michael Caine used Liberty to try and shelter at least £600,000 according to the documents. The movie star has previously threatened to move to the US if the government raises taxes above 50%.

Representatives for Caine and Michael declined to comment on the report. Melua's lawyers said that she had repaid the sheltered revenue to HMRC and so had not avoided tax.

HMRC, which has spent more than a decade investigating Liberty, is clamping down on tax avoidance, which it says costs the economy more than £5bn a year. It will challenge the Liberty scheme in court next March.

Chancellor George Osborne has condemned aggressive tax avoidance as "morally repugnant".

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