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Take That-endorsed music industry investment scheme accused of tax avoidance motivations

By | Published on Wednesday 20 June 2012

Take That

A music industry investment vehicle is in the spotlight today after allegations in The Times that a major motivating factor for participating in the investment venture is tax avoidance.

The previously reported Icebreaker scheme has invested in various music ventures in recent years, often involving artists looking to work outside the traditional label system. Like a number of other music and entertainment investment funds, tax breaks introduced by government to encourage investment in the creative industries are often utilised, though Icebreaker insists it is primarily interested in finding innovative ways to fund and enable equally innovative music projects.

However, The Times alleges that the way Icebreaker is set up, wealthy investors can often profit even if the ventures they invest in fail, because of the tax benefits along the way. Those claims are based, in the main, on information provided by wealth management advisors Mulberry Hamilton, who recommended the Icebreaker scheme to an undercover journalist.

Either way, the Inland Revenue seemingly has its own concerns about at least some of the Icebreaker schemes, and plans to go legal on the matter. A spokesman told the broadsheet: “We do not accept that the Icebreaker tax schemes have the tax effects their promoters claim. We are now preparing to litigate Icebreaker but for legal reasons cannot say more. [But] we examine the implementation of [all] avoidance schemes and will not let any aspect of these cases go unchallenged”.

The Times reckons that, if the Inland Revenue wins in court against Icebreaker later this year, those who have invested in the firm’s past ventures could have to pay back millions in taxes.

And that will include a number of celebrities from the music world itself, and beyond, most notably Take That, with Gary Barlow, Howard Donald, Mark Owen and the group’s manager Jonathan Wild having invested between them a reported £26 million in past Icebreaker schemes. A spokesman for the That-ers has confirmed that the four men have, indeed, invested in Icebreaker ventures, but said that they did so based on the commercial opportunities offered and not because of any tax avoidance benefits, adding that Barlow, Donald, Owen and Wild all make significant tax contributions each year.

The celebrity angle is relevant here, of course, because this week is ‘expose the famous tax dodgers’ week in The Times. Yesterday the paper revealed how comedian Jimmy Carr, a critic of corporate tax avoiders on Channel 4’s ’10 O’Clock Show’, significantly reduced his own tax bill by participating in a Jersey-based tax scheme called K2.