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Tax gossip: Frankie Boyle in hot water

2nd Jul 2012
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Comedian Frankie Boyle and members of the England cricket team are the latest celebrities to be in the public firing line over alleged tax avoidance.

Boyle hit back over the weekend against the Daily Mail’s avoidance allegations from Friday regarding his tax arrangements.

The newspaper claimed Boyle "could have avoided paying nearly £900,000 tax through the voluntary liquidation of his firm last year,” despite the fact he had recently mocked Jimmy Carr for using the Jersey-based K2 scheme.

By winding up the company Traskor Productions, of which he is the sole director and shareholder, he legally could have paid “a tax rate of just 10%” under entrepreneurs’ relief saving him £880,762, the Mail reported.

However Boyle has since claimed he paid £2.7m in tax over the last five years, which is "more tax than most people in show business and the cabinet."

He defended himself on Twitter:

“From 2007 I have paid £2.7million in tax and this equates to just under 40% of my income.

There's a lot of things people do to avoid paying tax and I don't do any of them.

I wound my company up for legal reasons separate from tax and my accountant applied for tax relief on this.

This tax relief is approximately half of the tax saving the Mail quoted in its article today.

I am certain I pay more tax than most people in show business and the cabinet.”

* * *

Cricketers' image rights under investigation

30 June - Members of the England cricket team could face investigation by HMRC amid allegations they exploited a legal loophole to mitigate their tax liabilities.

Continuing its celebrity tax avoidance campaign, the Daily Mail reported that stars including Andrew Strauss and Kevin Pietersen will be questioned as part of an HMRC inquiry into the use of image rights companies.

According to the article investigators met in the past few weeks with officials from the England and Wales Cricket Board and have written to all 18 leading county sides asking for information on how their players are paid.

In response to a query about whether such an investigation was underway, HMRC told AccountingWEB: "We cannot discuss individual clubs for legal reasons. However, HMRC is aware of the issue and is working with clubs and the ECB to resolve any tax matters arising from the use of Image Rights."

The use of image rights companies would allow players to pay corporation tax at 24% on that part of their income rather than 45% income tax.

Image rights are based on the idea that the name of a sports person has a financial value distinct from their performance, and that by factoring this consideration into their contracts, they seek to receive a share of the money from their image and reputation.

The problem is most county players in England and Wales have an ECB-approved contract that states their team owns their image rights.

Companies House reveals that 11 of the 13 England cricketers on contract to the ECB have companies of this kind.

* * *

The tax miseducation of Lauryn Hill

29 June - Former Fugees singer Lauryn Hill could face three years in prison and fines of up to $75,000 after pleading guilty to failing to pay income tax on estimated earnings of $1.8m, reports

The profession’s online tabloid followed the trial for several weeks, reporting the singer’s defence that she neglected to file returns because she had “left the mainstream” to preserve the freedom and health of herself and her family following her success in music and films.

“I did not deliberately abandon my fans, nor did I deliberately abandon any responsibilities, but I did however put my safety, health and freedom and the freedom, safety and health of my family first over all other material concerns!” she wrote on Tumblr last month.

“I conveyed all of this when questioned as to why I did not file taxes during this time period.  Obviously, the danger I faced was not accepted as reasonable grounds for deferring my tax payments, as authorities, who despite being told all of this, still chose to pursue action against me, as opposed to finding an alternative solution.”

The “celebrity survivalist” defence was supported by her lawyer, former US justice department assistant attorney general for tax, Nathan Hockman, but did not wash with the court. Sentencing will take place in November.

Replies (6)

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By magicfx
02nd Jul 2012 21:54

I think when celebrities come into money they do not have a clue how to handle it and the importance of the tax laws that govern what should be paid. Second the way that some schemes are reported may not be quite as they seem.

So Jimmy Carr strolls into your office and asks for advice on how to avoid tax on 3.1 million pounds.

You think fantastic - I can make a small fortune here for doing nothing. So you phone your mate in Panama ask him to chuck the 3.1 million into a bank account in Panama as you wish to earn 8% interest you then sort out power of attorney to lend against it make another 8%. you tell Jimmy that the whole matter is complicated but can do it if he places the funds in a trust for ten years but he will be charged 3% plus 100k per year which will largely be covered by interest payments. Jimmy agrees you call the inland revenue tell them you wish to repatriate 3.1 million over 10 years and pay the tax @ 5% per year  - you pay 2% tax on interest in panama. - all agreed - job done - everyone happy. Government blow up a fuss over it - Jimmy gets red faced and the government get their anti avoidance message across. Mate and you crack open a bottle bolly!!!

Thanks (1)
By johnjenkins
03rd Jul 2012 12:40

Or perhaps

someone phones Jimmy up and says "ere Jimbo how would you like to save a bit of tax - all above board and no come backs". "Crack on" says Jimmy. The rest is history.

Someone has to make these schemes in the first place. Therein lies the problem.

One way to stop avoidance would be to get rid of all tax allowances and reliefs save personal and plant (vehicles etc.). The consquence should be a lower basic rate of tax.

Thanks (2)
By George Attazder
03rd Jul 2012 12:59

The right amount of tax...

... is now the amount the press (and therefore David Cameron) say you should pay. Protest the inexcesses of the rich and famous at your own peril. It's a slipperly slope if "abusive" avoidance is curbed based soley on moral opinion, incited by the media.

If something's legal, but it offends the governments fiscal purposes (to raise money and influence behaviour), then change the law. if people go slinging their mud to freely, they could rouse the skeletons in their own cupboards.

Thanks (3)
By johnjenkins
03rd Jul 2012 14:07

What is wrong though

George is the persecution of SME's at the expense of those rich enough to be able to afford all the cleverdicky accountants and tax lawyers.

Thanks (3)
By magicfx
03rd Jul 2012 15:37

"For a nation to try to tax

"For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”

  Sir Winston Churchill

Thanks (4)
By johnjenkins
03rd Jul 2012 17:44

There's a hole

in my bucket, dear magicfx, dear magicfx, a hole.

Thanks (1)