HMRC has said they are clamping down on a scheme allegedly used for tax avoidance following reports that members of Take That have allegedly invested in the scheme.
The Times, as part of the paper's investigation into tax avoidance, reported Gary Barlow, who was recently awarded an OBE, Howard Donald and Mark Owen, as well as manager Jonathan Wild, allegedly contributed, along with 1,000 others, £480m to 62 partnerships run by Icebreaker Management Services.
Lawyers representing Barlow, Donald, Owen and Wild told The Times they paid a "significant tax."
An HMRC spokesperson said they had already challenged an "avoidance scheme run by Icebreaker 1 LLP."
"This type of scheme will fail where there is circular borrowing which serves no economic purpose or which cannot in fact be used in a trade. We are now preparing to litigate Icebreaker 2 but for legal reasons cannot say more at this time. We examine the implementation of avoidance schemes in detail and will not let any aspect of these cases go unchallenged."
A lawyer for the Icebreaker company has denied claims that it schemes are used to avoid tax.
The row comes after comedian Jimmy Carr was heckled following reportsof his participation in the alleged tax avoidance scheme known as K2.
The Telegraph reports he joked at a gig in Tumbridge Wells on Tuesday night “I haven’t been reading newspapers today,” adding “I have been paying exactly how much [tax] I need to and not a penny more." (http://www.telegraph.co.uk/news/celebritynews/9343267/Taxman-to-challenge-loophole-that-shelters-millions-for-Jimmy-Carr.html)
K2 allegedly allows wealthy individuals to pay just to 1% income tax, according to an investigation by The Times. According to the paper, comedian Carr may shelter £3.3m per year as part of the Jersey-based sceme.
Chief Secretary to the Treasury Danny Alexander derided tax avoiders as the "moral equivalent of benefit cheats" on Tuesday, while Chancellor George Osborne has condemned tax avoidance as "morally repugnant." He told the Daily Telegraph in April: "I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs - and to be fair it's within the tax laws - so that they were regularly paying virtually no income tax. And I don't think that's right."
Comedian Carr had previously mocked tax avoidance in a sketch for TV show 10 O Clock Live, wearing a blonde wig and saying: "Did you hear that in 2011 Barclays made £1.6bn profit globally. Guess how much UK corporation tax we paid.. We pay just under 1% tax. It's amazing. You look impressed."
He went on "why don't you apply for the Barclays 1% tax scam."
A spokesperson for Jimmy Carr declined to comment on the reports, however his lawyers confirmed to The Times his membership of K2.
See below for a slideshow of Twitter users' reactions to the story.
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An HMRC spokesperson has said the government is "extremely effective" at shutting down tax avoidance schemes.
"HMRC is extremely effective at shutting down tax avoidance schemes fast and effectively. The avoidance "industry" has been seriously undermined by HMRC's focus on tackling avoidance - preventing billions of pounds of tax being diverted from the Exchequer.
"In our 2010 spending review the Government made £917m available to us to tackle avoidance, evasion and fraud. This is being used to ensure a level playing field for all taxpayers."