Jimmy Carr has found his tax affairs under scrutiny once again after he was named among investors in a tax avoidance scheme that cost the taxpayer £52 million.
The comedian, who admitted in 2012 to making a "terrible error of judgement" over his involvement in another tax avoidance scheme, will now face a demand for repayment of tax relief given to him after he put money into an enterprise zone.
The entirely legal tax incentive scheme was scrapped in 2011 after investors had committed to it.
Carr and the England striker Wayne Rooney were among 675 investors who between them were given £131 million in tax relief, even though they only invested a total of £79m in two data centres that have never been occupied.
The £52m “tax profit” - deductible from their tax bills - will now be recovered by HM Revenue & Customs and some investors have already had tax demand payments, according to the BBC.
In 2011 famous faces including current and former football managers Kenny Dalglish, Arsene Wenger and Roy Hodgson and Rick Parfitt of the rock band Status Quo put money into the scheme to build two data centres on Tyneside.
Cobalt Data Centres 2 and 3, in Cobalt Business Park, near North Shields, were intended to foster economic growth in the area, and anyone investing in them was given a generous tax allowance to encourage investment in enterprise zones.
The entirely legal tax incentive scheme was scrapped in April 2011, just after the investors had put their money in.
The allowance enabled them collectively to claim 50 per cent tax relief from future tax bills on the full £263m cost of building the data centres, even though most of the money was borrowed from a bank in Vienna.
Five years on, the buildings remain empty and local MP Bridget Phillipson told the Commons public accounts committee last week there was a "principle at stake" if a system set up to support regeneration and investment was "exploited by others with no interest in regeneration or investment, simply to line their own pockets".
According to the BBC, investors are being sent accelerated payment notices, which mean they have to pay HMRC first and appeal afterwards if they disagree.
Some investors are understood to have taken the matter to a tax tribunal.
Carr, who was criticised in 2012 for sheltering income using the legal but aggressive K2 tax avoidance scheme, resigned as a member of Cobalt Data Centre 2 in May.
In 2012 David Cameron described Carr’s use of the K2 scheme “morally wrong”, even though it was fully disclosed to HMRC, and Carr said that “I will in future conduct my financial affairs much more responsibly”. He had by then already invested in Cobalt.
He has not so far commented on HMRC’s attempt to regain tax.
A spokesman for Roy Hodgson and Arsene Wenger said the two men were “pleased to invest in government-backed regeneration programmes which will hopefully help to generate new jobs in these areas".
Lady Ann Redgrave, wife of the former Olympic rower Sir Steve, was also among those who invested.
She said she had done so "in good faith on the advice of my financial advisor through an investment scheme".
A spokesman for Rick Parfitt said: "As this matter is currently under appeal it would be inappropriate to comment at this time."
Project backer Harcourt Capital said the delay in letting the centres was because of a rapidly-evolving data storage industry which had proved a "more difficult market to predict than was originally expected".
A spokesman for HMRC said: “We do not talk about identifiable schemes. The Enterprise Zone Allowance was designed to provide support to economically deprived areas of the UK. HMRC will not tolerate any abuse. When we find evidence of abuse we crack down to make sure the relief works as Parliament intended.”
0 comments: