Tax Avoidance Bill Bankrupts Millionaire Fashion Designer Karen MillenMarch 31, 2017
High street fashion designer, Karen Millen, has been declared bankrupt after failing to pay a £6 million tax bill arising from a tax avoidance scheme.
Millen, who opened her first store almost 35 years ago, claimed that her accountants advised her to enter a tax avoidance scheme back in 2001. Called Round the World, the scheme promised to save its members millions in capital gains tax by transferring shares to trustees in Mauritius.
HMRC challenged the scheme in 2010, eventually concluding that it was “carefully orchestrated” from the UK and was, therefore, subject to tax.
Last year, HMRC issued a notice to pay £6 million to Miller. Miller, currently embroiled in a 9-year conflict with Icelandic bank Kaupthing, was unable to pay and was declared bankrupt by the High Court this week.
Have you received an Advance Payment Notice?
The widely publicised Advance Payment Notice was introduced in the 2014 Budget. Prior to this if HMRC considered certain tax planning schemes were unlawful there would be a very lengthy investigation and legal action and only at the end of this if the individual lost would the tax be payable. Even if a scheme was invalid, the individual would end up not having to pay the tax for very many years.
An Advanced Payment Notice completely changes this. It requires participators in certain tax planning schemes make tax payments before the investigation and legal action. If the individual eventually wins the legal action, they would get the tax back at the end of this long process.
The tax calculated from the Notice is payable within 90 days of its issue.
Advance Payment Notices are having an immediate and real effect on individuals across the country, many of whom rashly never put aside the tax and simply spent it and therefore have no funds to pay an APN and end up Bankrupt.
We can help
If you have been hit by an Advance Payment Notice in relation to a tax avoidance scheme and are unable to pay it it’s essential you seek professional advice as soon as possible. As Insolvency Practitioners and business advisers, we are very experienced in providing help and advice in relation to debt and cash flow problems and helping individuals avoid insolvency using the Debt Arrangement Scheme (unfortunately for Karen only available in Scotland!).