One of the most infuriating things about saving, particularly if your frugality has been inspired by the current economic climate, is knowing that there are extraordinarily wealthy people out there not paying their dues when it comes to tax. Usually when we read about tax dodging rich people they are usually referred to collectively and nobody can get too frustrated about them because nobody really knows who they are. Well, over in in the UK recently there have been a few high profile cases of high profile tax dodgers getting their comeuppance.
Stand-up comedian Jimmy Carr is one of the most popular television personalities in the UK and is reasonably well known worldwide for his Comedy Central show Distraction and his regular appearances at major comedy festivals such as Just for Laughs in Montreal. It was revealed in the British tabloids last week that Carr had been diverting his income into a company based on offshore tax haven Jersey (an island in the English Channel which separates the UK and France).
Carr was receiving his money back from this company in the form of a secured loan which is not subject to the same levels of tax as a normal income. It transpires that Carr, a multi-millionaire, was paying 1% income tax compared to the 20% paid by your average Brit. Now, it must be noted that Carr had actually done nothing illegal, but he has been seen as a bit hypercritical; considering just a few weeks before he was performing a routine about tax dodging bankers and London “fat cats” on satirical news show 10 O’Clock Live. British Prime Minister David Cameron has been quick to lambast Carr’s tax decisions as “morally wrong”. Carr has since apologised publically and vowed to make less questionable decisions in the future.
Take That were a sort of British New Kids on the Block when they first appeared in the British pop charts in the early 90’s but today the group have managed to corner the mature radio ballad genre; with their songs featuring in Hollywood movies such as Stardust and the band performing at huge events such as the Queen’s Diamond Jubilee. The group’s main songwriter Gary Barlow, along with two other members Howard Donald and Mark Owen, have also been involved in similar schemes to Carr and paying almost insignificant levels of income tax as a result. Oddly enough the Prime Minister has made no mention of Take That’s tax avoidance; though a cynic might suggest this is due to Gary Barlow providing support to Cameron’s Conservative Party at the last UK election. The most popular twitter joke about the Take That tax case? Q: Why does Gary Barlow like the Queen so much? A: Because he doesn’t have to pay for her.
Glasgow Rangers Football Club
Glasgow Rangers are one of the biggest football (soccer) teams in the UK, certainly the largest in Scotland, and recently they have fallen victim to years of financial mismanagement.
What is being alleged is that Rangers had been paying players tax fee bonuses and loans instead of wages as far back as the late 1980’s thereby avoiding paying out millions in income tax. Between the late 80’s and 2012 Rangers amassed a massive fifteen league titles by splashing out millions of pounds on highly rated international football players such as Paul Gascoigne and Tore Andre Flo. The rest of the Scottish Premier League teams could only wonder what was going on as they got thrashed week in week out. The other Scottish teams got their revenge recently though as Rangers collapsed under their mounting financial woes and went into liquidation at the beginning of June; taking 140 years of history into oblivion with them. When Rangers tried to gain entry back into the top league as a new company the other teams rejected their application citing reasons of “sporting integrity”; leaving Rangers in limbo. To put the significance of this event into perspective for those who don’t follow UK soccer this would be like The Detroit Red Wings, Montreal Canadiens or Toronto Maple Leafs having all their Stanley Cups consigned to history and being booted out the NHL.
So, if reading about those who work the system or simply cheat their way out of paying their way makes your blood boil next time you have to pass on a luxury to keep up with your savings, remember that you are doing the honest way and those chancing their luck will, eventually, get caught out.
Kevin Ball is a financial blogger who writes for Norton Finance, a family run company who provide debt consolidation loan and finance solutions in the UK.