Last week, former Radio 1 DJ Chris Moyles had his appeal against HMRC upheld, costing him an estimated £400,000 in tax plus interest and penalties. In this week’s blog, I explore why the appeal was turned down.
How the Scheme Worked
Moyles declared on his tax return to 5 April 2008 that he engaged in trade as a second car dealer. This trade resulted in losses of £1m which could be offset against Moyles’ other income. At the height of his popularity presenting Radio 1’s breakfast show, it has been reported that he had a multi-million pound a year deal with the BBC. As a higher rate tax payer, offsetting these losses would have saved him £400,000 in tax.
Why the Scheme Was Rejected
The findings of the tribunal found that the trade of the second hand car dealer was undertaken entirely for the purposes of tax avoidance. The £1m of losses were created artificial, attributed to finance charges for raising loans. The tribunal concluded that as there never an intention for the scheme to make a profit, the losses would not be allowed to be offset against Moyles’ other income.
It is believed that 450 other ‘super-rich’ individuals took part in the scheme and HMRC will be in contact with them. HMRC now appearing to be taking a hard line approach to such blatant tax avoidance schemes and I would expect further tax to be reclaimed from other members of the scheme. This falls in line with HMRC’s approach against all forms of tax evasion, which with an ever increasing amount of information available to them, will see an ever increasing number of individuals and businesses investigated and challenged.
There are still many legal ways to minimise your tax liabilities. If you would like discuss this further with me, or wish to have a review of your business to ensure you are tax efficient, please get in touch using the contact details below:
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