BREAKING THE ICE
So Gary Barlow amongst several other multi millionaires invested in a tax avoidance scheme called Ice breaker and now the world is up in arms.
Let’s take away the hysteria and try and sort the fact from the fiction.
1) Has he done anything illegal.
Absolutely not. He has made an investment and accounted for it on his tax return in accordance with top professional advice.
2) So what’s the problem.
Her Majesty’s Revenue & Customs (HMRC) disagreed with that professional advice and successfully challenged the tax treatment of the investment. Every day up and down the country there are tax tribunals and court cases sorting out disputes between HMRC and taxpayers.
3) Will he have to pay the tax back
Yes as a result of this ruling, Gary and the other investors will have to pay an amount of tax based upon HMRC’s treatment of the investment, and provided they make that tax payment, they have done nothing wrong.
4) Will they be punished
Whilst they will have to pay interest based on the original due date of the tax, there will be no penalties or other punishment. The reason for this, is that this is a technical dispute between the tax advisers and HMRC. At the time Gary and the others completed their tax returns, they believed they were correct, and they had received advise from a top barrister confirming this. Whilst with hindsight it appears that barrister was wrong, the law of this land is that if you act in good faith there is no further punishment, beyond repaying the tax with interest
5) Isn’t it immoral
There are two issues here, the letter of the law and the spirit of the law. There are many people who say “I have a duty to pay tax within the letter of the law only”. The truth is, when the boot is on the other foot, and a tax payer falls foul of the letter of the law but not the spirit of the law HMRC are quick enough to chase the tax, and there are many cases of this nature. In addition there are many of these investments which afford additional tax breaks to the investors but provide real economic benefit to this country.
6) Did Gary know what he was doing.
Undoubtedly so. These investments are covered by regulations and are normally explained in great to the investors.