September 21, 2020

1997-03-02 – The Observer

1997 03 02 The_Observer_Sun__Mar_2__1997_

The Dbserver 2 March 1997

'5

by lfichael Hillard
and David Bennett

PHIL ‘COllINS. Eric Slapton
Ringo Starr and the Sex Pis-
tols were among a galaxy of
rock and roll megastars forced
to hand over millions of
pounds to the Inland Revenue
after a secret inx estigation
into schemes to minimise tax
on their royalties.

The full list‘df stars targeted

reads like a compilation

album from British pop Inu-
sic's hall of fame. It could be
titled Now That’s What I Call
Ta: Avoidance.

A who’ 5 Who of British pop
paid up almosti‘zo “million in
secret deals — several paid
more than £1 million each —
to settle tax claims after an
elite Revenue unit success
fully challenged a series of tax
schemes. _

The pop millionaires were
guaranteed confidentiaht} in
return for paying up and the

Revenue Special Ofiice team ,

who did the deals were sworn
to secrecy under the Official
Secrets Act However, the 02;»
server has established the de
tails behind many of these
remarkable deals. done since

the eafly Eighties.
The largest settlement un-

covered, for almost £31m, was
made by the Bee Gees, who
Were awarded a lifetime
achievement award at last
week‘s Brit Awards. Robin
Gibb alone paid about £1.8m
The rest. was shared by his

brothers Barry and Mauiice. '

At }east £2.75m was paid by
members of the Rolling
Stones. Almost £25111 was
paid by the members of origi-
nal heavy rockers Led ZeppeL
1311 And more than £2111 was
paid by Phil Collins and other
Genesis members.

A £1.5m settlement was
made by a company owned by

. Mark Knopfler. John Illsley

and other members of Dine
Straits. Pete Tomshend and
John Enmristle of the Who

handed over asimilar sum

Guitarist Eric Clapton who
won a Grammy award last
week settled for £11111 as did

’the members of Deep Purple

after the Revenue probed £7111

_ in overseas royalties.

The Sex Pistols. the punk
pioneers featured in the Great
Rock and Roll Swindle.
handed over £250,000, while
1121131101121 rocker Shak'm’ Ste
vens paid up to £500,000.

Other targets for Revenue
investigations included the

Smiths, whose hits include

“Heaven Knows I’m Miserable

Wyman claimed to.

live across the
Channel and
emphasised the
point in his hit, ‘Je
Suis un Rock Star’._
The ”Revenue
didn’t agree '

Robert Plant and '
Led Zeppelin

settled for £2. 41m
after tax schemes V

.. 1 With firms like

More Luck Than

7- J udgement proved

to be flawed "

Now’, the Kinks, whose
‘Sunny Afternoon' contains

the line ‘The taxman’s taken

all my dough'. and ‘Sir’ Bob
Geldof, saintly founder of the
Boomtown Rats.

Special Oifice investigators
probed the entire Bn'tish mu-
sic industry -— artists. produc-
ers. managers and record com~
panjes, even bootleggers.

Helped by seminal High
Court rulings against artifi-
cial tax avoidance schemes,
they successfully challenged
popular devices to shelter
mega-earn‘mgs from tax rates
of up to 60 per cent. Investiga-
tors also disproved claims of
living abroad and collected on
earnings fIOm foreign tours

and record sales sheltered-in
offshore tax havens. They
were often helped by the stars’
ineptitude 0r mistakes in fail~
ing to be paid in accordance
with cleverly worded con-
tracts. In only a minority of
cases did the taxman come
away empty-‘handed. . -
Ringo Starr learnt at first
hand what fellow Beatle
George Harrison meant when

he wrote in ‘Taxman’ ‘Should-

5 per cent appear too small, be
thankful I don’t take it all’.
The Revenue estimated that
Starr owed up to £500, 000 but
settled for £160, 000.

Eighties idols Duran Duran

agreed to pay nearly £550, 000
on overseas earnings. Led

Zeppelin settled after the tax
avoidance arrangements. for
companies receiving their roy-
alties — which had names
such 'as More ,Luck than
Judgement and Things That
Go Bump , in the Night —

proved flawed Robert Plant,-

John Baldwin. and John Bon-
ham (posthumously) also

made five and six- figure per-
sonal settlements. .

Singer- songwriter Gilbert .

O’Sullivan, who had a string
of hits in the 19705, was also
expensively wrong- -footed
when a tax scheme proved
inefiective. But the Revenue
waited until he successfully

sued his former manager for
unpaid royalties to‘ collect

£518,000. O’Sullivan went off

to live‘in Jersey. The Boom-'

town Rats were targeted for
‘sheltering’ earnings through
offshore trusts 'and partner-
ships. They came to a £200,000
settlement. The Revenue also
pursued Midge Ure, Geldofs

CO-Wl'iter Of the Band Aid.

anthem, ‘Do they know its
Christmas?’. ,His band
Ultravox paid almost £30, 000

Former Dexy 3 Midnight
Runners star Kevin Rowland
paid £48, 000 when the Reve-
nue caught up with his Manx
companies.

Many stars moved - either

themselves or their earnings

ofl‘shore, especially under La-
bour when the top tax rate

' was 98 per cent. N0n~residents

only. pay tax on income

' _ receivedin Britain. But in the

Eighties the Revenue tight
ened up the rules and taxed
anyone with a UK prOperty.

The Stones were targeted
after their ”1982 and 1990 world
tours when investigators
received‘free concert tickets
in the line of duty.

Drummer Charlie Watts
and bassist Bill Wyman
claimed to. live across the
Channel. Wyman emphasised
the point musically in his 1981
solo hit ‘Je Suis un Rock-Star’
in which he- declared ‘I live in
France‘. ‘Mais non,’ declared
the Revenue. Wyman later
agreed topay £1.25m. Watts
settled for arcund Elm. Mick
Jagger claimed to. live on the
Caribbean island of Mustique.

Again the Revenue chal-

lenged him and Jagger paid
£450 ,000 in 1986. ‘

‘Sunshine Superman’ star
Donovan, who‘gave a Come—
back concert in London last
week, attracted the Revenue’s
interest after they discovered
the folk singer had a house on
one of several Scottish islands
he owned He paid about
£45, 000. '

The Pretenders, fronted by
Chrissie Hynde, Were some
£700,000 ‘Brass [in Pocket’

Pet Shop Boys,

ck stars in secret ' 25m taX d al

lighte1 alte1 then g1g w1th the ‘
Special Office
Peter Gabriel settled fox

Vahout £90,000 and dandy high-

wayman Adam Ant for ap.
proximately £220 000.1
Trevor H0111 one of 81131;“
ain’s most succesful reco1d
producers and member of one- -
hit wonders the Buggies. paid

£30,000. Horn won awards for

his work with Tina'Turne'r.
Frankie Goes To Hollywood,
and Rod‘
Stewart

The Revenue’s tastes Were
nothing if not eclectic. Reggae
anist Jimmy Cliff was-target-
ed along with instrumentalist
Mike ‘Tubular B'ells’ Oldfield,
who settled ifor more than
£110,000._ .
- Paul Rodgers — a favourite .

‘ of Labour leader Tony Blair,

who Says he would not have
become a politician if he had

’ possessed as good a voice as

the former Free and BadCom-

pany lead singer —— paid up'to

£600,000.

'. Faced‘ by their Special

Qfiice fans, the pop stars prob-
any felt like those in the hit

musical Les leserables. They

Were not alone The show’s co-
corhposer'Alain Boublil must
have been'exactly that when '
the Revenue claimed up to_
£1.5m from his royalties.