You are here: Home - Insurance - News -

Advisers accused of ‘knowing perfectly well’ Icebreaker was tax dodge

0
Written by:
20/06/2014
Advisers who introduced clients to the Icebreaker scheme - in which members of Take That were invested - knew its sole aim was to enable tax avoidance, lawyers for an insurance company have claimed.

Icebreaker was a tax avoidance scheme that created tax losses out of nothing for wealthy people – members of  Take That included – which the government said could have cost the taxpayer £120m.

Members of the scheme – which was devised by Caroline Hamilton – claimed to be active partners trading in the creative industries, selling, for example, the rights to a song or an idea for a book.

They claimed tax relief on greater losses than they invested in the partnerships. The return on the partners’ ‘investment’ was the tax relief, which was considerably larger than their cash contribution.

The scheme was rejected by a tax tribunal in May after a case was brought against it by HMRC.

‘Investors’ in Icebreaker are now turning to insurance company Enterprise to pay out on policies it provided in respect of “losses or shortfalls” incurred by those who invested in the scheme.

However Enterprise is refusing to honour the insurance policies, on the grounds that it was deceived by Hamilton and her colleagues into believing that Icebreaker was a genuine investment vehicle, rather than an elaborate scheme designed solely to avoid tax.

In a letter from Ozon Solicitors, which acts on behalf of Enterprise, to one such Icebreaker ‘investor’, the law firm, citing the Tribunal ruling, states that: ‘Participants and their advisors [sic] as well as Ms Hamilton and her colleagues “knew perfectly well” that the gross capital contributions were a “pretence”.’

The letter continues: ‘Given that, in truth, the Icebreaker scheme was designed to make a loss (rather than a profit) as a means of conferring a tax benefit upon participants, it was virtually certain that a loss would be suffered immediately when cover was incepted.

‘Enterprise approached the risk that it was to cover based on…the proposition (albeit mistaken) that the full capital contribution would be invested by participants, and that the proceeds thereof would genuinely be used with a view to profitable trade.

‘Participants misrepresented the facts relating to the circumstances concerning their purported investment and the purpose of their participation in Icebreaker.

‘Enterprise considers that there is no cover under the policy for claims in respect of “losses or shortfalls” incurred by individual “investors”‘.

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
FTSE 100: This morning’s risers and fallers

A strong performance from mining stocks and more M&A activity in the pharmaceutical sector gave UK markets a boost on...

Close