Revealed: Celebrities including George Michael, Gary Barlow, Sir Michael Caine and Katie Melua were part of £1.2 bn tax avoidance scheme - along with QCs, doctors and judges



Investors in Liberty tax strategy reportedly include QCs, doctors and a judge



Scheme generated huge artificial 'losses' offshore used to reduce tax bills



HMRC has spent more than 10 years investigating Liberty, which is legal

Spokesmen for George Michael and Sir Michael Caine declined to comment

High profile celebrities including Katie Melua and George Michael were accused of hypocrisy yesterday for using an aggressive tax avoidance scheme despite preaching the importance of paying their taxes.

They are among 1,600 wealthy celebrities, business leaders, lawyers and doctors who together tried to shelter £1.2billion from the taxman via a complicated network of offshore companies.

Sir Michael Caine, Gary Barlow and two of his Take That bandmates, BBC presenter Anne Robinson and four members of rock group the Arctic Monkeys also invested in the highly controversial ‘Liberty’ scheme, a leaked database revealed.

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Scheme: George Michael has been named as one of 1,600 people who used the tax avoidance scheme Liberty to shelter a total of £1.2bn. The scheme is legal but has been investigated for more than a decade Katie Melua reportedly sought to shelter £500,000 through the scheme in 2008, two years before publicly stating she paid nearly half of her income in taxes. A spokesman said she repaid the sheltered tax to HMRC

Melua was criticised by Christian Aid, which nominated her for its Tax Superhero Award in 2010 after she boasted of paying ‘nearly half of what comes to me in taxes’ to support Britain’s public services.



The charity appeared to back a boycott of her music, tweeting: ‘You can buy Katie Melua’s albums on Amazon. Alternatively, you can sign up to become a tax justice campaigner.’



The Liberty scheme was ended in 2009 when a tax loophole was closed. But HM Revenue and Customs (HMRC) is still waiting to challenge it in court, with a test case due to be heard in March.

Experts believe the scheme will almost certainly be rejected, meaning the celebrities and other investors face having to pay back hundreds of millions of pounds.



Georgian-born Melua, 29, sought to shelter £850,000 through Liberty in 2008, paying £59,500 in fees, according to records obtained by the Times.

In the same year, she gave an interview in which she said she had chosen not to avoid tax by exploiting her dual nationality – she became a British citizen in 2005 – to put her earnings offshore.

The singer added: ‘I pay nearly half of what comes to me in taxes, but I know I’m paying to live in a country with lots of amazing qualities.’



Other Liberty members include Gary Barlow, according to The Times

Christian Aid said it was ‘morally wrong’ for people to avoid paying their fair share of tax and described her actions as ‘very disappointing’.



Joseph Stead, the charity’s senior economic justice adviser, added: ‘Companies, and individuals, often make the right noises about paying tax, but don’t live up to them.’

A spokesman for Melua said: ‘When HMRC stated they were reviewing the scheme, she paid the tax to HMRC in full. HMRC are not out of pocket and she has not avoided any tax liability.’



George Michael, 51, whose wealth is put at £105million, reportedly paid £443,000 to shelter £6.2million of his earnings via the Liberty scheme. But in 1996, the year before New Labour came to power, he told the Big Issue: ‘I’d pay 50 or even 60 per cent to a Labour government.’

Actor Sir Michael, 81, is said to have tried to shelter £600,000. In 2009, he threatened to return to America if the top band of income tax reached 51 per cent.

Anne Robinson, 70 in September, who reportedly invested £4million in the scheme after paying £280,000 in fees, spoke in 2002 of how she paid ‘vast taxes’.

Four members of the Brit Award-winning Arctic Monkeys – Alex Turner, 28, Jamie Cook, 29, Nick O’Malley, 29, and Matt Helders, 28 – each paid between £38,000 and £84,000 in fees to shelter between £557,000 and £1.1million in Liberty.



Gary Barlow, 43, reportedly invested £4.46million, while his bandmates Mark Owen, 42, and Howard Donald, 46, attempted to shelter £1.4million and £2.1million respectively.

Liberty was legal, and some investors may have chosen not to claim the tax relief arising from the scheme, or paid it back later.

But one tax expert said: ‘It is out-and-out tax avoidance. There is no pretence, as far as I can see, of any commercial background to it.’

John Mann, MP said: ‘There is a lot of hypocrisy there. It’s just not fair on the hardworking, tax-paying public.’

An HMRC spokesman said: ‘We are always happy to help the increasing numbers who want to disentangle themselves from the increasingly fruitless practice of tax avoidance.’