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Global sport stars such as footballer Wayne Rooney and golf world number one Rory McIlroy are set to become embroiled in a tax row after HMRC began a probe into £2bn worth of government-backed regeneration schemes.
News of the investigation emerged as Margaret Hodge, chair of the Commons Public Accounts Committee attacked the government for failing to do enough to deal with tax avoidance, urging the Coalition to give tax relief 'urgent scrutiny'.
According to The Times, six schemes worth £450m, funded by Milton Keynes-based Chancery Accounts & Tax, are accused of 'entirely artificial' levels of developer income. 'Such arrangements [appeared to] have little do with the property assets but are entered into to achieve higher tax benefits,' HMRC told Chancery.
Chancery founder Peter Nichols is an ex-HMRC tax inspector with a 15-year pedigree at the department. Its website says its aim 'is to make businesses tax neutral, allow owners or senior executives to pay minimum taxation, create tax free zones for investments and savings and deal with any inheritance tax liabilities'.
Rooney and McIlroy were just two of hundreds of investors that collectively paid £31m to shelter £68m from HMRC last year through a single scheme.
The scheme centred around the use of renovation grants, which were set up to encourage ecoomic development in run-down areas.
Waverton Property LLP was set up to convert a Birmingham warehouse into a data centre which would store servers.
Other investors in the scheme included Liverpool manager Kenny Dalglish and Sam Allardyce, his counterpart at West Ham.
The scheme’s promoter, Harcourt Capital, said the deal was entirely legitimate and all investors were taking on genuine commercial risks. The taxman was expected to stump up £34m in relief to investors.
All the investors in the Waverton Property scheme were set to reap the dividends from the Business Premises Renovation Allowances (BPRA) – set up by chancellor Gordon Brown in 2007. It promises 100% tax relief to property owners on money spent on conversion or renovation works on commercial property in qualifying areas left unused for at least 12 months.
The current list of assisted areas – which includes Glasgow, the Scottish Highlands, Liverpool, Newcastle, Sunderland, Birmingham and Coventry - is due to expire on 31 December 2013.
Harcourt Capital is run by Nick Astaire, a former Future Capital Partners director, along with two other partners formerly from Ingenious Media. The companies were criticised by PAC earlier this year for sheltering billions of pounds using government relief in film schemes, but both denied tax avoidance.
An HMRC spokesman said: ‘HMRC has an outstanding record for tackling tax avoidance. We act on disclosures made under the DOTAS rules systematically challenging avoidance schemes.
‘We win a clear majority of cases taken to the Courts and we will continue to litigate avoidance on behalf of the vast majority of businesses and individuals who choose to play by the rules.’
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