£1.2bn tax avoidance scheme revealed to be used by Michael Caine, George Michael and more

Some celebrities, including Arctic Monkeys band members, Sir Michael Caine and George Michael, are accused of sheltering cash in an avoidance scheme.

17:34 09 July 2014

Some 1,600 people including celebrities, QCs, doctors, top businessmen, criminals, and a judge are being accused of investing in the Liberty tax strategy to avoid paying their taxes in the UK. The scheme worked by making huge artificial losses offshore, which members could then be used to avoid paying tax on other income.

With the scheme, taxpayers were able to reduce their taxes from 40p to just 7p for every £1 earned, while higher rate taxpayers could earn £1million each year tax free. To make this happen, they had to pay £70,000 in fees to Mercury Tax Group, the company which ran the scheme between 2005 and 2009.

Based on the documents leaked to The Times, Wham! hitmaker George Michael sought to shelter £6.2 million he earned from record and tour sales. His spokesman said that due to his busy schedule, he could not answer questions at the moment.

Sky's political correspondent Anushka Asthana said: "All of these celebrities are going to be targeted by a change of rule.

"HMRC is going to take this tax scheme to court next March but in the meantime the new rules mean they have to pay the money back.

"If they don't, the Government can go directly into their bank accounts and take it."