I had originally intended to write about Gary Barlow a few
weeks back – at the height of the ‘scandal’ – but, as ever, others were doing a
better job of it and people’s positions were inevitably entrenched, often linked
to their opinion of Gary Barlow and his music.
The points I’d intended to make were fairly basic. Every
major celebrity you’ve ever heard of is involved in actively seeking to reduce
their tax bill. They employ accountants and advisors for this purpose and may
not always be personally aware of the methodology used. You can argue that they
should be more involved to ensure that the process is ethical but generally they’d prefer to keep their distance, it’s safer that way. They
do their jobs (writing and playing music in this instance) and leave the
accountants to do the boring bits. You only have to recall the numerous cases
of famous people having to sue accountants/managers/staff for fraud/embezzlement
to know that this ‘disconnect’ is true.
The British tax system is fairly complex and accordingly
contains loopholes for intelligent and well-advised accountants to exploit.
Parts of the system are even so vague and convoluted that tax officials would
struggle to explain their purpose, much less enforce them. The levels of taxes
set on earnings/income are also set in acknowledgement that individuals and
companies will actively seek to avoid paying as much as they can. The
Government know that people try to avoid taxes and subsequently they raise the
percentage charged on acknowledged earnings (above certain levels) to
accommodate this. It’s a poor system but it’s the one we have.
This doesn’t acknowledge that Gary Barlow was right, only
that he’s not alone and is unlucky to be singled out in this way – partly as a
scapegoat. The irony is that the band may tour again to pay off their bill which may involve the use of another loophole. Many
musicians used to use a complex touring calculation to ensure they were out of
the UK
for a set time (linked to a specific number of nights – not days - per tax
year) and could claim some form of non-domicile arrangement. I don’t know if this is still possible but it was common at one time. Musicians
were more aware of this one as it probably had to be explained to them and
their families to justify such an ‘absence’.
My central issue with the icebreaker scheme that Gary and some of his TT colleagues used was that it sought to create
losses through investing in intellectual property. Some of this was via new
talent, often musical. It struck me that it’d have been a lot easier for Take
That to use their considerable wealth and influence to provide actual funding
for genuine talent. Had they invested properly and supported real musicians
there would have been short term losses of course but also possible gains when
that talent became successful. Perhaps the losses would not have sufficiently
offset their tax burden but maybe the gains eventually would have? Some of the
artists could even have recorded Barlow’s songs to give him additional
potential to earn.
Record labels have consolidated and shrunk to a level where
they only fund what they consider to be ‘sure things’ and often bail out too
early. It was once thought that the live industry would pick up the slack in an
attempt to stabilise the market and guarantee long-term touring revenues but
this appears not to have been the case, at least not so far. Everyone’s only
investing in established names. There is a considerable gap that successful
artists could fill, using their influence, knowledge and experience as well as wealth.
Gary & his cohorts
may have missed a trick if not in offsetting tax then at least in consolidating
their hero status instead of appearing to become greedy villains.
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