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DODGE BALL; Southgate & partners faced tax avoidance bill Clients owing PS434m to taxman after hearing.

Byline: EXCLUSIVE by JEREMY ARMSTRONG and NICK SOMMERLAD

GARETH Southgate takes to the dugout in his first game as England manager tonight as one of hundreds of rich clients caught up in a PS434million tax avoidance dispute.

The 46-year-old former England player invested in two partnerships set up by notorious investment firm Ingenious, which disputes the taxman's avoidance allegations.

He joined Inside Track 1 LLP and Inside Track 3 LLP back in 2004, as a player.

But along with 400 other investors he has been hit with a tax demand by HM Revenue and Customs. From 2002 to 2010, Ingenious attracted stars including Southgate, David Beckham, Ant and Dec and Gary Lineker.

Hundreds of millions of pounds were invested with the intention of backing the British film industry.

But the company claimed PS1.6billion in losses and individuals, who were made partners of limited liability partnerships, were lawfully able to write off any losses from the schemes against other income.

Companies House show Southgate is still listed as a member of the two LLPs.

Ingenious helped to fund blockbuster movies such as Avatar and Life of Pi.

Now, following a tax tribunal ruling, investors have been facing a huge bill for PS434million in unpaid tax, plus interest and legal fees. The total amount of tax relief originally claimed by Ingenious investors was PS620million.

UNDERCOVER The revelation could not come at a worse time for the Football Association after the departure of Sam Allardyce, forced to stand down from the England job after only one game and 67 days.

He was filmed by undercover reporters discussing transfer deals and mocking his predecessor Roy Hodgson. But he still walked away with a reputed PS1million pay off.

Allardyce also invested in Limited Liability Partnerships with a number of high profile sport stars.

It is believed he was an investor in Little Wing Films, a legitimate tax avoidance scheme created by a London accountant and two financial advisers.

Tax investigators later discovered the firm, which claimed to have spent PS250million preparing films, was being used as a front by three fraudsters who were jailed for nine years each. But Allardyce was not involved in any wrongdoing.

Southgate is caretaker boss in tonight's World Cup qualifier against Malta and will reportedly earn PS500,000 for managing four games after taking over from Allardyce.

The FA were prepared to reward him for taking over at such short notice by giving him the equivalent of Allardyce's PS3 milliona-year salary for the time he was in charge.

He will be in charge as interim England boss until the friendly with Spain on November 15. And the FA will only conduct a search for a new boss after that game. Many pundits back Southgate for the job full-time. His playing career spanned 12 years at the top, from 1994 to 2006, during which he is likely to have amassed a fortune in excess of PS10million.

He was then manager of Middlesbrough, before being a TV pundit. He was appointed FA head of elite development in 2011.

Southgate will never be forgotten for missing the decisive penalty in the 96 semifinal shoot-out against Germany. It is not known whether Southgate or other partners have settled their tax affairs with HMRC or awaiting the outcome of the legal dispute between the two sides.

An Ingenious spokesman said at the time The legal will of the tribunal ruling in August: "We have consistently maintained our film production partnerships were bona fide businesses run for profit and we are pleased that the tribunal has recognised this.

investors face bigger "However we dispute the basis on which the tribunal has restricted loss relief to investors and are considering an appeal.

JENNIE BOSS OF "We are reviewing the judgment in fine detail and will comment further."

HMRC director general of enforcement and compliance Jennie Granger said the schemes had funded "some of the biggest films of all time".

She added: "The schemes involved people claiming far more in tax than they invested in the first place. We long always say that if something is too good to be true then it probably is.

t battle mean ltb "And in this case the long legal battle will mean that investors face even bigger bills for interest and legal costs."

even bills GRANGER HMRC COMPLIANCE wTPSo " The case was part of a wider crackdown by the Treasury to recoup some PS7billion thought to be owed to the Exchequer as a result of avoidance schemes.

Some 12,000 people are said to have bought into movie schemes that qualified for tax breaks under rules designed to help the UK film industry.

But celebrities and investors were warned they could all be forced to find the cash to pay HMRC before their cases were decided. In 2014, the Treasury suggested the scheme members pay their tax owed in advance of any legal decision on the schemes, offering a discount to wealthy investors if they elected to settle.

Companies House records show that members of Inside Track 1 LLP include film director Guy Ritchie, former BBC news reporter Kate Adie, singer Craig David, and ex-footballers Emile Heskey and Martin Keown, among many others.

Tax dispute resolution partner Dawn Register said the tribunal decision is not an outright victory for either HMRC or Ingenious.

She added: "Both sides are likely to be considering onward appeals and the final decision may be years away."

The HMRC stance has come as a blow to many celebrity high-earners investing in film finance schemes, including Anne Robinson and Jeremy Paxman. The majority of these were typically funded between 2004-2007 when then PM Gordon Brown looked to energise the UK film industry. Investors were promised big returns over 15 to 20 years. When asked about Southgate's tax affairs, an FA spokesman said last night: "This is a private matter."

Wayne Rooney is facing a PS3.5million charge after tax authorities challenged a suspected avoidance scheme in which he was the largest investor, it was reported last night.

The footballer allegedly used Invicta 43, a film investment partnership that generated tax relief for its wealthy clients, to shelter PS12.5million.

The scheme would have enabled him to avoid tax legally on his then PS4million annual salary at Manchester United for three years.

jeremy.armstrong@mirror.co.uk

The long legal battle will mean investors face even bigger bills JENNIE GRANGER hmrc boss of compliance

CAPTION(S):

TRAINING Gareth Southgate with England squad

SHAMED Sam Allardyce's downfall

INVESTMENT Ingenious funded Avatar

taxing times Southgate is caught up in schemes

MEMBER Martin Keown

MEMBER Kate Adie

MEMBER Craig David

MEMBER Guy Ritchie
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Publication:The Mirror (London, England)
Geographic Code:4EUUK
Date:Oct 8, 2016
Words:1103
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