Tracks & Tax, How Bob Geldof’s Flop Album ‘How to Compose Popular Songs That Will Sell’ from 2011 might result in a hit… From HMRC.
Over the course of more than four decades in showbusiness, Bob Geldof has generated his share of controversy.
In fact, whether it’s writing about a school shooting in California or chiding Margaret Thatcher over the British Treasury’s initial refusal to waive VAT on sales of the first Live Aid single, it could be said that the Boomtown Rats’ lead singer hasn’t exactly shied away from difficult topics.
Even though – Live Aid apart – his biggest-selling songs came in the late 1970s, Geldof has retained a place in the headlines.
Readers of this ‘blog will recall how last year, for example, a legal dispute over royalties with a former band member had revived interest in his status as a non-dom and his suggestion that the amount of time which he spent on charity work might merit tax relief (read more).
If HMRC’s interest wasn’t piqued by his considerable efforts on behalf of a number of worthy causes – most notably, a campaign on African famine relief which earned him an honorary knighthood – it could be forgiven for taking a closer look at what might be described as his day job.
Back in 2011, Geldof released an album, somewhat ironically entitled ‘How to Compose Popular Songs That Will Sell’. Even he was not confident of its chances of topping the charts, telling one interviewer that
“the chances of me selling any f***ing records are entirely slim”
HMRC had claimed that the scheme offered more tax relief for investors’ losses than they had contributed in cash.
The Revenue won a similar ruling two years later in the case of a film tax scheme, Ingenious, which was determined as having created artificial losses for investment in blockbuster movies such as ‘Avatar’ and ‘The Life of Pi’ (read more).
It’s fair to say that most people would be surprised to find anyone could possibly construe investment in a film by the same director – James Cameron – who had such success with ‘Titanic’, ‘Abyss’ and ‘Terminator’ as anything other than a licence to print money, not make a loss.
Indeed, as one HMRC official declared about such schemes at the time of the Ingenious outcome: “If something is too good to be true then it probably is”.
That was probably the reaction of wealthy celebrities like Take That, who were reportedly ordered to pay £20 million to HMRC for their involvement in the Icebreaker scheme
One of their fellow investors, a limited liability partnership named Lochurst, however, has now claimed in a recent High Court hearing that it only contributed an “unspecified sum” after being duped by Icebreaker and Geldof.
Lochurst has alleged that invoices were generated which were far in excess of the actual amounts needed to produce Geldof’s album.
It has even claimed that the whole affair might constitute “fraud”, an assertion rejected by Icebreaker.
Nevertheless, the matter will be considered afresh and in full by a tax tribunal, all of which promises further unwanted attention from HMRC for Geldof.
Due to the importance which the Revenue has placed on tackling avoidance – no matter when or where it occurs or the status of those involved – the stakes are certainly high.
After all, where taxpayers fail to pay what is considered to be their fair share, HMRC has shown that it can be just as insistent as Bob Geldof was in drumming up Live Aid donations in 1985.
Minus an expletive or two, perhaps.