Featured Research

from universities, journals, and other organizations

Celebrities may be going bankrupt to avoid tax bills, warns British tax expert

Date:
March 26, 2014
Source:
Kingston University
Summary:
An insolvency expert has warned that celebrities may increasingly be abusing the bankruptcy system in order to maximize their earnings and reduce the amount of tax they pay. A large number of famous faces had recently been declared bankrupt after being unable to pay what they owed.

An insolvency expert has warned that celebrities may increasingly be abusing the bankruptcy system in order to maximise their earnings and reduce the amount of tax they pay.

Dr John Tribe, a leading researcher on personal insolvency law and bankruptcy history at Kingston University, says that during the past few years he has noticed a significant spike in the number of well-known people becoming bankrupt. "It looks like this trend has been developing partly in response to the recent changes which mean that an individual's bankruptcy record is effectively wiped clean after just a year, reducing both the stigma attached to becoming insolvent and, at the same time, providing a solution to their monetary problems," he suggested. "Also, I suspect that some celebrities are being advised that bankruptcy is the best way to avoid their tax bills."

A large number of famous faces had recently been declared bankrupt after being unable to pay what they owed to Her Majesty's Revenue and Customs (HMRC), Dr Tribe explained. "In 2008, former popstar Kerry Katona filed for bankruptcy after failing to pay the final 82,000 of a 417,000 tax bill and just five years later in 2013, she was declared bankrupt for a second time and was dropped as the face of a payday lending company," he said. "Similarly, Calum Best, the son of footballer George Best, took a decision to declare himself bankrupt last year citing an inability to make his tax payments." Other famous names to have taken this route after going in the red have included members of boyband Blue, Duncan James and Anthony Costa, and former EastEnders stars Joe Swash and Martine McCutcheon.

Dr Tribe believes the vast majority of household names who find themselves in the civil courts do so because they fail to sort out their financial affairs. "This tax-avoiding tendency, if it is that, seems to be alarming, not least for HMRC, as a drop in revenue ultimately affects us all," he said. "While this tax loss could, in the greater scheme of things, be relatively small, say in the low millions, celebrities play an important role in popular culture so can have a significant influence on how people use the system."

The bankruptcy procedure, he explained, existed for the relief and rehabilitation of those who were genuinely suffering insurmountable debt. "It should not be used as a means of escaping tax liabilities which better financial planning would have addressed," he said.

The total amount of tax lost through non-payment and avoidance in 2011/12 was 35bn, according to HMRC figures.

The idea of celebrities filing for bankruptcy was nothing new, Dr Tribe stressed. "Over the years everyone from former boxer Chris Eubank to 18th Century writer Daniel Defoe have done it," he added. "Peter Stringfellow, the veteran night club owner, went bankrupt back in 1992 as did Eddie the Eagle Edwards, Britain's first Olympic ski jumper."

By their own admission bankruptcy could offer a way forward for some celebrities, Dr Tribe said. "Christopher Biggins, the pantomime dame favourite, for example, described his bankruptcy as 'the best thing that ever happened to me'."


Story Source:

The above story is based on materials provided by Kingston University. Note: Materials may be edited for content and length.


Cite This Page:

Kingston University. "Celebrities may be going bankrupt to avoid tax bills, warns British tax expert." ScienceDaily. ScienceDaily, 26 March 2014. <www.sciencedaily.com/releases/2014/03/140326153624.htm>.
Kingston University. (2014, March 26). Celebrities may be going bankrupt to avoid tax bills, warns British tax expert. ScienceDaily. Retrieved August 20, 2014 from www.sciencedaily.com/releases/2014/03/140326153624.htm
Kingston University. "Celebrities may be going bankrupt to avoid tax bills, warns British tax expert." ScienceDaily. www.sciencedaily.com/releases/2014/03/140326153624.htm (accessed August 20, 2014).

Share This




More Science & Society News

Wednesday, August 20, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Charter Schools Alter Post-Katrina Landscape

Charter Schools Alter Post-Katrina Landscape

AP (Aug. 20, 2014) Nine years after Hurricane Katrina, charter schools are the new reality of public education in New Orleans. The state of Louisiana took over most of the city's public schools after the killer storm in 2005. (Aug. 20) Video provided by AP
Powered by NewsLook.com
Breakingviews: Ebola's Economic Impact Could Eclipse SARS

Breakingviews: Ebola's Economic Impact Could Eclipse SARS

Reuters - Business Video Online (Aug. 18, 2014) The virus ravaging Africa has yet to spread elsewhere. Yet Asia’s SARS crisis in 2003 showed how changes to behaviour can hurt the economy more than the actual disease, says Breakingviews' Una Galani. Video provided by Reuters
Powered by NewsLook.com
USDA Cracks Down On Imports From Foreign Puppy Mills

USDA Cracks Down On Imports From Foreign Puppy Mills

Newsy (Aug. 18, 2014) New USDA measures to regulate dog imports aim to crack down on buying dogs from overseas puppy mills. Video provided by Newsy
Powered by NewsLook.com
Health Workers in Sierra Leone Risk Lives to Battle Ebola

Health Workers in Sierra Leone Risk Lives to Battle Ebola

AFP (Aug. 18, 2014) Sierra Leone has lost 32 nurses since the end of May to the Ebola virus, an epidemic that's now claimed 1,145 lives in west Africa. Duration: 02:14 Video provided by AFP
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins