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Rooney faces £3.5m tax bill for film scheme investment

Football star Wayne Rooney is facing a £3.5 million charge after HM Revenue & Customs challenged a suspected tax avoidance scheme.

Rooney faces £3.5m tax bill for film scheme investment

Football star Wayne Rooney is facing a £3.5 million charge after HM Revenue & Customs challenged a suspected tax avoidance scheme.

According The Times HMRC has told Rooney it believes he is liable for the sum

The footballer used Invicta 43, a film investment partnership that generated tax relief for its investors, to shelter £12.5 million.

The scheme would have enabled him to legally avoid tax for three years on his then £4 million annual salary at Manchester United.

According to The Times Rooney was put in the scheme by the now defunct Financial Management Group (FMG), described by the paper as a wealth management group, at one time chaired by the former Liverpool manager Kenny Dalglish. 

It said Invicta is thought to have paid a commission, possibly 2% of Rooney’s £12.5 million total investment, to FMG.

The paper said 225 Invicta investors collectively bought the rights to two Hollywood films, Fred Claus and 10,000 BC.

It worked by allowing partners in the scheme to claim tax relief on the cost of purchasing the films. Partners were expected to pay the tax in later years as income was generated from leasing the movies back to the studios.

A £200,000 investment could be topped up with a further £800,000 of borrowings, to £1 million.

The investor would then claim tax relief on that £1 million, worth £400,000 in 2007, the year the scheme was launched, and used that relief to shelter other income over three years.

The Times said HMRC contacted investors to inform them of its objections to Invicta.

Following this it issued some of them with partner payment notices (PPNs), asking for upfront tax payment.

A spokesman for HMRC confirmed to The Times that PPNs were only sent when it considers the arrangements used to be avoidance.

However, Rooney has not yet received a formal tax demand, the paper understands.

Investors have so-far been asked to pay one and a half times their cash contribution but could be asked to pay more than four times the cash paid in.

Rooney put in about £2.5 million cash and borrowed about £10 million from Bank of Scotland, the paper understands.

The bank, then an HBOS subsidiary, was working with Invicta on the scheme.

According to the paper, Rooney also borrowed his cash contribution from Investec. It is understood that loan has been paid back.

Rooney’s spokesman would not comment on this or other claims.

He said: ‘Wayne’s tax affairs have always been conducted in full compliance with the law.’

Fellow footballer investors include former Manchester United defender Wes Brown, and the Senegalese former player Abdoulaye Faye, of Newcastle United and Stoke City.

There is no suggestion that any named investor has behaved illegally or will not be able to pay, the paper said.

It added that many have argued the scheme was sold as a product for tax deferral rather than tax avoidance.

HMRC has argued that Invicta structured the scheme in breach of its guidance and questioned why investors were able to delay repaying most of the tax until 2023.

Under the PPN rules, recipients have 90 days to hand over the disputed tax and can get it back only if the scheme is upheld in court.

Law firm Fieldfisher has been employed by investors to dispute the PPNs.

HMRC will decide whether to reissue the demands in February. If investors fail to settle the case before that data they will be given 30 days to pay.

 

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