A string of footballers and other celebrities have been accused of using an extravagant data centre construction scheme in a bid to avoid tax.
The data centres, on the Cobalt business park just outside Newcastle, are completely empty two years after a tax relief deal was struck, which helped finance their construction.
Further reading
Google's 'contrived' tax arrangements must be 'fully investigated' by HMRC H4cked Off: Prism, death and taxes Google will pay higher taxes if laws changed, says Schmidt
Margaret Hodge, the chair of the House of Commons Public Accounts Committee, said that the tax relief available in enterprise zones, which was intended to stimulate economic growth, had been exploited by "greedy individuals" - although Hodge herself benefits from a tax-avoiding trust that owns family shares in steel trader Stemcor
The claims have been made in today's Guardian newspaper.
England manager Roy Hodgson, Arsenal manager Arsene Wenger and Manchester United player Wayne Rooney are all believed to have benefited from the scheme. Comedian Jimmy Carr, who has been fingered for his involvement in offshore tax avoidance schemes, was also name as a member, along side footballers Marouane Fellaini, Nikica Jelavic Sylvain Distin, Mikel Arteta and Leon Angel, agent for Hodgson and Wenger.
It was structured so that the football stars would invest in the building of the data centres and, in return, receive tax relief at the-then 50 per cent top rate of income tax. The generous tax relief for building projects in enterprise zones was abolished in the budget of April 2011.
The brochure produced to entice people to join the scheme promised £1.66 in "cash flow benefit" from HMRC for every £1 invested, according to the Guardian. In other words, HMRC (and, therefore, general taxpayers) paid out more in tax relief to investors than they put into the project, while also benefiting from the money made on the resulting asset.
"The 674 Cobalt [scheme] investors paid an average £117,000 each, £79m collectively, or 30% of the £264m total cost of buying the data centres. The remaining 70%, £185m, was borrowed from Bank Winter of Vienna.," claimed the Guardian.
It continued: "Although they put in only part of the cost, the wealthy investors were entitled under the enterprise zone rules to the full 50 per cent tax relief on the £264m purchase price - £132m. After a small amount of tax, the investors made a £52m profit from HMRC, paid soon after the deal was concluded in April 2011."
Although completed, the data centres remain empty and calls into question the current data centre building boom in the UK, which is thought to have been stimulated by demand for outsourced IT services and "the cloud", in particular.
