The former BBC personality claimed to be a second-hand car dealer in a failed bid to avoid paying tax on £1 million by entering into a tax avoidance scheme that includes 450 other high-earners.
Moyles, who described himself as the “saviour of Radio 1” before resigning as presenter of the breakfast show in 2012, had his “highly artificial” bid to avoid an estimated £400,000 income tax bill rejected by a tribunal last week.
The broadcaster claimed to have sold £3,731 worth of used vehicles but run up losses of £1 million that he wanted to claim against his tax bill.
Now all 450 members of the highly complex “Working Wheels” tax avoidance scheme, which is believed to include fellow celebrities and fund managers, will be pursued by HMRC for the money that they owe.
Moyles tried to offset the claimed £1m loss in the 2007-08 financial year against what he owed on his other income, including a £630,000 salary from the BBC, which is funded by TV licence fee payers.
He even filed a self-assessment tax return declaring he had “engaged in self-employment as a used car trader” during that period, and the finance charges he had incurred meant that he suffered a loss of more than £1 million.
At the time, the top rate of income tax was 40% – meaning that Moyles could have avoided paying £400,000.
Those who entered the scheme effectively paid large sums of money to arrange loans, which were then written off as losses that would reduce their liabilities.
Following investigation, HMRC rejected Moyles’ loss claim, which lead to the DJ launching an appeal before tax tribunal alongside two other affluent men who were also part of the scheme.
Moyles did not present evidence to the tribunal himself, but he did submit “a very brief and rather uninformative” witness statement, which made it evident that he took part in the scheme “for no purpose other than to achieve a tax saving”, Judge Colin Bishopp said.
Mr Bishopp added: “He was not concerned, said Mr [Derek] Smith [a chartered accountant], about the risk that he would be exposed to a large borrowing, but was anxious to be reassured that the scheme was lawful, and that he would not have to undertake any trading himself.
“He agreed that the scale of Mr Moyles’ borrowing was driven solely by the amount of the tax loss he wanted to achieve, in his case £1 million, and that the trading was not carried on for its own sake but was merely a means to an end; this was not, he agreed, a commercial means of borrowing for the purposes of an intended trade.”
David Gauke, incumbent Exchequer Secretary to the Treasury, commented: “This case is another example of why taxpayers should not fall for the promises of promoters selling schemes that are all too often too good to be true.
“Not only will the taxpayer waste money on the fees for these failed schemes, they will still have to pay all the tax, interest and penalties that are due.”
As with the Sir Alex Ferguson case, this is why people should not get involved in tax avoidance schemes. Too many people look at the just benefits whilst completely ignoring the associated risks and penalties.
Remember: unless a scheme has HMRC clearance there is always the chance of this happening to you.
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