Michael Caine, Katie Melua and Arctic Monkeys among celebs chased for taxes by HMRC

Showbiz figures named in a group of 1,600 people who used one £1.2billion avoidance scheme Liberty, which is being challenged by HMRC

With wealth beyond most people’s wildest dreams, Britain’s leading celebrities can easily afford to pay their fair share of tax.

But many turn to avoidance schemes to bring ­contributions down – denying the Treasury vital funds that could go towards hospitals, schools and other services battered by cuts.

And yesterday it was revealed some of our best-loved stars are among 33,000 Brits being hit by massive demands after ploughing their earnings into such ­arrangements, leaving a tax shortfall of £5.1billion.

Showbiz figures including George Michael, Michael Caine, Katie Melua and the Arctic Monkeys were named in a group of 1,600 people who used one £1.2billion avoidance scheme called Liberty, which is being challenged by HMRC.

Letters demanding huge sums of money will be sent out in the coming weeks after a crackdown by the authorities.

An HMRC spokesman said: “If they do not pay we will take legal action. If they don’t come to an agreement with us, we can seize their assets. We have the power to do that without going through the courts.”

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Gary Barlow, who is facing calls to hand back his OBE over claims he invested in a tax avoidance scheme

Investors in the Liberty tax strategy, who also include Anne Robinson and Gary Barlow, will receive “accelerated payment notices” by the end of the month demanding they pay cash which HMRC claims is owed in tax.

From 2005 to 2009, some of Britain’s most senior ­businessmen joined doctors, dentists, lawyers and public officials in signing up for the scheme.

Labour MP Shabana Mahmood blasted the arrangements. He said: “At a time when ­ordinary families face a cost-of-living crisis and the deficit is still high, it’s vital that we do more to tackle tax avoidance.

“For all the tough talk this government is failing to tackle the problem and ensure everyone pays their fair share. HMRC’s figures show the amount of ­uncollected tax rose last year and only last week ministers voted against Labour’s call for a major tax ­loophole to be shut.”

Earnings poured into Liberty between 2005 and 2009 making it one of the largest avoidance schemes. In a complex series of bank loans and ­dividends, it created huge artificial “losses” which members used to reduce their tax bills.

HMRC has spent years ­investigating the scheme.

Georgian-born chart star Katie Melua – reported to have put £850,000 into Liberty – was even given a “Tax Superhero Award” by Christian Aid four years ago after she claimed in an interview that she had paid “nearly half of what comes to me in taxes”.

The charity said it was ­disappointed to hear she had ploughed her cash into the scheme. Its senior economic justice adviser Joseph Stead added: “We believe it’s morally wrong for people to avoid paying their fair share of tax, because it undermines vital public services such as hospitals and schools and forces up taxes on people who are too poor or too honest to use such schemes.” A spokesman for 29-year-old Melua said: “At the suggestion of her accountants at the time, she participated in Liberty in 2008 and declared this to HMRC.

“When HMRC stated they were reviewing the scheme, she paid the tax in full. HMRC are not out of pocket and she has not avoided any tax liability.”

George Michael, one of the world’s best-selling music artists, sought to shelter £6.2million in record and tour sales after paying £443,000 in fees to Mercury Tax Group, the
Leeds-based company that ran the Liberty scheme. He declined to comment last night.

Four members of Brit Award-winning band Arctic Monkeys – Alex Turner, Jamie Cook, Nick O’Malley and Matt Helders – each paid between £38,000 and £84,000 in fees to shelter up to £1.1million.

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Sir Michael Caine arriving for the Cars 2 UK Film Premiere party, at Whitehall Gardens followed by the film premiere at Empire, Leicester Square in central London.

Screen legend Sir Michael Caine used Liberty in an attempt to shield at least £600,000, according to internal documents. He has threatened to move to the US if the government raised taxes above 50%. A spokesman for the actor, who is worth £60million, said: “We have no comment to make.”

Take That star Barlow invested £4.46 million in Liberty and BBC presenter Robinson ploughed in £4million. A loophole that allowed the tax avoidance was closed in 2009.

The letters sent out by HMRC will demand a payment on a date with interest added if it is not met. After 28 days, there will be a further late payment fee and items such as homes and cars could be seized. The final step would be to take the celebrity to court. Barlow faces a separate tax bill over his involvement in a second ­avoidance scheme called Icebreaker, which was defeated by the courts in May.

The singer has so far made no comment.

The Mirror told yesterday how investors in Ingenious Media had also been warned by the company they face huge tax bills and will have to pay back up to £1billion. Stars including David Beckham, Ant and Dec and Andrew Lloyd Webber will receive letters urging them to pay up.

What is the Liberty tax scheme?

The Liberty offshore tax scheme was open only to high earners normally paying between 40 and 50 per cent.

A member paying an average of £70,000 in fees to the Leeds-based firm that ran it could earn £1 million a year tax-free legally.

It worked by helping its clients generate substantial artificial “losses” offshore which members used to avoid tax on other income.

The government closed the loophole in 2009.

Most tax schemes use offshore structures to ensure members’ names are not recorded at Companies House. HMRC is bound by confidentiality to keep the names of investors secret even after a scheme has been defeated in court.

Such secrecy was offered by the Liberty tax scheme. Thousands of member attempted to use Liberty to shelter £1.2 billion, many on the advice of accountants.