A businessman whose Isle of Man based firm mass-marketed Disguised Remuneration schemes has been honoured by the Prince’s Trust, who will be naming a Manchester charity centre in his name.
The “Prince’s Trust Doug Barrowman Centre” will help disadvantaged young people in the Manchester area to get into education, gain access to training and provide a “one stop shop” to secure jobs.
However, the Prince’s Trust has come under fire for the decision, given that many of Mr Barrowman’s ex-clients are now facing cripplingly high tax bills as a result of using one of his companies’ services: AML, part of Mr Barrowman’s Isle of Man based Knox Group, sold Disguised Remuneration tax avoidance schemes to thousands of UK-based freelance consultants during the late 2000s and early 2010s.
More than 50,000 workers used such schemes, marketed by various providers including AML – the majority of which were based offshore. The schemes, marketed as compliant at the time and appearing to have supporting case law and QC opinion, were outlawed following the Rangers FC case and targeted in 2016 by a new rule called the Loan Charge, which has controversial, wide-ranging scope, allowing HMRC to tax individuals on 20 years’ past earnings in one lump sum when the law takes effect in April of this year. HMRC estimate that £3.2 billion will be collected by the Loan Charge.
Mr Barrowman was a non-executive director of AML, a firm that exclusively sold such tax avoidance schemes. He is the partner of Baroness Mone, a Conservative peer and former government adviser, and is described as a “Platinum Patron” of the Prince’s Trust and major benefactor of their “One Million Young Lives” campaign.
A Sunday Times investigation published this week found that workers using AML’s scheme included Ryanair pilots that were supplied through agencies. In some cases, the tax bills that they are now facing as a result have triggered “extreme stress and sleepless nights”, affecting their ability to work.
Steve Packham, a spokesman for the Loan Charge Action Group (LCAG), said, “It’s outrageous for Mr Barrowman to be having this centre named after him, considering the desperate situation these people find themselves in.”
Mr Barrowman donated £2 million to the Prince’s Trust via his foundation, The Barrowman Foundation, and will be the lead funder of the new centre in the Ancoats area of Manchester. It will span 8,000-10,000 square feet and will complement 4 existing centres in Salford, Burnley, Bury and Liverpool, boasting state-of-the-art digital facilities and flexible, custom-designed spaces.
Five former and current Ryanair pilots told The Sunday Times that they faced tax bills of up to £170,000 after using AML Disguised Remuneration schemes. One pilot, who has since joined another airline and wished to remain anonymous, said: “When I first found out about this, it caused sleepless nights, waking up in pools of sweat, shaking and shivering. My partner was saying, ‘I don’t think you should be flying an aeroplane as a commander out of London at the moment.’”
The recently formed 2019 Loan Charge All-Party Parliamentary Group is currently looking into Disguised Remuneration schemes as part of a review forced upon the Treasury by an amendment to the Finance Bill. Its chair, Sir Edward Davey, will be writing to the Treasury for more clarity on exactly how many pilots were involved in DR schemes.
He said: “Those who profit from this kind of scandal face no consequences while hard-working ordinary people are hammered and in this case face ruin.”
When contacted by The Sunday Times, Ryanair said it had never heard of Barrowman or AML and it was “completely untrue” that any pilots had been paid through loans.
A spokesman for Barrowman said AML was always fully compliant with tax law and HMRC was “regrettably” targeting workers who thought they had done nothing wrong. No money from AML has ever been used for charitable donations to the Prince’s Trust.
Incredibly, the spokesman said that HMRC was not pursuing AML for any owed tax.
19th February 2019.
Sources:
https://barrowmanfoundation.com/princes-trust/
