Clueless about tax: singer Katie Melua defends sign up to tax avoidance scheme Liberty

Singer-songwriter Katie Melua has come under fire after it was revealed that she signed up to a controversial tax avoidance scheme. 

 

Called Liberty, it works by creating artificial tax losses on investments which can be off-set against a person's tax bill. The scheme was exposed during a two week investigation by The Times into tax avoidance in Britain.

 

Although legal, Liberty has been heavily criticised because tax avoidance is thought to result in at least a £5bn loss for the UK economy every year.

 

For the 29-year-old musician it comes as quite a fall from grace, after the charity Christian Aid went from describing her as a “tax super hero” because she paid her taxes in full, to labelling her a “fallen hero”.

 

Melua wrote on her website that being in the spotlight for tax avoidance “sucks”, and said that schemes such as Liberty ought to be stopped to prevent others from using them.

 

She added that she was not fully aware of what she was doing when she agreed to sign up to it during her twenties: "That I was fairly clueless and inexperienced when it came to finance goes without saying and, I'm embarrassed to admit, not as interested in it as I should have been."

 

New laws being introduced this month will force people using tax evasion schemes to pay back millions of pounds in disputed tax.

 

1,600 people are known to have used Liberty, and Melua is one of many high profile people who have been caught out as a result of the investigation, with others including singer George Michael, presenter Anne Robinson and actor Michael Cane. People using Liberty are believed to have collectively hidden £1.2bn between 2005 and 2009.