6 Famous Tax Dodgers — and What Small Businesses Can Learn

As I've written about recently, HMRC have recently refocused their tax investigations on small businesses, and their rulebook applies to everyone.

The following six high-profile tax cases illustrate the kind of mistakes HMRC sees every day in ordinary small businesses — just with fewer headlines and smaller numbers.

Illegal tax evasion ⛔ vs. tax avoidance ⚠️

Before looking at the examples, it’s important to be precise about the difference.

Tax evasion is illegal. It involves deliberately hiding income, falsifying records, or knowingly breaking the rules. It can — and does — lead to prosecution and prison.

Tax avoidance, by contrast, involves arranging one’s affairs within the law to reduce tax. However, when arrangements are contrived, artificial, or driven mainly by tax savings rather than real commercial activity, HMRC may challenge them — sometimes many years later.

An important practical distinction: Tax evasion is usually masterminded by the taxpayer, whereas tax avoidance schemes are often mis-sold by advisers to taxpayers who trust that what they’re being offered is legitimate.

💡 Tax tip:As established in the case Inland Revenue Commissioners v. Duke of Westminster [1936], every taxpayer is entitled to arrange their affairs to pay no more tax than the law requires. However, that principle does not protect artificial schemes that lack genuine commercial substance.

Clear cases of tax evasion

Lester Piggott

Lester Piggott was one of Britain’s greatest ever jockeys — a nine-time Derby winner and national sporting hero.

That reputation collapsed in 1987 when he pleaded guilty to multiple counts of tax fraud after deliberately concealing income through offshore bank accounts. He received a three-year prison sentence and served time.

This was not a technical disagreement with HMRC. It was deliberate concealment.

Sarah Panitzke

Sarah Panitzke’s was involved in a large-scale carousel (missing-trader) VAT fraud, exploiting cross-border mobile phone trading to generate fraudulent VAT repayments of hundreds of millions of pounds!

After fleeing the UK, she was convicted in her absence, later arrested in Spain, extradited, and sentenced to eight years in prison, alongside multi-million-pound confiscation orders.

The uncomfortable truth for business owners

Different lives. Same category of behaviour.

Once HMRC can show intentional dishonesty — hiding income, falsifying records, or knowingly participating in sham transactions — the issue stops being about unpaid tax and penalties and starts being about criminal liability.

Small business reality: Cash-in-hand work, undeclared side income, or “I’ll fix it later” thinking are not harmless shortcuts. They are exactly the behaviours HMRC uses to justify harsher penalties — and, in serious cases, prosecution.

Aggressive tax avoidance: “too good to be true”

Jimmy Carr | Gary Barlow & Take That | David Beckham

Let’s be clear and fair: none of these individuals were convicted of tax evasion, and none were accused of hiding income.

But all three entered into arrangements that shared a common flaw: the tax outcome was simply too good to be true.

• Jimmy Carr used a loan-based offshore scheme marketed as legal and widely used.

• Gary Barlow and his bandmates invested in partnerships presented as commercial ventures that conveniently generated large tax losses.

• David Beckham invested in film-related structures that HMRC challenged many years later, reopening his tax position long after the schemes were sold as “settled”.

In each case, the technical detail mattered less than the underlying question HMRC always asks:

Was this really about making money — or about avoiding tax?

Why this matters to ordinary businesses

⚠️ Small-business versions of the same avoidance schemes still circulate today - see HMRC live list of name schemes and promoters.

💡 Practical tip: If the primary selling point is the tax saving — rather than how the business actually makes money — you are in dangerous territory. HMRC and tribunals consistently look past paperwork to commercial reality.

Ignoring the rules: Just poor compliance

Vince Cable

Vince Cable, former Business Secretary and leader of the Liberal Democrats - fell foul of a far more common problem.

He failed to register for VAT once his freelance income exceeded the VAT threshold. The amounts involved were modest. The penalty was small. The publicity was not.

There was no scheme, no offshore structure, no clever planning. Just a failure to monitor turnover properly.

Small business reality: This is one of the most common triggers for HMRC action. VAT registration is based on a rolling 12-month total, not an accounting year.

Lesson for small UK business owners

These stories fall into two clear camps:

1. Breaking or ignoring the rules (Piggott, Panitzke, Cable)– hiding income, failing to register, or simply not operating basic bookkeeping systems.

2. Avoidance driven by optimism (Carr, Barlow, Beckham) – trusting schemes that promised outcomes common sense should have questioned.

The mistake is assuming these are “celebrity problems”. They are not. They are human problems: over-confidence, misplaced trust, and the belief that complexity equals safety.

It doesn’t.

Key Takeaways 📌

• 🧾 If income exists, HMRC expects to see it — delay and concealment are what escalate cases.

  
  

• 🧠 Complex tax planning increases investigation risk.

  
  

• 🎯 Contrived (non-commercial) arrangements should be questioned.

  
  

• 📊 VAT needs active monitoring — especially if turnover is growing.

  
  

• 🕰️ Time is on HMRC's side — They'll often argue carelessness (6 years) or deliberate behaviour (20 years) to inquire and look back.

  
  

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