The high-end fashion designer Karen Millen declared bankrupt for the unpaid tax liability of £6 million.
Karen Millen founded a high street fashion chain some 35 years ago. She was allegedly involved in a tax avoidance scheme, failing to pay the amount to HM Revenue and Customs (HMRC).
Why Karen Millen Declared Bankrupt?
Karen Millen, upon the advice of her accountant willingly participated in a tax avoidance scheme called Round the World in 2001.
The members of Round the World were given the idea to transfer their shares to trustees in Maldives and avoid paying capital gains on the sale of shares.
However, HMRC knew what was going on and successfully challenged the scheme by investigating how carefully it was orchestrated. HMRC has issued a notice to Karen Millen to pay £ 6 million in taxes by September 2016. The fashion diva failed to pay the taxes in time, and so Karen Millen declared bankrupt.
Karen Millen’s business remains safe from the unpaid taxes as she sold her share back in 2004 for £35 million. In her defense, the fashion designer said that she became a victim to an Icelandic bank Kaupthing that crashed back in 2008. The bank had financed the buyer of her business for £ 95 million.
She also said that current owners of Karen Millen brand had stopped her from starting again in the fashion industry. She also faces legal challenges because she cannot launch a brand in her name.
She was involved in a legal battle ongoing for the last nine years. Here is what she had to say about it.
“The past nine years have been one long legal battle against the banks to try to achieve justice and have now taken their toll. I feel all of my energy has been eaten up by negativity. It is my intention now to finally put the past behind me, and I look forward to a clean start.”
The bankruptcy has brought her at the risk of losing her home. She currently lives in a £3 million home in Kent. Karen Millen started with very humble beginnings back in 1983 with just £ 100 loan. By the year 2004, the brand had become enormously successful. The reach of the brand at that time had reached to 130 stores all over the world. Karen Millen says she wants to have a clean start by forgetting about the negativity of the past.