When an investment or tax scam rears its ugly head, it’s a safe bet to assume that a few celebrities would have fallen victim and lost significant amounts of their cash.
Sports stars in particular have historically been terrible with money.
This is often because they rely on unscrupulous advisers or are swayed by changing room chat, falling to peer pressure to back the latest, greatest scheme to pay less tax.
The Mail on Sunday reported yesterday that a number of celebrities have fallen victim to an alleged £125m tax fraud involving film investments.
The newspaper report listed West Ham United manager Sam Allardyce, Princess Diana’s former butler Paul Burrell and pop singers Mike Skinner of The Streets and Damon Gough, also known as Badly Drawn Boy, as victims of the alleged tax fraud.
It wasn’t only celebrities to be reeled in, but also some city professionals including Caspar Shand Kydd, nephew of Princess Diana’s stepfather Peter Shand Kydd.
Two individuals caught up with links to Princess Diana?! It’s a wonder that the Daily Express wasn’t all over this story before the Mail on Sunday…
Celebrities and professional sports people probably fall victim to these scams for many of the same reasons as any other individuals.
Greed certainly plays a role, as well as ignorance.
If an investment or tax planning scheme seems too good to be true, it usually is.
The best Financial Planning is reasonably boring. This often fails to excite those who demand higher returns, bigger rewards or significantly lower tax bills.
The best Financial Planning is also best delivered by properly authorised and regulated individuals, using regulated investment and tax planning schemes.
It would be nice to see fewer of these scams in the future, particularly as they damage the reputation of all financial advisers and often result in us paying compensation costs through our levy to fund the Financial Services Compensation Scheme (FSCS).
Better regulation from the Financial Conduct Authority (FCA), HMRC and others is one way to ensure ordinary and celebrity investors do not get scammed.
Another possibly more effective way is for investors themselves to become better educated, understand the risks and stop fuelling the scams in the first place.
An investment or tax planning scam that doesn’t attract any investor cash never becomes a scam which loses investor cash or features in the weekend press.
