September 27, 2024

Snails in Skyscrapers and David Beckham: The Strangest Tax Avoidance Schemes in History

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Tax avoidance is a tale as old as, well, taxes themselves, with individuals and companies constantly seeking creative (and often strange) ways to reduce their liabilities. While most of us rely on accountants to help find wholly legal deductions, some schemes venture into truly bizarre territory, exploiting obscure loopholes in tax laws.

From snail farms being stored in skyscrapers to toy pandas “occupying” empty office spaces, these tax avoidance schemes have pushed the boundaries of legality and ingenuity. Let’s dive into some of the weirdest tax avoidance schemes in history, each more surprising than the last.

1. The Snail Farm "Agriculture" Exemption

The 2024 case of a snail farm in a Liverpool office building is one of the more outlandish recent attempts to claim a business rates exemption. The idea behind this scheme is that agricultural use of land or buildings can make the property exempt from local taxes. In this particular situation, 15 crates of snails — with as few as two snails each — were housed in an office, with the operators claiming this qualified as agricultural use. The High Court previously ruled a similar operation as a “sham” when the same landlord attempted to claim the exemption through a supposed snail farm.

2. "Potato Price Support" Scheme

In the 1970s, the New York Times reported that some American farmers found a legal tax loophole by participating in government programs that paid them not to grow certain crops, such as potatoes. By agreeing to restrict production, farmers could still receive compensation from the government, which could be classified as income eligible for certain tax benefits. This strange crossroads of agricultural policy and tax law allowed some farmers to gain financial benefits simply by not growing food, an incredibly creative avoidance tactic.

3. The "Toy Panda" Scheme

In the UK, some businesses have tried to avoid business rates by filling empty properties with toy pandas. The rationale? These properties were no longer empty and thus wouldn’t be subject to the vacant property tax. In a strange twist, landlords would "lease" space to companies that filled the buildings with toys — pandas or otherwise — and claim these were legitimate operations. In some cases, the courts ruled against these schemes, labeling them as blatant tax avoidance, but it didn’t stop certain business owners from trying.

4. "Offshore Livestock"

In the late 20th century, this tax scheme involved registering herds of cattle offshore in tax havens like the Isle of Man or the Channel Islands. By registering livestock offshore, investors could avoid capital gains tax and inheritance tax in the UK. The livestock was technically owned by an offshore company, not the individual, allowing significant tax savings in some situations. This method was eventually targeted by His Majesty’s Revenue & Customs (HMRC) and closed it down, but for a time, the loophole allowed taxpayers to hide wealth in the form of living assets.

5. Film Industry Tax Schemes

In the early 2000s, a tax avoidance scheme known as the "Film Partnership Scheme" allowed wealthy individuals to invest in film production as a means of offsetting tax liabilities. In one notable case, David and Victoria Beckham, Robbie Williams, Andrew Lloyd Weber, Gary Lineker, and Geri Halliwell were all alleged to have been involved in one of these schemes. By making large investments in movies, investors could claim generous tax reliefs. However, many of the films produced were either never released or were made with the primary aim of tax avoidance rather than artistic or commercial success. The UK government eventually closed this loophole, and many individuals were later pursued for back taxes.

6. Centurion Parking Meters Scandal

The Centurion parking meter scheme, which occurred in South Africa, involved a company utilizing parking meters as a tax avoidance strategy. Instead of operating the meters for their intended purpose, the company claimed them as "business assets" to avoid paying local property taxes totaling nearly USD500,000. By placing 96 meters across vacant lots in Centurion, they exploited a loophole to argue that the land was being used for commercial purposes, which reduced their tax liability significantly. This move sparked outrage from residents, as it shifted the financial burden onto them. The scheme was criticized as unethical, and it became a significant public issue.

7. Business of Storing Air

One of the more creative avoidance schemes involved companies leasing large, empty properties and claiming they were used for "air storage" to avoid business rates. Since no specific regulation outlined how "storage" should be defined, some landlords and tenants claimed that simply holding air in a building counted as business use, thus exempting them from certain taxes. Per the BBC, authorities eventually caught on to the absurdity of the claim, and the loophole was closed.

While these tax avoidance schemes may elicit chuckles or raised eyebrows, they showcase the extreme lengths to which people will go to exploit loopholes and minimize their tax bills. Although tax authorities across the globe work tirelessly to close these loopholes, new schemes always seem to emerge.

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Snails in Skyscrapers and David Beckham: The Strangest Tax Avoidance Schemes in History