Director Christopher Nolan (C) poses with actors (from L-R) Gary Oldman, Christian Bale, Anne Hathaway and Michael Caine
Director Christopher Nolan (C) poses with actors from Batman (from L-R) Gary Oldman, Christian Bale, Anne Hathaway and Michael CaineReuters

British movie legend Sir Michael Caine is one of the more famous names among a group of wealthy people that are alleged to have collectively avoided paying £1.2bn of UK taxes.

The group of about 1,600 investors took advantage of a tax sheltering scheme called Liberty between 2005 and 2009.

According to a report by The Times newspaper, citing information from a leaked database, George Michael, British band Arctic Monkeys, and another music artist Katie Melua have avoided over one billion pounds worth of tax payments to the HMRC by using one of country's most aggressive tax avoidance schemes.

Out of the total amount of money sheltered in the Liberty tax strategy scheme, run by a Leeds-based company called Mercury Tax Group, Caine attempted to shelter at least £600,000 (€754,393, $1.02m).

Caine's spokesperson told The Times: "We have no comment to make for or on behalf of Michael Caine."

British singer George Michael performs on stage
British singer George Michael performs on stageReuters

Meanwhile, George Michael allegedly sheltered £6.2m in record and tour sales, and paid £443,000 for the service. Michael's publicist told The Times that the world famous music artist has a "busy schedule" which meant that he could not respond to questions.

Elsewhere, lawyers for one of Britain's best-selling female music artists, Katie Melua, hit back at claims she was aggressively avoiding tax by telling the newspaper that "she had invested in Liberty at the suggestion of her accountants but repaid the sheltered tax to HM Revenue & Customs and so had not avoided tax."

Melua allegedly invested £850,000 in Liberty in 2008 but then, only two years later, claimed she paid "nearly half of what comes to me in taxes" and was nominated for Christian Aid's Tax Superhero Award.

Northern British indie artists, Arctic Monkeys, also allegedly sunk between £557,000 and £1.1m in Liberty.

Band members, Alex Turner, Jamie Cook, Nick O'Malley and Matt Helders declined to comment to The Times.

Katie Melua performs at the
Katie Melua performs at the "Cinema for Peace 2012" charity galaReuters

Tax Avoidance Crackdown

Tax avoidance is the legal way of reducing one's tax bill. It's a convoluted business which may involve deductible payments and accounts domiciled in off-shore, low tax jurisdictions.

Tax evasion, by contrast, is illegal, and involves deliberately misrepresenting or concealing beneficial ownership of assets via shell companies and the like, and in particular, dishonest tax reporting to authorities such as the IRS or HMRC.

The Liberty scheme allegedly allowed investors to write down huge "artificial offshore losses" meaning that they would pay less tax on other income.

While tax avoidance schemes are legal, they have come in for a lot of flack lately: paying little tax on lots of assets could be very damaging to celebrities, who are certain to anger the British public as a result.

Meanwhile, Britain's government and the taxman have sought to close the loopholes that allow individuals and companies to pay little amounts of tax, in comparison to their overall earnings.

In July, Whitehall and the HMRC are set to launch a new crackdown on tax avoidance schemes, meaning those who invested in Liberty could pay back hundreds of millions of pounds in disputed tax.