Stony-hearted taxman gives Jagger and Co no satisfaction

The Government, despite its campaign to woo the music industry, yesterday went on the offensive against Britain's best-known band, the Rolling Stones.

As the group confirmed that they were cancelling their concerts in Britain this summer for tax reasons, Treasury sources joined fans in reacting with disbelief at the decision.

But in fact, Mick Jagger, who was being ridiculed with gusto yesterday by government MPs, privately wanted the shows to go on. In heated backstage arguments he was defeated by two of his fellow band members - Charlie Watts and Ronnie Wood - who stood to lose millions of pounds in retrospective tax claims. Jagger is rich enough to stomach the tax loss, and Keith Richards is now an American citizen and does not even pay tax in Britain.

The four fiftysomething Stones devoted their monthly group meeting to matters fiscal exactly one month ago, in the middle of their world tour.

A technician on the tour had complained to Jagger that his accountant had told him he would face a retrospective tax demand following Labour's last budget.

The roadie was aggrieved because he and his 200 backstage colleagues - from roadies to hairdressers to drivers - had all been assured by the group that being on the road for a year would exempt them from paying British tax. It was to have been a tax-free year of hard work, maybe; parties, definitely; music and travel. Now, Gordon Brown's tax changes meant that appearing in Britain in 1998 would make them all liable for a retrospective tax bill on their earnings in America and Europe.

The Stones were sympathetic. They felt guilty that they had unintentionally misled their crew. And they began to worry about their own fortunes. Their own accountants had already mentioned the tax law changes to them; but the plight of their 200 staff now brought it home.

They could claim, their financial advisers told them, that the British leg of the tour would now lose pounds 12m instead of making a profit. Keith Richards knew that his own wallet would not be affected. Jagger could bear the loss. But Charlie Watts and Ronnie Wood were furious. They urged postponing the British concerts until the following tax year.

Jagger, anticipating the fans' reaction and the political fallout, argued vigorously against it, but was outvoted. He swallowed hard, knowing he would inevitably be the band's spokesman when the news broke and he would face the obloquy.

The Stones' management informed the venues and promoters and briefed one newspaper on the unfairness to the tour crew of a retrospective tax bill. The press jumped on a story showing yet another failure of Tony Blair's Cool Britannia wooing of the music industry. OK, the Stones have not been cool for a few years, but they are still rock'n'roll, and their attack on the Treasury is embarrassing.

The Government was quick to hit back. Sources said that they were not prepared to be "lectured on tax by tax exiles" and warned that they were ready to draw unflattering comparisons between the Stones and other groups who were happy to play in the UK this summer.

The Tories, meanwhile, decided to use Jagger and co to highlight supposed iniquities of Labour's fiscal policy. Treasury spokesman David Heathcoat- Amory claimed: "It shows how shortsighted the government policy is, as it will hit British fans and prevent them from seeing a British band performing in their own country."

The Tories' culture spokesman, Richard Spring, said successful artists who returned to Britain under the Conservatives would now consider not playing here.

But not everyone saw it as politic to be a Stones fan. The Liberal Democrat MP Norman Baker - improbably enough a lead singer in a rock band himself - turned on them. The Lewes MP - who fronts an occasional rock band called the Reform Club - said: "I think it's outrageous that they're setting so much store on their tax returns. It shows they are clapped-out capitalists."

Who are these bands that the Treasury might use as examples to shame the Stones? The main one is likely to be the Spice Girls, young enough to be the Stones' daughters. Also on a world tour, they have already played British gigs and will be playing again at Wembley Stadium in September.

Yesterday, tax experts seemed to think the Stones had a point. John Whiting, of the accountants Price Waterhouse, said it was the tour crew who were being hit. He added: "This tax break has been cancelled retrospectively, and that is unreasonable."

Gary Jackson, of the celebrity accountants Arram Berlyn Gardner, added: "There will not be a huge exodus, but any major star organising a worldwide tour may well look to become non-resident in the UK."

Until the Budget on 17 March, Britons who lived and worked abroad for more than a year were exempt from British taxes on their earnings, as long as they did not spend more than 62 days in this country.

Business Outlook, page 19

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