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New Sainsbury’s chief Mike Coupe invests in controversial ‘tax avoidance’ scheme

Mike Coupe faces questions after his mentor Justin King’s moral stand against loopholes

Simon Neville
Monday 03 February 2014 03:49 GMT

Sainsbury’s new chief executive is a member of a controversial tax avoidance scheme that uses legal loopholes in a way that can reduce tax bills.

The decision by Mike Coupe, who said he wants to continue Justin King's legacy, to invest in the schemes places him at odds with his predecessor, who has attacked business leaders and fellow retailers who avoid tax and has called it an issue of "morality" rather than "legality".

The current commercial director, who will replace Mr King as boss of the UK's second biggest supermarket, has invested in the Invicta Film Partnership since 2002, alongside businessmen, lawyers and the former England footballer Michael Owen.

Each investor typically puts forward a lump sum or borrows money to push into the fund which is used for British film productions. The full investment is put down as a loss and 40 per cent can be claimed back from Her Majesty's Revenue and Customs.

Invicta Film Partnership has 26 active schemes with several hundred investors, according to Companies' House.

It is not known how much money was invested by Mr Coupe, who earned £2.2m last year. However, the 54 members have an equity stake of £24m, suggesting each stake is worth around £400,000.

Mr Coupe has also previously invested into another scheme where members invest their money into alternative energy projects and can benefit from further tax relief, although that scheme was closed last year.

Similar film schemes have been criticised by the Government and led to more aggressive ones being shut down, leaving investors unable to claim the tax benefits they had hoped for.

A spokesperson for Sainsbury's said: "At the time the Government was encouraging investment into British film-making through these types of investment vehicles. Whilst initially there were some financial benefits these were then removed by changes to tax rates."

The energy scheme had nothing to do with tax, and was investing in windfarms and alternative energy, the spokesperson said. He stressed the schemes were different to those which caused controversy for comedian Jimmy Carr and songwriter Gary Barlow.

Mr Coupe was unveiled as Mr King's replacement last week, but they know each other well and have worked alongside each other for 17 of the last 20 years. They were both at Asda in the 1990s.Speaking last week, Mr Coupe said he wanted to continue building on Mr King's legacy.

He said: "I think the story is very much one of continuity and we've worked closely together for the last 10 years.

"All of the major strategic decisions that we've made in the last 10 years we've made collectively, and I see us taking that forward."

Mr King has been outspoken against tax avoidance since Starbucks was found to have paid no corporation tax in the UK for at least three years by using a complex web of payments to subsidiaries elsewhere across Europe.

Last year at the British Retail Consortium's annual symposium of business leaders, Mr King showed a copy of a corporation tax return form to the room. He said at the time: "Tax is a moral issue, I would argue. Every business in a position of trust should be able to stand up and try to explain why they arrange their affairs the way they do, if they believe they have nothing to hide.

"Trust is a moral issue and you can't claim to hold a trustworthy space on any issue, including tax, by just saying 'I'm operating within the law', because it is not a good enough articulation to win trust.

"Of course we all operate within the law. It's shocking that anybody would think saying we operate within the law does anything other than confirm what every consumer believes to be true."

He also talked of the moral duty to pay tax in various media interviews.

Invicta could not be reached for comment. However, it is administrated by chartered accountants at Malde & Co, which states on its website that it offers film services "whether you need advise [sic] on structuring a film or you want to maximise UK film tax credits".

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