Dame Vivienne Westwood is used to stirring up controversy with her designs and political viewpoints. However now the designer stands accused of being a hypocrite and a tax avoider, after the recent publication of company accounts found that Dame Westwood's main UK business arm is paying 2 million pounds a year to an offshore company in Luxembourg for the right to use her name on her eponymous fashion label.
This arrangement means that the company has avoided paying the UK Treasury approximately 500,000 pounds a year, a move which has been described as tax experts as none other than 'tax avoidance,' according to the Telegraph, as it cut the company's UK profits by 2 million pounds for the year ending December 31, 2013.
The scheme has been compared to a model used by American coffee chain Starbucks, who found itself in the middle of a protest last year. And as one of the Green Party's largest supporters, donating 300,000 pounds to the party, she now stands accused of hypocrisy as well as the Green Party is calling for a Tax Dodgers Bill which would outlaw such arrangements.
"This has to be tax avoidance. Why else would you make these payments to a company in Luxembourg?," commented one City accountant to the Telegraph, after studying the company accounts. "It makes the Green Party hypocrites for taking her money and Westwood a hypocrite for backing a party with policies she does not appear to endorse."
Jolyon Maugham QC, a tax barrister, added: "What’s odd about Ms Westwood’s arrangements is that the rights were held in the UK, but were then transferred out of the UK. The transfer means that the fee is no longer subject to UK tax. And that’s tax avoidance by any sensible definition."
The fashion house has issued a statement in regards to the accusation: "Latimo SA is the holding company of this group which owns and protects the Vivienne Westwood trademarks worldwide. Vivienne Westwood Ltd pays regular royalties to Latimo SA pursuant to a Licence Agreement. Vivienne Westwood Ltd and all the companies belonging to the group pay all the required taxes in all the countries in which they trade or operate, in accordance to audited financial statements."
"Within the UK, Vivienne Westwood Limited paid 780,228 pounds of taxes in 2013 and 1,250,858 pounds of taxes in 2012. Profits, as per the decision of the Board of Directors, were invested in the structure and in the international development of the company. The donation of 300,000 pounds to the Green Party was made by Dame Vivienne Westwood personally and not by the Vivienne Westwood Group."