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The Stack Archive

UK celebrities implicated in data centre tax avoidance scheme

Mon 19 Dec 2016

Several high-profile celebrities in the UK have received a bill for back taxes associated with the building of the Cobalt 2 and 3 data centers in Tyneside.

A group of 675 investors took part in the building of the data centers in 2011, contributing 79M GBP to the construction fund. However, a tax loophole allowed the group to claim the full cost of the build and receive 131M GBP in tax relief – an overall profit of more than 50M GBP.

Investors included such household names as Lady Ann Redgrave, footballer Wayne Rooney, and David Heyman, the Oscar-nominated producer of the Harry Potter films.

There is no suggestion of wrongdoing on the part of the investors, nor is there any proof that they were informed that the data centers would not be tenanted or functioning when they made the decision to invest.

However, HMRC has issued accelerated payment notices (APN) to the investors who profited from the tax refund scheme, requiring them to pay back the funds immediately and appeal later, if they disagree with the charge.

The buildings, known as the Cobalt 2 and 3 data centers, have never been tenanted. They were recently taken over by a new management group, Stellium, and are being actively marketed to new customers. The Cobalt data centers, while not Uptime certified, promise Tier III performance and received a BREEAM green data center award at the 2013 launch.

Stellium has reportedly installed new fiber and equipment at the Cobalt location since the acquisition, and a representative said in an interview, “The Stellium management team has a proven track record of successfully turning around assets such as these both in the UK and Ireland. They are focused on using this experience to deliver one of the most modern data centers in the UK to the North East of England.”

Stellium plans to use the data center business in Newcastle to provide support for emergent technology businesses in the north east. Citing better connectivity as one of the reasons for the location of the data centers, Stellium CEO Noel Meaney said, “Latency in Newcastle is better than Dublin.” Additionally, the presence of a large university attracting IT grads makes Newcastle an attractive hub for IT businesses, said Meaney. “There’s a real buzz.”

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business data centre government news tax UK
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