Vivienne Westwood is due to pay HM Revenue & Customs for owed £350,000 taxes for selling clothing outside of agreed markets. According to the Telegraph, the oversight has led to her UK company paying a £3m exceptional payment to its Luxembourg-based parent that has had the effect of reducing the UK firm's corporation tax liabilities for 2010 by £840,000.
Famed for her towering heels and punk aesthetic, Ms Westwood's UK business sold the rights to her trademarks to Luxembourg- based Latimo, which she controls, for £840,000 in 2002.
However, the taxman examined the deal and argued that Ms Westwood had been doing herself a disservice.
After a negotiation, the two sides ultimately agreed that her trademarks were worth more than double that amount. The £2m valuation triggered an additional tax bill of £348,463 plus interest of £144,112, which fell due in 2009.
Vivienne Westwood Italy's legal and corporate affairs director, Giorgio Ravasio, said the original 2002 licensing deal only allowed Vivienne Westwood Limited (VWL) to sell its trademarked wares to Japan. He said the trademarks had been independently valued and that profits from the trademarks had subsequently "exceeded expectations".
Mr Ravasio added that the license arrangement with Latimo had come up for renewal in 2010 and this was when the discrepancy with Westwood's UK sales had been spotted.
"It was recognized that VWL had in fact, also been selling certain trademarked collections in the UK and elsewhere," he said. "This was retrospectively rectified; an agreed sum of £3m to be paid to Latimo."
Mr Ravasio added: "There was no link between the payment to HMRC and the payment to Latimo."
Vivienne Westwood Limited made sales of £23.8m and employed 160 people across its design, production, retail and marketing operations at the end of 2010, with the highest paid director receiving £708,161 in pay and bonuses.
Westwood's acclaimed collections include Anglomania, and this autumn's Red Label, with its focus on 'Britishness'.
Image: Dame Vivienne
Source: Daily Telegraph ©