Michael Caine, George Michael Among Celebrities Who Have Used U.K. Tax Shelters (Report)

Getty Images

The tax-avoidance scheme is legal but is facing a challenge from the British tax authority.

LONDON – The Times of London has listed a slew of British celebrities, including Michael Caine, George Michael and former Take That member Gary Barlow, who it says have used an income tax shelter that U.K. tax authorities are investigating.

The so-called Liberty scheme is currently legal, but Her Majesty's Revenue and Customs Service has said it will challenge it in court next year as it has reduced the taxes paid by wealthy individuals.

Michael tried to shelter $10.6 million (£6.2 million) in record and tour sales via the scheme, the paper reported, citing documents it obtained.

PHOTOS Beyonce, Arctic Monkeys and Others at BRIT Awards 2014

Caine attempted to shelter at least $1.03 million (£600,000), according to the report. And Barlow invested $7.7 million (£4.46 million) in the scheme, it said. He already had to deal with a backlash for his involvement in another tax avoidance scheme earlier this year.

Members of the Arctic Monkeys were also mentioned as having participated.

Representatives for the celebrities either declined to comment or couldn't be reached, British media reports said.

The British government has been trying to close tax loopholes to increase tax revenue.

Comedian Jimmy Carr in 2012 was found to have used a tax shelter. While it wasn't illegal, he apologized on Twitter. "I met with a financial advisor and he said to me 'Do you want to pay less tax? It’s totally legal.' I said 'Yes'," Carr tweeted. "I now realize I’ve made a terrible error of judgment."