One Direction has been racking up a fortune for the past six years, but just when they get a chance to take a break to spend some of that money, the tax man starts knocking on their doors. Is there a scandal going on here or is this business as usual for One Direction?
Forbes has stated in the past that One Direction made $130 million in 2015 and that this money was comprised of their earnings for touring.
What is not necessarily clarified is how much their net worth is considering their many business investments. This can include One Direction’s stake in 5SOS, 1D songs that have been used for advertising, and they also have a company called 1D Media.
Sadly, according to The Sun, One Direction resigned as the people responsible for 1D Media, and it seems that they may have stepped down as a result of a “tax probe.”
In addition to 1D Media, One Direction also owns “1D Live LLP, PPM Music and Rollcall Touring,” according to a SugarScape report from 2013. The big question for many fans could be “Why did One Direction set up all of these companies?”
Some imply that the reasoning for One Direction to invest money in these different companies is that they help One Direction avoid losing a higher percentage of everything they make in taxes. By investing their money in a business, One Direction is only going to get taxed if they withdraw money from it.
Adding to this, Harry Styles has his own publishing company outside of One Direction called HSA Publishing LTD, according to Press Party. Louis Tomlinson also has a music company outside of One Direction called 78 Productions, according to UnReality TV.
As it appears, that investment in 1D Media paid off tremendously, and in October 2015, Daily Mail reported that the company made £73.7 million ($104,498,125) in 2014.
By contrast, Music Business Worldwide claims that the 2014 profits were 50 percent higher than the 2013 tally for 1D Media.
Unlike scandals involving hidden money in places like offshore Panamanian accounts, One Direction has all of their books upfront and on the table… or so they thought. According to The Sun, One Direction are getting a tax probe about 1D Media because the tax offices in the U.K. “frown upon” an “‘alphabet’ share structure” for investments.
While the timing of One Direction leaving 1D Media at the same time as they are getting a tax investigation may look suspicious, tax experts evaluating the situation said it could be seen as a sign that One Direction is getting into the vacationing spirit and not evading tax authorities.
So far, One Direction has run 1D Media for four years, and the first reported instance of One Direction being the directors for 1D Media occurred in March 2012, according to Doncaster Free Press.
Around March 2012, Digital Spy and others wrote that 1D Media was a way for One Direction to avoid taxes, but the intentions of One Direction may not have been that defined (considering most of them were teenagers in March 2012). Instead, the argument for investing money like One Direction did could be explained by the following.
“Private companies in the UK pay around 28-percent tax on profits, compared to 50-percent income tax for individuals earning over £150,000 [$212,682] a year.”
Unfortunately, this is not the first time One Direction has been dealing with lawyers in April over money.
Daily Mail reports on April 8 that their parent company, Sony, is in a lawsuit with Family Matters Music because they should have paid $65,000 in royalties to Family Matters Productions (a different company, entirely) on behalf of One Direction.
Like any band, One Direction is not immune to lawsuits. For instance, when One Direction was formed as a band, Simon Cowell and Syco were sued by an American band of the same name for $1 million in 2012, according to MTV.
For trivia lovers, it should be noted that Vulture states that the 2012 band name claim was “One Direction’s first lawsuit.”
[Picture by Kevin Winter/Getty Images]