Karen Millen founder declared bankrupt over huge tax bill

By

Sandra Halliday

Published
Mar 31, 2017

The woman who founded one of Britain’s best known fashion chains has been declared bankrupt after saying she could not pay a £6 million tax bill.

Karen Millen, who is no longer connected to the chain that bears her name, faces losing her home and other assets after a tax avoidance scheme she participated in was delayed illegal. She was also prevented from launching a planned China- and US-focused homewares and lifestyle company.

UK press report Friday said invested in a scheme focused on Mauritius that was designed to avoid capital gains tax. But UK tax authorities challenged the scheme and issued Millen with the £6 million bill.

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An appeals court judge had also ruled that her plan to use the name ‘Karen Millen' and ‘Karen’ on a new brand would lead to confusion with the existing Karen Millen fashion label.

The action to prevent her launching the brand had been taken by the administrators of failed Icelandic bank Kaupthing, which now own the Karen Millen business. Millen said she had been the victim of fraud by Kaupthing and that she also lost significant sums on investments when other Icelandic banks failed during the financial crisis.

With partner Kevin Stanford, Millen opened her first store in the 1983 and the chain grew to become one of the most recognisable names on UK high streets, as well as expanding abroad.

The business was acquired in 2004 for £95 million with Kaupthing providing the finance for the buyout and Millen getting £35 million from the deal. But she said that when Kaupthing collapsed, she and Stanford lost millions as around 40% of the £95million had not been settled.

Four years ago, former a number of former Kaupthing executives were jailed for fraud.