Karen Millen, founder of the eponymous womenswear chain, has been declared bankrupt by the High Court over an unpaid tax bill.
Millen said she was advised by her accountants to invest in a tax avoidance scheme called Round the World in 2001. The scheme sought to avoid UK capital gains tax on planned disposals of shares by putting them into the hands of trustees in Mauritius.
Revenue and Customs challenged the scheme and, in 2010, the Court of Appeal ruled that the UK could tax the gains on the disposals. Millen was reportedly ordered to pay about £6m back to the taxman in September last year.
However, at the time she was also fighting a legal battle with Icelandic bank Kaupthing over the use of the Karen Millen name.
The dispute related to an agreement made in 2004 when she and her then husband, Kevin Stanford, sold their majority shares in the retailer to Baugur Group, which was financed by Kaupthing.
Millen wanted to use her name on homeware products in China and the US. However, last August a High Court judge ruled that this would breach the terms of the original agreement.
As a result of the legal costs, she was unable to pay what she owed to Revenue and Customs.
“Obviously I am deeply devastated by this outcome,” said Millen. “All of my energy has been eaten up by such negativity.
“It is my intention now to finally put the past behind me and look forward to a clean start, where I can concentrate and focus my time on what I do best, and look forward to making a contribution to the fashion and retail world once again.”