Greed that bankrupted the fashion Queen of the High Street: She built a £35m empire on a £100 loan - but now Karen Millen's gone bust after a £6m tax dodge. So what DID happen to her millions?

  • She started her business in 1983 with £100  before selling it in 2004 for £35m
  • But the 55-year-old was declared bankrupt in a landmark case this week
  • She is pointing the finger at everyone but herself - so where did it go wrong? 

Karen Millen was declared bankrupt this week

Karen Millen was declared bankrupt this week

Within hours of being declared bankrupt at the High Court this week, the British fashion designer Karen Millen was talking of her devastation — and blaming everyone but herself.

She pointed the finger at the accountants who advised her. At the Icelandic banks she accuses of defrauding her. And, last but not least, at the High Court, which blocked her from using her famous name to launch a new business empire.

The 55-year-old mother of three, who sold her stake in her eponymous High Street fashion empire for £35 million in 2004, has failed to pay an eye-watering £6 million tax bill slapped on her by HMRC following her involvement in a controversial tax avoidance scheme. 

She now faces losing her palatial £3 million Georgian mansion in Kent — complete with swimming pool, lake and helipad — as well as any secondary properties, cars, jewellery and other valuables.

It is a sorry turn of events indeed in the life of a woman who was once at the heart of one of British fashion’s great success stories. 

But how on earth could everything have gone so wrong for this golden girl, who launched her couture career in 1983 with a £100 loan and a roll of white cotton fabric and went on to lead a multi-million-pound label adored by everyone from the Duchess of Cambridge to Holly Willoughby and Jerry Hall.

While Ms Millen this week appeared to be taking none or little of the blame, questions are being asked about why she entered an aggressive tax avoidance scheme in the first place — and what happened to the millions she made when she sold her stake in her chain of stores, adding to her already vast fortune?

One industry expert told the Mail this week that Ms Millen had been ‘foolish’ for entering the scheme.

She sold her stake in her eponymous High Street fashion empire for £35 million in 2004

She sold her stake in her eponymous High Street fashion empire for £35 million in 2004

‘If she’d paid the tax she owed at the time, she wouldn’t have been in this mess,’ says chartered accountant and political economist Richard Murphy. ‘It’s just greed that makes the wealthy invest in these schemes, then it comes back to haunt them. I’ve got no sympathy. Where is the rest of her money? Has she spent it?’

Ms Millen has certainly enjoyed an A-list lifestyle in recent years. Aside from the upkeep of her lavish home and the Porsche she used to drive around in, her three children have also been privately educated.

In 2005, the year after she sold her business, she was photographed on board a yacht with Lord Freddie Windsor at the Cannes Film Festival. At the time, she had entered into business with Brass Hat Films, a London-based finance company.

Her OBE celebration party in 2008 attracted guests including millionaire financier Matthew Mellon, former husband of Jimmy Choo founder Tamara Mellon, and fellow designer Maria Grachvogel.

Ms Millen meanwhile claimed this week that she had been a victim of fraud by Kaupthing, a collapsed Icelandic bank, which financed the buyer of her business in 2004 for £95 million — though what that fraud was, exactly, she did not make clear.

She said that her battles with Kaupthing ‘have led to my inability to pay HMRC’.

Karen Millen's sprawling Kent mansion complete with full size football pitch, lake, tennis court and swimming pool

Karen Millen's sprawling Kent mansion complete with full size football pitch, lake, tennis court and swimming pool

Ms Millen is embroiled in a row with the bank’s administrators, who now own her former business and all rights in the name ‘Karen Millen’.

Nonetheless, a few years ago she launched a legal challenge, saying she wanted to use her own name to launch a homeware range.

Last year, a High Court judge ruled against her, saying it would be ‘confusing’ to the original brand.

But as Richard Murphy added: ‘Given that she sold her name as part of the business, it’s hardly reasonable for her to think she can start a new business using that name.’

The ‘round the world’ tax avoidance scheme in which Ms Millen invested offered members the chance of avoiding paying capital gains tax on the sale of shares by transferring them to trustees in a country where the tax rate for capital gains is zero — in her case, the idyllic island of Mauritius.

Millen attends the London Lifestyle Awards 2011 at Park Plaza Riverbank
She attends the Sorapol Spring/Summer 2016 London Fashion Week

Ms Millen (pictured at fashion events) is embroiled in a row with the bank’s administrators, who now own her former business and all rights in the name ‘Karen Millen’

But the Court of Appeal found that the scheme, which was recommended to the super wealthy by several accountancy firms, was controlled from the UK and therefore liable to UK taxation.

One leading City accountant who advised his client to invest in the scheme told the Mail last night that Ms Millen should have known the scheme was ‘risky’ and kept the tax on one side in case she needed to pay it.

‘There was nothing wrong with the scheme technically,’ he said. ‘Unfortunately there was one test case involving a member whose accountants had left a paper trail to this country and on the back of that everyone else — including Ms Millen — will now have to pay the tax owed in the UK.’

Ms Millen also claims to have lost significant sums in the 2008 financial crisis after other Icelandic investments failed.

Speaking about her financial misfortune this week, she said: ‘The past nine years have been one long legal battle against the banks to try to achieve justice and have now taken their toll. I feel all of my energy has been eaten up by negativity.’

Ms Millen at The Caudwell Children Butterfly Ball at Battersea Evolution

Ms Millen at The Caudwell Children Butterfly Ball at Battersea Evolution

It is certainly a sad state of affairs for a woman who climbed to the top from humble roots.

The daughter of carpet-fitter Anthony Millen and his secretary wife Sheila, Millen was one of four children raised in a modest three-bedroom council house on an estate in Maidstone, Kent, not far from the Georgian house which, until it is sold, is her present home.

Her father’s rheumatoid arthritis made it difficult for him to work and money was tight. He died 23 years ago at 55 before seeing his daughter’s name become one of the most recognisable High Street brands.

Millen considered an apprenticeship as a painter-decorator to help the family finances, but a school visit to a college fashion show ignited a passion for design when she was 16.

She left school and embarked on a City & Guilds fashion course at Kent’s Medway College of Design and straight after that, aged 19 and on holiday in Morocco, she met the 20-year-old man who would go on to be her business partner and father of her three children.

Meeting Kevin Stanford was, she said, ‘love at first sight’. They used their £100 bank loan — and that roll of cotton — to make smart tailored shirts initially sold to friends via Tupperware-style parties.

Three years later, they opened their first shop in Maidstone, selling catwalk-style clothes designed and made by Millen on her kitchen table. A second shop soon followed in nearby Tunbridge Wells.

Throughout the Eighties, the business expanded with more and more Karen Millen stores opening across Britain’s High Streets.

Her tight-fit clothes and Versace-style bustiers became hugely popular among fashion-conscious young women in search of office and wedding outfits with an edge.

By the time the pair came to sell their business to Icelandic investors in 2004, there were 130 Karen Millen stores in cities as far-flung as Beirut and Los Angeles.

The couple seemed to have it all. As well as their fashion empire, they went on to have three children together — Josh, 26, Jordan, 24, and Jake, 19, setting up home in a palatial Georgian mansion in the village of Wateringbury in Kent which boasts a swimming pool, seven-a-side football pitch, tennis court, helipad and a mini lake.

The mansion in Wateringbury, Kent, which also has a helipad and a mini lake 

The mansion in Wateringbury, Kent, which also has a helipad and a mini lake 

Ironically, just when it seemed that life couldn’t get any better, it began to fall apart and Millen and Stanford separated after 20 years.

Speaking to this paper five years ago, Millen said the decision to part was hers.

‘There was no real love in the house. It had no heart. There was no one thing that sparked the end. 

'We got together when I was a teenager and after being with someone that long, things don’t go wrong overnight. 

'We grew into different people. We had different opinions about the direction the company should go in and would argue all the time — about everything.’

But while Stanford remarried and had more children, Millen’s love life has been less straightforward.

In 2003, she became embroiled in a relationship with convicted fraudster Graham Briggs who had recently been released from prison after a £50,000 fraud on the Isle of Wight and who was running the hotel that Millen had checked in to in France’s Dordogne region.

At The Battersea Evolution, Battersea Park

At The Battersea Evolution, Battersea Park

He was later accused of conning wealthy British expats out of nearly £2 million. Millen has always vigorously denied Briggs’ boast that she had given him £1 million after he seduced her.

She told the Mail in 2011: ‘I went out with him at a time when I was feeling emotionally fragile, but I never gave him any money. No way would I have done that.’

That rather ill-judged relationship was followed by a romance with former England footballer Sol Campbell who is 13 years her junior, but that also petered out.

Since then, she has spoken about the difficulty of finding love as a single woman in her 50s.

‘I used to panic because I thought I would never meet someone.’ 

Ironically, however, her biggest heartbreak appears to have been the sale of her company. Describing the day she signed away Karen Millen in July 2004, she told the Mail in 2011 she became ‘an emotional wreck’ and felt as if she had ‘betrayed’ her staff.

‘It was like watching your child grow up and leave home — but with the knowledge that they would never come back.’

What Millen does next remains to be seen. Her bankruptcy will limit her business activities for two years. Nevertheless, it seems unlikely that the Karen Millen story will stop here.

She told The Times this week: ‘It is my intention now to finally put the past behind me and I look forward to a clean start.’

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