By Paul Yeomans

MIDDLESBROUGH FC defender Jonathan Woodgate is the latest footballer to be linked to an investigation into tax avoidance that could leave him having to pay out thousands of pounds.

Documents seen by The Northern Echo reveal that Woodgate, alongside other Premier league footballers, invested into four funds that sought to exploit a tax loop-hole that offered significant tax incentives for individuals investing into the UK’s film industry.

After having paid substantial sums to enter into the scheme, hundreds of figures from the worlds of sport and entertainment became 'directors' of the funds which then allowed them to write off losses against other income.

Her Majesty's Revenue and Customs (HMRC) has concluded that the scheme is bogus and is taking the firm behind the initiative to court in a bid to reclaim the cash.

The latest clampdown on tax avoidance schemes comes as the Government seeks to shore up the country’s tax system to reclaim some of the £7bn of lost tax cash that is thought to be lost every year to such tax avoidance schemes as the one Woodgate is involved in.

As part of such funds, more than 12,000 wealthy individuals are thought to have been involved.

The company behind the initiative is being taken to court by the government but has publicly defended the initiative as a legitimate investment vehicle and denies that it is an artificial tool to reduce the investor’s tax bills.

Under guidelines published by the Treasury this year, investors in the scheme will be asked to pay back the taxes which HMRC insists were unfairly avoided.

The court case will be heard in November but participants in the scheme have already received letters from the HMRC demanding the cash.

It is thought HMRC is trying to retrieve £500m as part of the crackdown which could swell to as much as £1bn with some participants expected to land bills reaching millions of pounds.

If the court rules in their favour, the individuals will be allowed to keep hold of the cash. However, the move from HMRC to ask for the cash before the trial points to the government’s growing confidence.

The tax break for such initiatives was set up by the previous government with the intention of increasing funding for the struggling UK film industry.

Woodgate joins the list of current footballers caught up in the court case – former and current England captains Steven Gerrard and Wayne Rooney are also involved, as are top entertainers such a David Baddiel and journalist Kate Aidie.

Woodgate's agents, Wasserman Media Group, did not return the Echo's calls.