Karen Millen has been declared bankrupt by the High Court over unpaid tax.
The declaration earlier this week came after the fashion designer, 55, did not pay the £6 million that was demanded from HMRC due to her involvement in a tax avoidance scheme.
According to The Times, Millen — whose clothes eponymous high street chain helped to define what women wore to work for the past two decades — could now lose her £3 million home in Kent as well as any other properties, cars and valuables.
The Karen Millen retail business remains safe, as Millen had sold her share in it for £35 million in 2004.
Millen said she was the victim of fraud by Kaupthing, an Icelandic bank that collapsed in 2008, which financed the buyer of her business in 2004 for £95 million.
She said Kaupthing’s administrators, which now own the Karen Millen brand, had prevented her from starting again.
This includes not being able to launch a range under her own name thanks to a legal challenge last year that saw a High Court judge rule it would be “confusing” to the original brand.
Millen also said that in 2001 her accountants advised her to enter a tax avoidance scheme called Round the World, which promised members they could avoid millions in capital gains tax from the sale of shares by transferring the shares to trustees in Mauritius.
However, the HMRC won a legal dispute with Round the World in 2010 – as the scheme was found to be “carefully orchestrated” from the UK and could therefore be taxed – and issued Millen with a notice to pay about £6 million in September last year.
She said her battles with Kaupthing meant she had “inability to pay HMRC”.
“The past nine years have been one long legal battle against the banks to try to achieve justice and have now taken their toll,” Millen said.
“I feel all of my energy has been eaten up by negativity. It is my intention now to finally put the past behind me and I look forward to a clean start.”