Tuesday, 21 August 2012 10:08
HMRC wins court ruling against three tax avoidance cases
HM Revenue and Customs has won three key court cases during July against tax avoidance schemes.
If unchallenged these cases would have lost the Exchequer £200m in unpaid taxes.
The first case on 11 July involved a taxpayer using a tax avoidance scheme to avoid capital gains tax. The man hoped to create an artificial loss so he would not have to pay tax on the £10m profit gained after he sold his business in 2003/4.
The second case on 16 July involved the directors of Sloane Robinson Investment Services using a tax avoidance scheme to avoid paying about £13m of tax from their bonuses. When legislation was changed to counter that particular scheme, the directors modified it to enable the scheme to continue.
Thirdly, a case on 30 July was a scheme which aimed to exploit the mismatch between two tax regimes. Gilts which generated an interest coupon were borrowed for one day when an interest coupon was due. A payment representative of that coupon was then made to the lender, for which tax relief was claimed. At the same time, the scheme envisaged no tax would be due in respect of the interest coupon received. The total tax at stake in this case was around £100m.
Jim Harra, HMRC's director general of business tax, said: "These wins in court are a victory for the vast majority of taxpayers who do not try to dodge their taxes.
"They send a clear message to tax avoiders- HMRC will challenge tax avoidance relentlessly and we will beat you.
"These schemes don't come cheap, you carry a serious risk that you'll end up paying the tax and interest on top of a set-up charge which can run into hundreds of thousands of pounds. So you have to ask yourself whether it's really worth it."
If unchallenged these cases would have lost the Exchequer £200m in unpaid taxes.
The first case on 11 July involved a taxpayer using a tax avoidance scheme to avoid capital gains tax. The man hoped to create an artificial loss so he would not have to pay tax on the £10m profit gained after he sold his business in 2003/4.
The second case on 16 July involved the directors of Sloane Robinson Investment Services using a tax avoidance scheme to avoid paying about £13m of tax from their bonuses. When legislation was changed to counter that particular scheme, the directors modified it to enable the scheme to continue.
Thirdly, a case on 30 July was a scheme which aimed to exploit the mismatch between two tax regimes. Gilts which generated an interest coupon were borrowed for one day when an interest coupon was due. A payment representative of that coupon was then made to the lender, for which tax relief was claimed. At the same time, the scheme envisaged no tax would be due in respect of the interest coupon received. The total tax at stake in this case was around £100m.
Jim Harra, HMRC's director general of business tax, said: "These wins in court are a victory for the vast majority of taxpayers who do not try to dodge their taxes.
"They send a clear message to tax avoiders- HMRC will challenge tax avoidance relentlessly and we will beat you.
"These schemes don't come cheap, you carry a serious risk that you'll end up paying the tax and interest on top of a set-up charge which can run into hundreds of thousands of pounds. So you have to ask yourself whether it's really worth it."
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