Three Tax Avoidance Schemes Closed Down

The taxpayer has saved around £200 million after tax avoidance schemes were shut down in court. The first case involved a Howard Schofield concerning capital gains on a £10 million gain in 2003/2004.

Schofield entered into a scheme that contrived to create an artificial loss and therefore avoid paying tax on the profit.  The Court of Appeal ruled the scheme had no commercial purpose.
The second case saw directors at international investment firm put money into companies which rewarded investors when the companies got liquidated.

The First Tier Tribunal ruled that the money was employment bonuses and therefore subject to tax, saving around £13 million.

The third case was appealed by a Nicholas Barnes, who was one of more than 100 participants in a tax avoidance scheme.

The scheme involved government bonds generating interest  coupons, which were then borrowed for one single day when a coupon was made to the lender, allowing tax relief to be claimed.

The first tier tribunal called the scheme “a designed and marketed tax avoidance scheme.”

Jim Harra, HMRC’s director general of business tax said that the taxman would “relentlessly pursue” anyone engaged in tax avoidance.

He said: “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 the hundreds of thousands of pounds. So you have to ask yourself whether it’s really worth it.”