HMRC wins £190m tax avoidance case

More than 400 individuals who took part in a "highly complex" tax avoidance scheme may owe £190m after HMRC won a tax tribunal.

The scheme, promoted by boutique tax firm, NT Advisors, involved the sale of shares to the investors for millions of pounds more than they were worth. The sale of the shares created a huge paper loss – at no risk to investor, who could offset their loss against income tax.

One investor sold more than £6m-worth of shares for £552.

The first tier tribunal (Steven Price, John Myers and James Lucas v HMRC, TCO2703) said...

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Comments

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ireallyshouldkn... | | Permalink

Surely if HMRC won it is tax evasion and not avoidance?

It's not evasion

howardwalters | | Permalink

because evasion is illegal and avoidance isn't. If you were correct then any decision in favour of HMRC potentially makes a criminal of the loser?

evasion v avoidance

moneymanager | | Permalink

On the scant facts noted the scheme appears wholly artificial with the operations having no commercial intent other than claiming tax relief. As such there are long standing legal principles under wwhich it could and should be attacked.

It is unlikley though to have been an attempt at tax evasion but is rather a failed avoidance scheme. Some you win some you lose, and that natually goes for both sides.

Burden of proof

andrew.hyde | | Permalink

I think that if the users of the scheme had a reasonable, legitimate and tenable expectation that the scheme worked, then it's avoidance not evasion under the law as it stands.

If you wanted to go even further and contend it was criminal fraud, then surely you'd have to meet a criminal standard of proof?  You'd have to prove beyond all reasonable doubt that the users knew perfectly well that the scheme had no chance of succeeding once HMRC were apprised of the full facts.  That sounds quite difficult.

I think the truth is that the users were persuaded by a clever salesman, supported by a compliant barrister, that the scheme was very likely to succeed.  They accepted that in good faith, but of course it turned out to be wrong.  So they gambled and lost, and most of us would say 'rightly so'.