Tribunal crushes newspaper avoidance scheme | AccountingWEB

Tribunal crushes newspaper avoidance scheme

A tax avoidance scheme used by a regional newspaper publisher has been quashed by a tax tribunal.

Iliffe Media claimed to license newspaper mastheads to avoid tax.

The decision by the first-tier tribunal, Iliffe News and Media Ltd & Ors v Revenue & CustomsTC02365, has protected £5.6m, with a potential further protection of £104m in 67 similar cases, HMRC said.


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afairpo's picture

Odds & ends of comments    2 thanks

afairpo | | Permalink

It's "Iliffe Media" not "Lliffe Media".

The case was actually lost by the taxpayer because the IP law interpretation was found to be wrong - the companies had assigned the unregistered trademarks 'in gross' (ie: without the associated business) which the Tribunal held cannot be done under English law. IP lawyers are a little divided as to whether that's actually the case or not.

The tax findings are all obiter - useful information, but the judicial equivalent of 'off the cuff' remarks. Interesting elements include the judge taking into account the tax adviser's intentions when considering whether the tax advantage was the sole or main purpose - this was because the taxpayer's directors didn't understand some of the reasons behind the structure. The judge also looked at a hypothetical transaction as a comparison to consider sole/main purpose, which rather goes against history in this area - the test has not previously been whether there was some other way to do the transaction, but instead the actual intentions/purposes. Then again, the transaction in this case doesn't seem to have been particularly well structured to achieve the intended commercial aims.

Worth noting that this is the second case in a short period of time where the Tribunal decided against the taxpayer on the basis of a failure of non-tax law (the other being the Vardy case on SDLT) - emphasising the importance of getting the basic legal structure right, and not getting distracted by the tax stuff.

so what does happen now?

The Black Knight | | Permalink

Tax payer gets penalty? Would they now? (reasonable care excuse)

Adviser gets sued? Or is there always a watertight disclaimer.......presumably all it failed because all the bases had not been covered, not because it was untested in Law?