A first tier tribunal has ruled that two taxpayers negligently submitted tax returns because of their failure to verify a tax avoidance scheme was not a sham.
The married company directors, Bernard Litman and Ann Newall challenged the view they were negligent and HMRC penalties arising from what the Revenue deemed "negligently submitted tax returns" for tax years 2004/5 in Litman V HMRC  UKFTT 089 (TC).
The couple had adopted a tax avoidance scheme from Isle of Man-based consultancy Montpelier Group. Under this they took out a £400,000 loan to buy capital redemption policies that they then repaid.
This loan created a...