Save content
Have you found this content useful? Use the button above to save it to your profile.
Beach in the Cayman Islands
iStock_Cayman_Anna_Jedynak

HMRC wins big offshore tax case

by
4th May 2016
Save content
Have you found this content useful? Use the button above to save it to your profile.

HMRC said it has “protected” £365m in tax after defeating a tax avoidance scheme that involved dividends paid on shares to a company based in the Cayman Islands.

The first tier tribunal [Clavis Liverty 1 LP and HMRC, TC05028] ruled that the Clavis Liberty Fund 1 LP scheme, involving 99 partners, created an artificial tax loss.

The scheme involved a limited partnership, registered in Jersey and claiming to carry out UK trade.

Each of the 99 users of the scheme contributed a sum, which was used, together with a large bank loan, to acquire rights to dividends declared by a Cayman-registered company.

The partnership claimed a deduction for the cost of the dividend rights but sought to exclude the dividend payments paid from its trading profits, giving rise to a loss, HMRC said.

“This is an important success for HMRC both in terms of the money that it will bring in, and the powerful signal it sends to anyone who might be tempted to use any form of offshore arrangement to avoid paying the tax that is due,” said Jennie Granger, director general of enforcement and compliance at HMRC.

The tribunal decision is HMRC’s second win in a large tax case during April.

Last month the Supreme Court refused permission for Eclipse Film Partners to appeal against a Court of Appeal ruling.

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.