A specialist tax barrister recently lost a first tier tribunal appeal against HMRC’s decision not to allow him to claim tax relief on a £475,000 loss on an avoidance scheme of his own devising.
Rex Bretten QC, who retired around 18 months ago from Tax Chambers at 15 Old Square, designed a scheme that involved setting up two trusts in which he invested £500,000 in loans raised against what are known as relevant discounted securities (RDS). The arrangement created a £475,000 loss against which he tried to claim £190,000 relief.
While the loan arrangements were fairly simple, the interpretation of their legality was much less straightforward. In a what might be termed a 2-1 points decision in the case of George Rex Bretton QC v HMRC  UKFTT 189 (TC), tribunal judge Barbara Mosedale ruled in March that the transactions were caught by anti-avoidance provisions (paragraph 9A) in schedule 13 of the Finance Act 1996 that applied at the time of Bretten’s initial appeal.
Bretten represented himself at the tribunal hearing in January, and the case was given an added twist by Public Accounts Committee chair Margaret Hodge, who named Bretten as one of a handful of tax QCs who “prostitute themselves” to schemes designed to deliberately create gross tax relief for investors.
In February 2003, Bretton became joint trustee...
About John Stokdyk
John Stokdyk is the global editor of AccountingWEB UK and AccountingWEB.com.