HMRC defeats avoidance case worth £200m

HMRC has defeated an avoidance scheme used chiefly by property developers and IT contractors and could now be owed up to £200m in unpaid tax

The scheme, which was used by more than 2,000 people, aimed to exploit the UK’s double taxation agreement with the Isle of Man.

Those using the scheme believed that it would reduce their rate of income tax to 5% or less. The scheme was blocked by parliament in 2008 and the Revenue was given allowances to enforce the new legislation retrospectively.

Electrical engineering consultant Robert Huitson subsequently challenged the ruling but, following a decision by a first tier tribunal, that appeal was dismissed.

Commenting on the ruling, Jim Harra, HMRC’s director general of business tax, said, “This is yet another example where some people try to abuse the tax system to deprive the UK of money for vital public services.

“This is unfair on the majority who pay their fair share”