A property development company has failed in its attempt to avoid paying tax on a property sale by creating a “loss” of £1.6 million. It used a scheme that involved buying and surrendering investment bonds issued by a life assurance company.
HMRC has already recovered tax, interest and penalties of £250 million from cases closely resembling the scheme used by Abbeyland Ltd.
The First-tier Tribunal ruled:
“The acquisition and subsequent disposal of the bonds were solely for the purposes of a tax avoidance scheme, all the steps of which were pre-ordained, with no commercial motive or effect (other than the necessary incurring of commissions and fees) . . . ”
The Exchequer Secretary to the Treasury, David Gauke, said:
“HMRC has protected over £1 billion this year by taking avoidance schemes to court and is now winning almost 90 per cent of the avoidance cases it litigates.
“Although the vast majority of taxpayers play by the rules, there are some avoidance promoters that believe the more technically complex and contrived the scheme, the safer it is from being challenged. They are wrong and the Government has provided HMRC with the resources to comprehensively challenge and clamp down on avoidance.”