HMRC has won a major tax avoidance case against Abbey National Treasury Services PLC (ANTS) and Cater Allen International Ltd (CAIL),  

protecting more than £16 million for UK taxpayers after the courts decided against their attempt to avoid paying corporation tax on the interest on floating loan rate notes. In total, the ruling will protect over £86 million, as four similar cases were awaiting the ruling.

David Gauke, Financial Secretary to the Treasury said:

“This is welcome news for all those businesses and families who play by the rules.

“HMRC has successfully tackled yet another complex avoidance scheme, protecting substantial amounts of tax at stake and is sending a very clear message to anyone tempted – you won’t get away with it.”

This is the latest result in a series of tax tribunal wins for HMRC, with tribunals finding in HMRC’s favour in around 80% of cases.

Since 2010, HMRC has collected over £31 billion in additional compliance yield from large business.


Notes to Editors

1. The tax liability in this case is more than £16 million.

2. The First Tier Tribunal decision is available at

3. The avoidance scheme, used by Abbey National Treasury Services PLC (ANTS) and Cater Allen International Ltd (both part of the Santander banking group), attempted to avoid tax on interest on floating loan rate notes. In this type of loan, the interest rate (and therefore the instalment amount) fluctuates according to the rise or fall in the market interest rates.

4. ANTS claimed at the Tribunal that no corporation tax was due on the quarterly interest it accrued on the floating loan rate notes, as the rights to that interest had previously been transferred to its offshore parent company, Santander. They claimed this meant that corporation tax was not due as the interest did not belong to the company.

When the rights to the interest were transferred, ANTS had built in a buy-back option to transfer the rights of interest back at any stage. Just days after a large interest payment was made to Santander from the loan notes, ANTS exercised this buy-back option. The buy-back was at a price which meant that ANTS had retained the economic benefit of the interest payments, but it claimed not to be taxable on them.

HMRC successfully argued that the interest payments were liable to corporation tax. The First Tier Tribunal agreed.

5. A wide range of measures have been brought in during the past two years, including monitoring of high risk promoters and expanding and strengthening the highly effective Disclosure of Tax Avoidance Schemes (DOTAS) regime. Failure to disclose avoidance schemes to HMRC can result in fines of up to £1 million.