Appeal rejected - PwC tax avoidance scheme

[Ignis Fatuus]

Lose the words "other than to avoid tax"

And you have just described the legal aid system and the BBC

No. The BBC is designed with a purpose. Unlike many posts on here, and not a few posters IMHO.

[BolshieBastard]

Not the same as us imo.

Torygraph version here

The court ruled against a scheme promoted by PricewaterhouseCoopers (PwC), the accountancy firm, used by a businessman in a bid to avoid about £11m in tax.

When another 200 taxpayers attempting to use the scheme are taken into account, the total cost in lost tax would have been nearer £100m, experts said. But the court ruling sets a precedent that could mean billions of pounds in potentially avoided tax will instead flow to the public purse.

"This gives a very clear indication of the way courts are now looking at tax schemes," said Mike Warburton of Grant Thornton. "The ruling says in effect, 'we are not going to countenance aggressive tax schemes'. You have to see this as an important victory for the taxman.

"Things are now running very much against tax avoidance schemes, both politically and in the courts." He put the potential tax savings from the knock-on effects of the ruling in the "billions of pounds".

The case was brought by HM Revenue & Customs (HMRC) against Howard Schofield, who had been sold a scheme by PwC to avoid capital gains tax on £10.7m. It involved a complex series of derivatives transactions that, in effect, went in a circle but had the effect of avoiding the tax otherwise due.

After a case about 30 years ago, such schemes were seen as invalid, but the legal situation was not watertight. However, this week's case reinforces the so-called "Ramsay principle" that artificial schemes to circulate money in a bid to avoid tax are not valid.

Lady Justice Hallett, one of the Appeal Court judges, said: "To my mind, this appeal was a thinly disguised attempt to undermine the Ramsay principle. Once it was accepted that the principle remains valid, and once the findings of the First Tier Tribunal were accepted, this appeal was doomed to fail."

HMRC said: "This was an artificial, circular, self-cancelling scheme designed with no purpose other than to avoid tax. The court delivered a very strong judgment that such transactions do not work in law. This case involved losses of about £11m but there are other users of the generic scheme on which this scheme was based generating substantial losses [of tax to HMRC]."

David Gauke, the exchequer secretary to the Treasury, said: "This is a great result for the country and it's another example of HMRC taking firm action against the avoidance schemes that would otherwise deprive the UK of billions of pounds.

"HMRC has a strong track record of quickly and effectively challenging avoidance through the courts, and anyone thinking of using such a scheme needs to carefully consider that. When millions of hard working families are playing by the rules, paying what they have to, we will not put up with the use of cleverly structured schemes designed purely to get around the rules.

"I hope that real lessons are learnt from the Court of Appeal's decision."

Mr Warburton said Mr Schofield could petition the Supreme Court to hear an appeal, but added: "I would have considerable doubt about the chance of success and he may not even obtain permission to try.”

PwC said: "We aim to provide balanced, informed advice which takes into account not only current tax legislation but also current practice and case law. The case reported today relates to tax planning undertaken some years ago and planning of this nature is no longer recommended to our clients."

[centurian]

Presumably even if the court had approved the scheme then the government would just have changed the law retrospectively.

Perhaps, but at least so far, it seems that processes have been followed correctly. It was clearly an aggressive scheme from the outset, carrying large risks. HMRC disputed the scheme under existing legislation - and have won in court, twice.

[Higgs Boson]

"an artificial, circular, self-cancelling scheme designed with no purpose other than to avoid tax"

Lose the words "other than to avoid tax"

And you have just described the legal aid system and the BBC

[BrilloPad]

What sort of scheme was it?

Looks like avoidance of capital gains to me.

Well I suppose it is evasion now.

Presumably even if the court had approved the scheme then the government would just have changed the law retrospectively.

[cojak]

And rather tortuous as the punter had to live outside of the UK for 5 years.

[Hex]

What sort of scheme was it?

"an artificial, circular, self-cancelling scheme designed with no purpose other than to avoid tax"

[Higgs Boson]

What sort of scheme was it?

[LisaContractorUmbrella]

Thanks Clare

[Clare@InTouch]

The Court of Appeal has unanimously rejected an appeal by a taxpayer against HMRC regarding a tax avoidance scheme recommended by PricewaterhouseCoopers in the early noughties.
The Court also refused permission for Howard Peter Schofield to appeal to the Supreme Court.
The scheme, called Digital Collar, had been described by HMRC as "an artificial, circular, self-cancelling scheme designed with no purpose other than to avoid tax".

The scheme, which has not been in use since 2005, was used by about 200 people who must now all pay the tax in full, plus interest, on top of significant fees for use of the scheme itself.

Read more: Court rejects appeal over tax avoidance scheme - IFAonline

IFA Online - News, blogs and analysis for IFAs. Visit the website now.

[Waldorf]

Revenue wins back £100m in avoided tax - FT.com

Sorry if this has already been covered chaps

The link can only be viewed by FT subscribers

Any chance of posting what it is all about?

[LisaContractorUmbrella]

Revenue wins back £100m in avoided tax - FT.com

Sorry if this has already been covered chaps