According to David Gauke, exchequer secretary, the Tax Tribunal’s decision in favour of HMRC in April is a sign that the department “will stop at nothing to catch up with those who are not paying their way”.
He said: “The vast majority of businesses and individuals pay the tax they owe. The additional resources that we have made available to HMRC are helping to ensure the minority cannot avoid their responsibilities.
“HMRC will challenge avoidance schemes that risk denying the exchequer vital tax revenues and will pursue to litigation when necessary.”
His comments after a lengthy case in which Bank of Ireland-owned lender Bristol & West defended its decision to novate a floating/fixed-rate swap to another BOI subsidiary in 2003 for a £91m premium in return.
As outlined in the 23-page judgement handed down by tribunal judge Howard Nowlan, HMRC contested that there was no such loophole allowing Bristol & West to avoid £30m worth of corporation tax by swapping the contract within the parent group.
The Tax Tribunal ruled in favour of HMRC, and said the company will be forced to pay the money it owns on £91m of profit.
In the judgement, Mr Nowlan said: “The appellant will be taxable on the £91m, subject to any deduction for any premium initially paid for the swap.”
Background
In April, HMRC confirmed that it has now won more than 50 tax avoidance cases since 2010 as it continues to ensure as many people as possible are paying the tax they owe.
