An offshore tax avoidance scheme has suffered a third court defeat landing underlying investors with a tax bill of £80m after its appeal against two earlier tribunal rulings was rejected by the Court of Appeal.
According to a statement published by HM Revenue and Customs, Matthew Jenner of NT Advisory pitched a complex scheme branded Project Corbiere to wealthy clients, which involved transferring UK government bonds backwards and forwards to the British Virgin Islands.
HMRC said the scheme, first marketed in 2005, was used by investors to manufacture an unwarranted tax deduction of up to £1.2m.
The Court of Appeal said the scheme was specifically designed to avoid tax. The First-tier and Upper Tribunals had also previously ruled in HMRC’s favour.
Some of the 230 wealthy individuals who first used the scheme in 2005 have settled tax bills with the revenue worth £20m, leaving £80m in tax that will now have to be repaid following the defeat.
David Gauke, exchequer secretary to the Treasury, said: “This is an important win for HMRC and is the latest in a string of successes. It is excellent news for the vast majority of taxpayers who play by the rules.
“Many users of this scheme have already accepted the inevitable and settled up with HMRC and those who haven’t should do so quickly.
“This government has provided HMRC with nearly £1bn to clamp down on tax avoidance, evasion and fraud. We recently announced proposals which will give HMRC stronger powers to tackle promoters and users of avoidance schemes sending a clear signal that tax avoidance doesn’t pay.”
In December, the Upper Tax Tribunal ruled that film partnership scheme Eclipse 35, marketed as a tax efficient way to invest in the film industry and recommended to many as a way to mitigate higher rate income tax, does not deliver the tax relief it claimed.
Eclipse 35 was a limited liability partnership which claimed to enable its 287 individuals to obtain tax relief on their general income. It is one of 31 related avoidance partnerships with over £600m tax at risk, according to HMRC.
HMRC believed Eclipse 35 did not work and secured an initial victory at the First Tier Tribunal in 2011. An appeal by Eclipse Film Partners has now also been rejected by the Upper Tribunal.
