The court unanimously rejected the taxpayer’s appeal against HMRC’s action, and has refused permission for the taxpayer to appeal to the Supreme Court.
The tax scheme, marketed by PwC, was used by about 200 people who now face having to pay the tax in full, plus interest, on top of significant fees for use of the scheme itself. HMRC said the scheme was an "artificial, circular, self-cancelling scheme designed with no purpose other than to avoid tax."
This case involved losses of about £11m but HMRC said there are other users of the generic scheme on which this scheme was based generating substantial “losses”.
Exchequer Secretary David Gauke 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.”
The full notes of the case, which was decided on 11 July, can be read here