HMRC says that the victory, against promoter Matthew Jenner of NT Advisors (NTA), has saved the taxpayer around £190m of tax.
It is the third NTA-promoted tax avoidance scheme that has been given short shrift by the tribunal in the past two years.
According to HMRC, the plan – which NTA pushed to over 400 wealthy individuals – involved creating a massive loss on the sale of the shares, although the loss was only a paper one and would not expose the investors to any risk or economic downside.
NTA put together a series of loans and share transactions involving SG Hambros bank in the Channel Islands. They set up a company in the British Virgin Islands and sold shares in it to investors for millions of pounds more than they were worth. The money for the shares which Hambros had put up then passed through the company and straight back to the bank.
Although the investors were left owing money to offshore trusts, these had been created for their benefit so it didn’t matter that they never actually paid up.
The tribunal decided that the scheme was artificial and designed only for the purpose of avoiding tax, and threw it out.
“HMRC will always challenge schemes like this,” warned exchequer secretary David Gauke. “Not only will investors have to pay the tax they owe, they will also have to pay interest; all this on top of the promoter’s fees.”