Danny McCance 27 Mar 2019 01:22pm

HMRC wins £40m Hyrax tax avoidance case

The Revenue is set to collect £40m in unpaid taxes after winning its legal battle against Hyrax Resourcing

The First-Tier Tribunal found that Hyrax had promoted what was considered to be a disguised remuneration avoidance scheme under Disclosure of Tax Avoidance Schemes (DOTAS) rules.

Under this scheme Hyrax would pay users loans to enable them to avoid paying income tax and national insurance on their earnings – the amounts received in loans were not declared as income and so users would not pay tax on their earnings.

HMRC said that this was a predecessor to the K2 scheme, used by comedian Jimmy Carr.

Hyrax must now disclose the details of the scheme to the Revenue, plus the names of 1,180 high earners using it.

Failure to do so could result in a further £6m penalty – £5,000 per client –plus £5,000 per day for non-disclosure.

“HMRC is cracking down on the unscrupulous promoters who sell these highly contrived tax avoidance loan schemes,” said financial secretary to the Treasury Mel Stride.

He added that promoters should take note of this recent decision and get in touch with the Revenue about undisclosed schemes immediately.

There is no right to appeal against the decision although Hyrax is entitled to pursue a judicial review.