Raymond Doherty 24 Oct 2018 04:26pm

HMRC wins £79m tax avoidance case

The Revenue has won a major tax avoidance case against US giants Goldman Sachs and Cargill

The long-running case involves a tax avoidance scheme used by Teesside Power Limited (TPL), subsequently renamed GDF Suez Teesside Limited.

In 2001 Cargill’s private equity division and Goldman Sachs took ownership of TPL following the collapse of its owner Enron in 2001.

TPL tried to avoid paying UK corporation tax on the millions it was owed from subsidiaries of Enron in 2006 by setting up a company in the US and converting the money into shares.

The scheme was devised by EY, which was also TPL’s auditor at the time.

The case has been through the both the First Tier Tribunal and an Upper Tier Tribunal. Today the Court of Appeal ruled in favour of HMRC, which is now owed £79m in tax that Goldman Sachs and Cargill are liable for, according to the Times.

Following the decision, Penny Ciniewicz, director of Customer Compliance at HMRC said, “Anybody who tries to exploit the tax rules to gain an unfair advantage will come unstuck.

“We have dedicated teams in place to tackle abuse wherever we find it.”

Miles Dean, managing partner of Milestone International Tax, said, “This is how tax disputes should be settled. The court system in the UK is underpinned by the rule of law and provides taxpayers and the tax authority with certainty that disputes will be properly heard.

"HMRC’s win rate appears to be increasing in complex avoidance cases, most likely due to the purposive approach now taken by the courts in interpreting tax legislation,” added Dean.