Source: HMRC Press Release • May 10, 2016
The Bank of Ireland has lost a £27m tax avoidance case after trying to exploit a loophole that did not exist.
HM Revenue and Customs (HMRC) challenged the attempt to avoid Corporation Tax by the Bank of Ireland through a subsidiary, the former building society Bristol and West, and the Court of Appeal has ruled HMRC was right.
Another £5.9m is at stake in a follower case while the other five users of the scheme conceded before the legal action began, paying £215m in tax.
The avoidance scheme sought to exploit the move from one piece of legislation to another. Contracts were moved from Bank of Ireland subsidiary under the old legislation but were received by a second subsidiary under the new legislation.
All parties agreed the transfer of the contracts was done solely to avoid tax but they argued the scheme worked because the move from one piece of legislation to the other created a loophole.
HMRC’s Director General of Business Tax, Jim Harra, said:
“This was a cynical attempt to exploit a non-existent loophole to avoid paying tax. It has failed.
“We will continue to investigate and pursue those who try to avoid paying their fair share on behalf of the majority who play by the rules, and pay the tax they owe.”