Source: HMRC Press Release 10 March 2018
HM Revenue and Customs’ victory before the Upper Tribunal against Cyclops Electronics and Graceland Fixing confirms that a multi-million pound tax avoidance scheme they and over a hundred other businesses used was a tax-avoidance scam.
They used loan notes to pay directors’ bonuses in an attempt to avoid income tax and National Insurance. The scheme was designed to take advantage of legislation (now amended) that provides tax relief for genuine commercial transactions.
According to HMRC “The money we’ve protected in this case alone would be enough to pay the annual salaries of around 2,400 newly qualified teachers.”
This win adds to HMRCs’ excellent record, having won nine out of ten tax avoidance cases taken to court in the last two years, with many more settling before reaching that stage.