Tax barrister beaten in court
A top tax barrister who designed his own tax avoidance scheme and defended it in court against HMRC has lost his attempt to avoid paying 拢190,000 in tax.
Rex Bretten QC designed a highly complex scheme which involved setting up trusts and investing 拢500,000 in discounted securities. He claimed his scheme created a loss of 拢475,000 which he could set against his income. The tribunal said that the securities had been issued solely to facilitate Mr Bretten鈥檚 tax avoidance scheme and that there was no genuine loss, so the tax is payable.
Although the structure was unique, the principles ruled on by the tribunal could be directly applied to a number of other cases involving further tax of around 拢2 million.
The Exchequer Secretary to the Treasury, David Gauke, said:
The vast majority of individuals and businesses pay the tax they owe. There are, however, a small minority who will seek to exploit the rules and try to avoid their responsibilities by engaging in artificially contrived schemes.
This is simply unacceptable and this case serves to highlight the work HMRC is doing to tackle evasion, avoidance and fraud. This Government has invested over 拢1 billion in HMRC and we are determined to ensure that the tax that is due under the law is collected.
Jim Harra, HMRC鈥檚 Director General for Business Tax, said:
This is another important success for HMRC at tribunal which may well have repercussions for other similar tax avoidance schemes.
Some people make the mistake of thinking that a complex avoidance scheme backed by a senior lawyer is safe from HMRC鈥檚 challenge. That would be a big mistake, as this outcome proves. People should always ask themselves whether a proposed scheme is too good to be true.
See for a summary of the tribunal decision.
The Finance Act 2003 abolished the 鈥渄iscounted securities鈥� loss relief claimed by Bretten.
At the 2013 Budget, the Government published , which sets out the progress that has been made in the drive against tax avoidance.
A significant crackdown on tax avoidance and evasion, which will in total raise over 拢4.6 billion in new revenue over the next five years, was announced at the
Since 2010, HMRC has won more than 50 tax avoidance court cases, protecting billions of pounds.