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HMRC court wins protect over £1 billion

Press Release   •   Jul 18, 2013 10:11 BST

The total amount of tax protected by tackling corporate tax avoidance schemes has passed £1 billion in the first six months of 2013, David Gauke, Exchequer Secretary to the Treasury, announced today at the first HM Revenue and Customs (HMRC) Stakeholder Conference.

Speaking this morning at the conference, Mr Gauke said:

“Today I can announce that HMRC has topped £1 billion this year in court wins against corporate tax avoidance, following a judgment worth almost £88 million, involving a company called Vocalspruce and a scheme promoted by Price Waterhouse Coopers.”

Vocalspruce, at the time part of a FTSE-listed group, lost its bid to convince a tax tribunal that the avoidance scheme worked as intended.

This case has delivered over £62 million to the UK’s coffers, as other users of the failed scheme settled up. It also has major implications for 43 similar cases, protecting over £87 million.

Welcoming the Tribunal decision, Mr Gauke said:

“These are complex, intricate schemes and without the technical skills, resources and sheer commitment of HMRC’s specialists they would go unchallenged, costing the country billions of pounds every year.

“The message coming out of these cases is clear – entering into a tax avoidance scheme can be complex, expensive and self defeating, and the taxpayer can even end up paying more than the original bill.

“The Government has invested nearly £1 billion in HMRC to come down hard on avoidance, evasion and fraud and they will continue to challenge abuses like this wherever they find them.”

Notes for editors

1.  Large corporate avoidance tackled through the courts in 2013 and the tax protected:

Land Securities

£60 million

Bristol and West

£30 million

WHA

£600 million

P&O

£154 million

AbbeyLand

£50 million

Vocalspruce

£88 million

Tax settled in advance of Vocalspruce judgment

£63 million

Project Blue Ltd

£135 million

Total

£1,180 million

2.  The Vocalspruce case revolved around the use of loan notes by Vocalspruce’s then parent, Brixton plc. Profits on loan notes are taxable, but this scheme aimed to make them non-taxable by exploiting what it claimed was a loophole in Finance Act 1996. Both the Lower and Upper Tribunal ruled against this interpretation.

3.  The Upper Tribunal appeal was conducted under Rule 18, which is used when there are other cases with common or related issues of fact or law at stake. Vocalspruce was the lead case, having 43 followers, with £87.7 million of tax at stake.

4.  The Vocalspruce tribunal judgement can be viewed here.

5.  HMRC held its first Stakeholder Conference for key stakeholders at 100 Parliament Street on Thursday 18 July.

6.  Follow HMRC on Twitter @HMRCgovuk

7.  HMRC’s flickr channel www.flickr.com/hmrcgovuk

Issued by HM Revenue & Customs Press Office

HM Revenue & Customs (HMRC) is the UK’s tax authority.

HMRC is responsible for making sure that the money is available to fund the UK’s public services and for helping families and individuals with targeted financial support.