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Ladbrokes’ luck runs out in £71 million tax avoidance case

Press Release   •   Feb 25, 2017 12:11 GMT

Ladbrokes has lost a long running legal battle with HM Revenue and Customs (HMRC), costing the high street bookie £71 million.

Ladbrokes used a tax avoidance scheme, promoted in 2008 by accountancy firm Deloitte, in an attempt to minimise its Corporation Tax bill by exploiting a legal loophole now long closed.

The scheme involved two companies in the Ladbrokes group (Ladbrokes International and Travel Document Service) entering into purposely-designed arrangements so that an artificially manufactured fall in the value of the shares in one of the companies generated a loss for the other company for tax purposes. The group suffered no real loss overall.

Ladbrokes conceded that the arrangements were intended to avoid tax but argued in court that anti-avoidance rules did not catch them out – HMRC disagreed.

HMRC’s Director General for Customer Compliance, Jennie Granger, said:

“Ladbrokes would have been better off just paying the tax but instead they pursued this lengthy legal dispute with HMRC. Avoidance schemes like this just don’t work and HMRC will always take firm action against them. The bookie gambled and lost when the odds of success could not have been lower.”

The decision is another win for HMRC, which this financial year alone has protected over £1.7 billion of public money through its enforcement of the tax rules.

Notes to editors:

  1. The appeal loss follows a court hearing in 2015 when the First-Tier Tribunal ruled in HMRC’s favour.
  2. HMRC wins over 80% of the cases heard in court.
  3. There were originally 11 users of this type of scheme. Nine have now conceded before the Tribunal hearing and paid the tax owed.
  4. Follow HMRC Press Office on Twitter @HMRCpressoffice
  5. 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.