Brain disorder research scheme guilty of tax avoidance

26 July 2017

HMRC has won a legal battle against a tax avoidance scheme, which claimed £122 million was spent on research into brain disorders, when only £7 million of it reached a genuine research company.

The win against Brain Disorders Research Limited Partnership protects taxes worth £29 million.

The organisation said the money was going to research into depression and Attention Deficit Hyperactivity Disorder (ADHD) but they claimed reliefs on artificial loans and large amounts of capital allowances.

The scheme, promoted by Matrix-Securities Ltd, was designed to create an impression the money was being used for research when, in fact, it sought to claim reliefs that were not due.

David Richardson, HMRC Director General for Customer Compliance, said:

“We’re relentless in pursing those who use contrived, artificial schemes to try to avoid tax. The message is clear – it just doesn’t pay to try to avoid tax.”

HMRC has an excellent record in tax avoidance cases, winning around 80% of cases taken to court.

The case, heard at the upper tribunal agreed with the previous decision from the first-tier tribunal that part of the contract was ‘a sham’. The appellants have applied to the court of appeal for permission to appeal the decision.