Up to £200m due after HMRC defeats avoidance scheme in Tribunal

12 October 2015

A complex tax avoidance scheme used mainly by property developers and IT contractors has been defeated at Tribunal by HMRC.

The scheme aimed to exploit the UK’s double-taxation agreement with the Isle of Man. Over 2,000 people used the complex and artificial arrangement, believing it would reduce their rate of Income Tax to typically less than 5%.

The scheme was blocked by Parliament in 2008. A scheme user, Robert Huitson, challenged the amending legislation, taking the case to Tribunal.

The Tribunal’s positive decision for HMRC means that the property developers and IT contractors who were the main users of the scheme now collectively owe HMRC up to £200m in unpaid tax.