HMRC have published their list of tax avoidance litigation decisions for 2023-24. This identifies the results in litigation decisions where HMRC considered that tax avoidance was involved. The summary indicates decreased litigation in 2023-24, but a continued high win rate for HMRC.
Of the twenty-three cases litigated where the substantive issue considered was tax avoidance, eighteen were recorded as wins for HMRC. Among these cases were:
HMRC wins
- JTI Acquisitions Company (2011) Limited v HMRC [2023] UKUT 194, where the Upper Tribunal (UT) agreed with the First Tier Tribunal (FTT) that whilst the appellant made a commercial acquisition using a group loan, the wider group strategy of securing a UK deduction meant it had an unallowable purpose.
- Hargreaves Property Holdings Limited v HMRC [2023] UKUT120, in which the UT confirmed that the restructuring of the group’s loans failed to alter the underlying nature of the loans, meaning £2.7m of withholding tax was payable.
HMRC losses
- HMRC v Fisher & Anor and HMRC v Fisher Respondent No 2 [2023] UKSC 44, where the Supreme Court held that the transfer of a business to Gibraltar could not be a Transfer of Assets Abroad as it was not made by the individual shareholders but by a company owned by them.
- Olivia Wilkinson and others v HMRC [2023] TC 08887, in which the First Tier Tribunal (FTT) decided that HMRC was not able to deny Capital Gains Tax (CGT) relief on a share-for-share exchange that subsequently allowed the daughters of a company's owner to claim Entrepreneurs' Relief (ER) after a take-over. The CGT planning exercise was not one of the main purposes, nor the main purpose, of the deal.
HMRC identified a further twelve procedural cases of which they had ten wins, one partial win and one loss. The wins included:
- Landmaster Investment Limited & Anor v HMRC [2023] TC08919, where the FTT found that reservation agreements, relating to the purchase of new build apartments, were not options or rights of pre-emption. The residential rates of Stamp Duty Land Tax (SDLT) applied.
- Delphi Derivatives Limited v HMRC [2023] TC8912, in which the FTT dismissed an appeal against penalties for inaccuracies in PAYE returns for contributions to an Employee Benefit Trust (EBT). The taxpayer had acted carelessly initially, and then deliberately, by continuing to contribute after HMRC had already opened an enquiry into the scheme as well as issuing a Spotlight about their views on the scheme.
HMRC won all four Disclosure of Tax Avoidance Schemes (DOTAS) cases.
League table
Results for the three most recent years are summarised in the league table below.
Results for 2023-24 show a notable decrease in the number of cases litigated where the substantive issue considered was tax avoidance. Overall, HMRC's success rate dropped slightly from 2022-23 and 2021-22, at 86% in 2023-24.
|
2023-24 |
2022-23 |
2021-22 |
|
|
Wins (including partial wins) |
|||
|
Substantive issue of tax avoidance |
18 |
30 |
21 |
|
Procedural cases |
11 |
13 |
14 |
|
DOTAS |
4 |
6 |
- |
|
Judicial review cases |
1 |
1 |
2 |
| Permission for judicial review on publishing Tax avoidance schemes, promoters, enablers and suppliers |
2 |
- | - |
|
Total wins |
36 |
50 |
37 |
|
Losses |
|||
|
Substantive issue of tax avoidance |
5 |
3 |
- |
|
Procedural cases |
1 |
3 |
4 |
|
DOTAS |
- |
1 |
- |
|
Judicial review cases |
- |
- |
1 |
|
Total losses |
6 |
7 |
5 |
|
Percentage won |
86% |
88% |
88% |
Useful guides on this topic
DOTAS: Disclosure of Tax Avoidance Schemes
What are the Disclosure of Tax Avoidance Schemes (DOTAS) rules? When should you disclose your use of a tax avoidance scheme? What are the consequences of non-disclosure? How are penalties calculated?
Anti-avoidance: HMRC's spotlights
What are HMRC's Spotlights and where can you find them?
What is the Ramsay principle in tax?
Not sure what is meant by the Ramsay principle? Here is a quick guide.
Tax Agents: HMRC's Standards for Agents
HMRC's 'Standard for agents' is a non-statutory standard, aimed at all tax agents, although largely to most tax agents who are not members of any of the professional tax and accountancy bodies.
Professional Conduct in Relation to Taxation
The Professional Conduct in Relation to Taxation (PCRT), adopted by the main professional accounting and tax bodies, sets out the professional standards that are expected of a member when undertaking tax work.
Named tax avoidance schemes, promoters, enablers
HMRC publishes a list of named tax avoidance schemes, promoters, enablers and suppliers. It is not recommended that taxpayers use any of these schemes, as HMRC does not consider that they work and you may end up with a significant tax liability if you engage with the scheme suppliers.
External link
