Court blows PwC-marketed tax scheme out of the water
Scheme designed to artificially create losses to avoid CGT, says Court of Appeal
Scheme designed to artificially create losses to avoid CGT, says Court of Appeal
A MILLION-POUND tax scheme marketed by PwC has been shut after a Court of Appeal hearing.
The scheme, which dates back to 2002/2003, was used by about 200 people who now have to pay back the full capital gains tax as well as interest.
The case, Howard Schofield v HMRC, which involved losses to the Exchequer of about £11m, was described by the court as similar to the Ramsay case, where artificial losses were created to avoid a capital gains tax bill.
“Under the scheme as a whole, the options were created merely to be destroyed. They were self-cancelling. Thus, for capital gains purposes, there was no asset and no disposal,” said Lady Justice Hallett.
“To my mind, this appeal was a thinly disguised attempt to undermine the Ramsay principle.”
Exchequer secretary David Gauke said: “This is a great result for the country and it’s another example of HMRC taking firm action against the avoidance schemes that would otherwise deprive the UK of billions of pounds. HMRC has a strong track record of quickly and effectively challenging avoidance through the courts, and anyone thinking of using such a scheme needs to carefully consider that.
“When millions of hard-working families are playing by the rules and paying what they have to, we will not put up with the use of cleverly structured schemes designed purely to get around the rules.
“I hope that real lessons are learnt from the Court of Appeal’s decision.”
PwC said in a statement: “PwC provides tax advice to a wide range of clients with a wide range of commercial circumstances. That advice is always provided in accordance with the law and with appropriate disclosure to tax authorities.
“We aim to provide balanced, informed advice which takes into account not only current tax legislation but also current practice and case law. The case reported today relates to tax planning undertaken some years ago and planning of this nature would no longer be recommended to our clients.”