Philippa D’Arcy, one of the richest and most powerful women in the Square Mile, fought off a second attempt by HMRC to clamp down on a byzantine ‘repo’ scheme.

The taxman was appealing a special commissioners’ decision in favour of D’Arcy but once again suffered defeat when the judge in the case upheld the decision of the commissioners.

D’Arcy, whose maiden name is Rose, founded the Rose Partnership, which has become a premier recruitment firm for the City’s biggest investment banks.

Various rich lists have estimated her personal fortune in the tens of millions of pounds, matching the wealth of celebrity investment fund manager Nicola Horlick.

HMRC has been engaged in an ongoing battle with D’Arcy over her use of the ‘repo’ tax planning scheme involving the purchase and subsequent sale of gilts, claiming an expense on the purchase and tax relief on the gains.

The scheme was implemented by D’Arcy’s tax adviser Philip Shirley and broker NCL Investments in 2002. Recent legislation blocked the use of such schemes.

Tax experts have described the case as one of the most complex and opaque of recent times, a view acknowledged in the High Court judgment.

‘This is, in my view, one of those cases which will inevitably occur from time to time in a tax system as complicated as ours, where a well-advised taxpayer has been able to take advantage of an unintended gap left by the interaction between two different sets of statutory provisions,’ said Justice Henderson.

John Cullinane, president of the Chartered Institute of Taxation, said the D’Arcy case demonstrated how complex legislation could do more harm than good.

‘The lesson to be drawn from this is that it is the complexity of the legislation that gave this taxpayer the opportunity to reduce her tax liability in a way that HMRC clearly did not approve of,’ Cullinane said.

He added that the case showed the ‘folly’ of trying to fight tax avoidance through detailed laws, which increased the compliance burden on the majority of taxpayers and opened the door to further intricate planning HMRC disapproves of.