The FT quotes Whitehall officials as saying the scheme ‘relied on unusual transactions in derivatives known as currency swaps to deliver big reductions in corporation tax for the companies’.
As a result, companies that used the scheme are having their 2002/2003 accounts scrutinised by Revenue officials.
Legislation has since been enacted to prevent such schemes being used to cut tax bills, but the Revenue is reportedly looking at ways to challenge the tax reductions the companies claimed before the legislation took effect.
A test case could soon end up in the courts.
E&Y denies that it promotes abusive tax schemes.
News of the crackdown comes soon after the introduction of new requirements forcing accountants and other tax advisors to disclose all avoidance schemes being marketed to clients.
It also follows the establishment of a global task force set up the UK, US, Canada and Australia to combat abusive tax transactions.
Making Tax Digital will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs
MHA MacIntyre Hudson has partnered with cloud accounting software provider Xero ahead of the government’s requirement for digital records
The drive towards a fully digital tax regime is an admirable one, but mandation is simply wrong, according to one of the UK's most senior tax technology practitioners - Paul Aplin
Does Darwin's theory apply to taxation? Colin ponders...