Tax shelter scheme wins controversial approval
London's tourism chief David Campbell is at the centre of a bitter struggle with the Inland Revenue over the use of a tax scheme worth a potential £1m in tax relief.
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Campbell, the former chief executive of Ginger Media, won the right to claim relief on a loss of almost £2.5m after a Revenue special commissioners’ decision last week.
Experts said that ‘thousands of cases’ were waiting for the decision on Campbell’s transfer of a £2.5m ‘relevant discounted security’ to his wife.
This particular ‘scheme’, set up under the advice of Coutts Bank, was designed to save Campbell tax on the windfall bonus he gained when Ginger Media was sold to Scottish Media Group for £225m in 2000. It also let Campbell make investments.
Richard Bramwell QC, who acted for Campbell, told Accountancy Age: ‘The basic idea of creating losses has been extremely widely used. There are thousands of cases waiting for this decision.’ Bramwell said the Revenue had already tried to block the scheme three times in the past.
The special commissioners said: ‘We find that, although the main purpose of the appellant was to produce a tax loss, it was not the sole purpose.’
In order to produce the tax loss, Campbell borrowed £3.9m from NatWest which he put in a new company in exchange for loan notes. The notes had a lower market value, and the loss was triggered after he transferred them to his wife, the day after the sale of Ginger Media.
One senior tax expert said that it was encouraging that the special commissioners had not been influenced by the announcement in this year’s Budget of a clamp down on tax avoidance schemes.
A spokeswoman for the Revenue would not comment other than to confirm it was ‘considering an appeal’. Campbell had no comment.