TaxCorporate TaxNo immunity for £77m vaccine tax avoidance scheme

No immunity for £77m vaccine tax avoidance scheme

Scheme seeking to exploit research and development tax reliefs is shut down in upper-tier tribunal

A TAX AVOIDANCE SCHEME that sought to exploit reliefs put in place for the development of life-saving vaccines has been shut down in the upper-tier tribunal.

Investors in the scheme used a Jersey-registered limited partnership that claimed to be involved in creating and exploiting intellectual property from research into vaccines against diseases such as HIV, flu, hepatitis A and hepatitis B.

The Vaccine Research Limited Partnership scheme, promoted by Matrix Structured Finance, sought to exploit a tax relief for spending on research and development by claiming back all the tax due on an alleged investment of £114m and a first year trading loss of £193m.

In summing up, Justice Sales said: “The memorandum makes it clear that investors who invest in the partnership expect to receive a return based on tax relief on a proportion of the total sum described as paid by the partnership to numology, namely £193m.

“The FTT found that it was not severable. This was a view which it was plainly entitled to take on the evidence. Indeed, we think it would have been difficult for any other view to be taken. The FTT found that the Partnership engaged in both trade and non-trade activities and that the Matrix fee was attributable to both. Therefore, the ‘wholly and exclusively’ test could not be satisfied by the partnership. We consider that this conclusion is unassailable.”

David Gauke, financial secretary to the Treasury, added: “This is the latest in a series of HMRC tribunal wins over avoidance schemes whose members try to exploit the rules for partnerships rather than accept their responsibilities as taxpayers.”

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