Stagecoach tax avoidance stopped in its tracks by HMRC

A TAX AVOIDANCE scheme used by one of the UK’s largest bus operators has been shut down by HMRC.

Stagecoach group used an artificial scheme which attempted to make a loss in one of its biggest companies, hoping to cut their tax bill by £11m in the accounting period ending 30 April 2011. The transport firm used the scheme while being advised by KPMG.

However the first-tier tribunal ruled that Stagecoach failed to make a loss through the scheme, and agreed with all of HMRCs legal challenges.

Jim Harra, director general of business tax said: “This was clear tax avoidance. It was an attempt to manufacture losses to deny the public purse the tax due.

“We will challenge any attempt to abuse the rules to avoid paying what is owed.”

The taxman has been working hard to crackdown on businesses using similar tax avoidance schemes to the Stagecoach case, and is currently dealing with 11 similar cases which could fetch up to £179m in tax for the revenue.

HMRC has collected £485m in tax and interest from 16 other groups where similar schemes were used to try and avoid tax.

When contacted by Accountancy Age, a spokesperson for Stagecoach said that the historic tax had already been paid in full, and that it expects to pay over £35m in corporation taxes in 2015/16.

“We believe it is right that we pay our fair share of taxes and we are committed to doing so,” said the spokesperson.

“These historic transactions involved Stagecoach investment in its subsidiaries, and the first tier tribunal ruling did not challenge the commercial background behind those transactions. The tribunal did not however agree with the tax treatment Stagecoach had adopted and we will take time to consider the findings of the tribunal before deciding on the way forward.”

A KPMG spokesperson said: “We are unable to comment on specific client situations, particularly where they are the subject of litigation.”