HMRC has won a giant first-tier tribunal against an offshore tax scheme.
The company, Clavis Liberty Fund 1 LP, was based in the Cayman Islands. Yet claimed to take part in UK trade. They used contributions from 99 partners, and a bank loan to acquire rights to dividends out of the scheme, which tried to create artificial tax loss.
The tribunal was the first time that this particular anti-avoidance legislation had been used (Section 730 of the Income and Corporation Taxes Act 1988). And it looks like this could be a giant step for HMRC in terms of stopping offshore tax schemes.
HMRC saved £365m over 3 cases in the chase to stop offshore tax havens and schemes. This case in particular has saved around £18m, which is a promising start for the UK tax office. Jennie Granger, Director General of Enforcement and Compliance, HMRC said ‘This is an important success for HMRC both in terms of the money that it will bring in, and the powerful signal it sends to anyone who might be tempted to use any form of offshore arrangement to avoid paying the tax that is due”.
This all comes after complaints from MP’s and members of PAC, demanding the tax office do more to tackle tax fraud. They suggested that HMRC partake in more investigations of the super rich each year. They also suggested they make more staff investigate tax evasion and offshore companies. HMRC had since released a statement agreeing with MP’s. They stated that in a bid to stop the wealthy evading tax, and have the public put more faith in the tax office, they would implement changes. They plan to add criminal charges to any tax evasion convictions. Along with this, the tax office plans on using money from their Summer Budget 2015 to investigate and convict 100 companies and wealthy individuals each year until 2020.