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Aberdeen loses court battle over £7m tax avoidance scheme

HM Revenue & Customs has won a court case against Aberdeen Asset Management over an offshore tax avoidance scheme used to pay bonuses to its senior executives.

Between 2000 and 2003, Aberdeen paid senior employees more than £31m in bonuses through an employee benefit trust, free of income tax and national insurance contributions.

HMRC won its appeal in a Scottish Court which confirmed Aberdeen should have paid £7m in income tax and national insurance contributions.

HMRC first told Aberdeen it owed the £7m in January 2007 but the asset manager contested the demand.

A first-tier tribunal rejected Aberdeen’s appeal in October 2010. A second appeal was rejected by the Upper Tribunal in January 2012, leading to the latest appeal in the Court of Session.

HMRC business tax director general Jim Harra says: “This decision will be a big help when we come to argue other cases that are currently in the courts.

“We hope this success will encourage more companies to cut their losses and come forward to settle their EBT liabilities on the basis that this kind of avoidance scheme does not work.”

Murphy Wealth partner Adrian Murphy says: “It is quite right that if you try and get round the tax rules you should be punished. 

“Unfortunately, HMRC do not have the resources to tackle the wide-ranging tax avoidance situation but will obviously be pleased they have managed to claim a victory over Aberdeen in this instance.”

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