A tax advice firm has lost its tenth battle with HM Revenue & Customs over its promotion of tax avoidance schemes.
The Court of Appeal found that London-based NT Advisors had constructed a series of circular payments with no commercial purpose specifically designed to reduce tax for clients. The ruling will cost the 304 members in the scheme £143m in foregone tax relief.
The latest court decision takes the amount of tax HMRC has protected from NT Advisors’s schemes to £916m.
HMRC has described the firm as a “serial avoidance promoter”.
BDO tax dispute resolution partner Dawn Register says: “This is another big win for HMRC, which sends out a clear and strong message that promoters of aggressive tax avoidance schemes will be held accountable.
“A significant struggle for participants approached by HMRC will be sourcing the cash to repay some, or all of the original tax relief they receive.
“Withdrawing from these schemes before April 2017 is crucial, or participants will face being labelled as a serial avoider and those that fail to do so could be subject to HMRC’s new ‘naming and shaming’ laws with all the reputational risk and damage that ensues.”
HMRC is consulting on plans to penalise advisers who enable tax avoidance. Advisers who are deemed “enablers” may have to pay up to 100 per cent of the tax avoided or payments received for referrals to the scheme, but HMRC has also floated the idea of a cap on penalties. The consultation closes next month.
HMRC has used its powers to collect disputed tax upfront with so-called accelerated payments notices to collect £3bn from tax avoidance schemes in the last two years.