News story

HMRC wins in court have protected over £1 billion

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The total amount of tax protected by tackling corporate tax avoidance schemes has passed £1 billion in the first six months of 2013.

Announcing the figure at the first annual HM Revenue and Customs (HMRC) Stakeholder Conference, David Gauke, Exchequer Secretary to the Treasury, said:

Today I can announce that HMRC has topped £1 billion this year in court wins against corporate tax avoidance, following a judgment worth almost £88 million, involving a company called Vocalspruce and a scheme promoted by Price Waterhouse Coopers.

Vocalspruce, at the time part of a FTSE-listed group, lost its bid to convince a tax tribunal that the avoidance scheme worked as intended.

This case has delivered over £62 million to the UK’s coffers, as other users of the failed scheme settled up. It also has major implications for 43 similar cases, protecting over £87 million.

Welcoming the Tribunal decision, Mr Gauke said:

These are complex, intricate schemes and without the technical skills, resources and sheer commitment of HMRC’s specialists they would go unchallenged, costing the country billions of pounds every year.

The message coming out of these cases is clear – entering into a tax avoidance scheme can be complex, expensive and self defeating, and the taxpayer can even end up paying more than the original bill.

The Government has invested nearly £1 billion in HMRC to come down hard on avoidance, evasion and fraud and they will continue to challenge abuses like this wherever they find them.

Details of the large corporate avoidance tackled through the courts in 2013, and the tax protected, are as follows:

Item Tax protected
Land Securities £60 million
Bristol and West £30 million
WHA £600 million
P&O £154 million
AbbeyLand £50 million
Vocalspruce £88 million
Tax settled in advance of Vocalspruce judgment £63 million
Project Blue Ltd £135 million
TOTAL £1,180 million

Notes: The Vocalspruce case revolved around the use of loan notes by Vocalspruce’s then parent, Brixton plc. Profits on loan notes are taxable, but this scheme aimed to make them non-taxable by exploiting what it claimed was a loophole in Finance Act 1996. Both the Lower and Upper Tribunal ruled against this interpretation. The Upper Tribunal appeal was conducted under Rule 18, which is used when there are other cases with common or related issues of fact or law at stake. Vocalspruce was the lead case, having 43 followers, with £87.7 million of tax at stake. See the Vocalspruce tribunal judgement.