Investors in the scheme used a Jersey-registered limited partnership which claimed to be involved in creating and exploiting intellectual property from research into vaccines against diseases such as HIV, flu, Hepatitis A and Hepatitis B.
The Vaccine Research Limited Partnership scheme, promoted by Matrix Structured Finance, sought to exploit a tax relief for spending on research and development (R&D) by claiming back all the tax due on an alleged investment of £114 million and a first year trading loss of £193 million.
However, the Upper Tribunal has now backed an earlier First-tier Tribunal (FTT) ruling in HM Revenue and Customs’ (HMRC) favour, finding that only £14 million had been spent on R&D.
David Gauke, Financial Secretary to the Treasury, said:
This is the latest in a series of HMRC tribunal wins over avoidance schemes whose members try to exploit the rules for partnerships rather than accept their responsibilities as taxpayers.
HMRC relentlessly pursues those who avoid tax and won’t hesitate to litigate if necessary. Investors in avoidance schemes should know by now that, if their case does go to the courts, they’re likely to lose.
The Upper Tribunal ruling in HMRC vs the partners of Vaccine Research Limited Partnership will be published on http://www.financeandtaxtribunals.gov.uk.