Bristol & West tax avoidance plan loses again
Bristol & West plc, owned by Bank of Ireland, has lost its second attempt to avoid 拢27 million of corporation tax by claiming that there was a loophole in the law governing the taxation of derivatives.
皇冠体育app Upper Tribunal said that Bristol & West transferred interest rate swaps to another Bank of Ireland subsidiary purely in the hope of securing a tax advantage. A further 拢215 million was protected when other followers of the plan settled before being taken to tribunal.
David Gauke, Exchequer Secretary to the Treasury, welcomed the outcome:
This case is the result of HMRC鈥檚 relentless work against a highly complex and speculative avoidance gamble that, unchallenged, would have deprived the country of over 拢27 million in corporation tax.
HMRC has shown that, no matter how complex or intricate the case is, it will not hesitate to litigate when the rules are being abused.
More information about the plan
Bristol & West transferred interest rate swaps from one group company to another for 拢91 million. 皇冠体育appy sought to take advantage of a change in the regime for taxing derivatives, wrongly believing the credit which had accrued to the transferor (profit) would disappear because one of the companies involved in the 鈥渋n the money鈥� interest rate swaps was within the new regime, while the other was not. 皇冠体育app plan attempted to exploit this perceived asymmetry.
皇冠体育app Upper Tribunal allowed Bristol & West鈥檚 appeal on a point that was originally upheld in HM Revenue and Custom鈥檚 (HMRC) favour in the First Tier Tribunal, involving a closure notice mistakenly sent out. However, they agreed with HMRC that the perceived loophole did not exist and the scheme did not work, allowing HMRC to collect the tax due in subsequent years.
皇冠体育app Tribunal decision can be found here