The following is an article published in the ‘The Law Society Gazette’ on 12 April 2013 by Catherine Baksi.
It highlights the fact that spurious tax avoidance schemes are looked at in detail and challenged by HMRC. Fortunately CAPITAL ALLOWANCES do not fall into this category as they are legislated for under the Capital Allowances Act 2001. As EXACT follow all of the HMRC rules and guidance on this tax relief, you can be assured of a successful claim.
“A former London tax barrister who designed his own tax avoidance scheme has lost his tribunal appeal against HM Revenue & Customs. He was attempting to avoid paying £190,000 in tax.
Rex Bretten QC designed a complex scheme which entailed setting up trusts and investing £500,000 in discounted securities. He claimed his scheme created a loss of £475,000, which he could set against his income.
Bretten practised from Tax Chambers at 15 Old Square until his retirement last year.
His appeal arose out of an HMRC amendment to his self-assessment tax return for the year 2002/03 when the Revenue closed an inquiry into his tax return for that year on 31 May 2011.
The effect of the amendment was to increase Bretten’s charge to income tax by denying him the claimed loss of £475,000.
The First Tier Tribunal Tax Chamber said that the securities had been issued solely to facilitate Bretten’s tax avoidance scheme and that there was no genuine loss. The tax was therefore payable.
HMRC’s director general for business tax Jim Harra said the case was an important success, which could have repercussions for other similar tax avoidance schemes.
Harra commented: ‘Some people make the mistake of thinking that a complex avoidance scheme backed by a senior lawyer is safe from HMRC’s challenge.’
Bretten represented himself at the tribunal and could not be contacted for comment on whether or not he will appeal the decision.”
For more information on Capital Allowances email email@example.com quoting “Capital Allowances”