Counsel’s opinion counts

Mercury Tax Group set up a tax arrangement designed to generate a tax loss.

The issue was whether the scheme was a notifiable arrangement within FA 2004 s 306(1)(a).

The Special Commissioner reviewed the evidence.

Two conditions had to be satisfied for the scheme to be notifiable. First the arrangements had to include one or more of the financial products to which Tax Avoidance Schemes (Information) Regulations 2004 SI 2004/1864 para 7 refers: in this instance the evidence shows that they clearly did.

The second condition was whether the tax advantage expected to be obtained under the arrangements arose to a significant degree from the inclusion in those arrangements of the relevant financial product.

The words ‘to a significant degree’ implied that a financial product could be included without giving rise to a tax advantage.

The commissioner ruled that this condition was not satisfied and the arrangement...