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HMRC have published Spotlight number seven, relating to an avoidance scheme that aims to generate gift aid and gift of shares tax relief claims.
A cash donation to a nominated charity is required and in return shares are received from an unnamed non UK 'philanthropist'.
These shares are claimed to be worth up to eight times the amount of the cash donation and are in companies listed on a stock exchange that is not recognised by HMRC.
The scheme anticipates that the shares will be donated to the nominated charity.
HMRC believe there is also strong evidence that these schemes have links to share scams such as boiler rooms.
These involve a high level of upfront fee, paid to the scheme promoters, which is concealed within the original cash donation given to the charity.
The department says that no gift aid is due on the cash donation because the donor receives a benefit: i.e. the shares, that exceeds the value of the donation.
Furthermore, no gift of shares relief is due because the requirement that the shares are listed on a stock exchange recognised by HMRC is not met.
