The taxpayer was a self-employed IT consultant resident in the UK who set up an intermediary-based tax avoidance scheme.
In brief income was routed through offshore trusts and the relevant double tax agreement used to exempt the money from tax. He claimed the relief through his annual tax returns.
Although HMRC did not argue that the arrangements were a sham they said they had no genuine commercial purpose and their only objective was to avoid tax.
They first wrote to the taxpayer informing him they were likely to challenge the validity of the scheme in June 2004 and suggested that he make a payment on account in respect of the disputed tax.
In 2007 HMRC told the taxpayer they intended to list it for hearing before the Special Commissioners. Meanwhile the Government introduced FA 2008 s 58...
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