Unnecessary loan

The taxpayer was an employee of SCL who took part in a marketed offshore soft currency loan scheme as part of his remuneration.

He agreed to take two-thirds of his salary as loans in depreciating currencies. Subsequent trades were designed to render the loans as non-taxable foreign exchange gains. He mentioned in his tax returns neither use of the scheme nor income received.

HMRC carried out an investigation into SCL’s employees which led to the issue of discovery assessments on the taxpayer on the basis his were taxable. He appealed.

The First-tier Tribunal was unimpressed by the taxpayer saying he was not a “straightforward witness”.

The judge did not accept the taxpayer’s assertion that SCL was responsible for dealing with his tax affairs and added that the taxpayer must have been “fully aware that there would be a tax advantage to him in taking out the loans”....