Ramsay did not prevent dry tax charge

The taxpayer participated in a marketed tax avoidance scheme that was notified under the disclosure of tax avoidance schemes regime (DOTAS).

The scheme involved a series of steps involving sale and purchase of qualifying corporate bonds (QCBs) by a limited partnership. HMRC said the individual transactions gave rise to income assessable as interest and made discovery assessments. This was a dry tax charge because the failure of the scheme as a whole meant there was no overall economic advantage.

The taxpayer appealed saying that Ramsay applied to the whole arrangement so taking a holistic view all the steps in the scheme should be ignored. He was also liable to the high income child benefit charge and appealed against this on the basis that it breached his human rights.

The First-tier Tribunal found that the charging provision for discounts as interest receivable was not concerned with the...