The taxpayers were brothers whose appeals were heard together because they were identical other than some minor differences in the underlying facts. HMRC became aware that the taxpayers had taken part in an avoidance scheme after a search in 2010 of the scheme provider Montpelier Tax Planning as part of a criminal investigation. The brothers claimed relief for self-employed trading losses arising from options trading for 2005-06.
The losses were set off against other income then carried back to earlier years. The brothers did not take any advice before entering into the scheme saying they relied on Montpelier for everything. They said they had found the information complex but it was ‘a tax planning scheme … and that Montpelier had maintained that it was trading and that they had positive counsel’s opinion on it’.
HMRC opened a code of practice 9 enquiry on the grounds of suspected...
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