A TAX AVOIDANCE SCHEME ring-fencing some £156m from the public purse has been shut down after a first-tier tribunal ruling.
The scheme, devised by NT [No Tax] Advisors and sold by Dominion Fiduciary Serves Group, had 305 users. It was challenged by HM Revenue & Customs investigators after they identified a series of financial transactions involving loan notes worth £6 million which were intended to exploit the tax rules on stock lending.
However, the tribunal found the arrangement was based on little more than "signing pieces of paper and making entries into accounts". The money moved in a circle and the tribunal held it served no other purpose than to save tax, adding that had the scheme proved successful, it would have been tantamount to making income tax voluntary.
It is the second scheme in as many months that NT Advisors has been publicly associated with, after it emerged that its founder also set up the Cup Trust, a registered charity used as a front for another avoidance scheme saving investors £46m in tax and artificially generating Gift Aid.
Speaking after the ruling, HMRC's director-general for business tax Jim Harra said: "People who are tempted by this type of scheme should be warned that they carry serious risks. These include paying advisors expensive set-up charges, which can run into hundreds of thousands of pounds, on top of tax that is due and interest for late payment.
"HMRC will challenge these schemes, however complex they appear to be. We have the skills and the expertise to effectively challenge tax avoidance and we will continue to do so."
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