HIGH-STREET bookmaker Ladbrokes has lost a £54m tax avoidance case at the first-tier tribunal.
The ruling means Ladbrokes cannot reclaim £54m in tax. Another three similar cases are worth £112m of tax, HMRC said.
Under the scheme, two companies in the Ladbroke group (Ladbroke International and Travel Document Service) entered into specially designed arrangements so an artificially manufactured fall in the value of the shares in one company created a loss in the other company for tax purposes. The group suffered no real economic loss overall.
Ladbrokes admitted that the arrangements were intended to avoid tax but argued that anti-avoidance rules did not catch them. The tribunal agreed with HMRC that the rules prevented Ladbrokes from gaining the tax advantage it sought.
There were originally 11 users of the scheme, of which seven conceded and paid the disputed tax before the tribunal hearing.
The scheme – promoted by Deloitte – was used in 2008 and exploited a loophole that was closed in the same year.
In a statement to Accountancy Age, a spokesman for Ladbrokes said: “We believed we had a strong argument in this case. We’re now considering our options with regards to a possible appeal.”
HMRC’s director-general of business tax Jim Harra said: “Avoidance just doesn’t pay – we win about 80% of cases that taxpayers choose to litigate and many more concede before litigation. We will uncover the avoidance schemes and contrived structures designed to minimise tax and we will challenge them.”