Timothy Brennan QC successful in bonuses tax avoidance scheme appeal
The Tax Chamber of the First-tier Tribunal has handed down judgment in Sloane Robinson Investment Services Ltd v HMRC (TC/2009/15862), rejecting the company’s case based on its scheme to pay millions of pounds of bonuses free of income tax and NIC by exploiting the terms of ITEPA 2003, Part 7 through a share dividend scheme.
The case concerned the affairs of four directors of a hedge fund company, including Mr Hugh Sloane and Mr George Robinson, who embarked on a commercially marketed scheme to present payment of bonuses as awards of employment related restricted securities in SPV companies, which were subsequently liquidated. The Tribunal found that the individuals were entitled to receive money before the bonuses were routed into the avoidance scheme and that the tax exemption provisions of Part 7 were irrelevant. Each individual made a decision to direct his entitlement to ascertained sums of money into the scheme and he was taxable on those sums under the rules in ITEPA s 18 and s 686 before the individual’s interest in the relevant shares was created. Further, the scheme fell foul of the decision of the Court of Appeal in HMRC v PA Holdings Ltd [2011] EWCA Civ 1414. While accepting that there was throughout a “commercial unity” to the relevant scheme, the Tribunal did not decide a further point based on Ramsay arguments.
Timothy Brennan QC acted for HM Revenue & Customs
The case attracted news coverage in The Independent and the Daily Mail.
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