You are here: Home - Household Bills - News -

Court rejects appeal over tax avoidance scheme

Written by:
The Court of Appeal has unanimously rejected an appeal by a taxpayer against HMRC regarding a tax avoidance scheme recommended by PricewaterhouseCoopers in the early noughties.
Court rejects appeal over tax avoidance scheme

The Court also refused permission for Howard Peter Schofield to appeal to the Supreme Court.

The scheme, called Digital Collar, had been described by HMRC as “an artificial, circular, self-cancelling scheme designed with no purpose other than to avoid tax”.

In 2002, Schofield sold shares in his company, PL Schofield Limited, and made a considerable profit.

Allowing for taper relief of 75%, he would have been liable to pay a tax bill of £10.7m for the 2002/3 tax year.

However, after receiving advice from PricewaterhouseCoopers in 2003, he entered into the Digital Collar scheme involving non-commercial self-cancelling option agreements that would create an allowable loss.

The scheme involved Cooper moving to Spain for five years to become a non-resident of the UK.  

Viewed separately, the options created exempt gains and allowable losses. However, viewed as a composite transaction, they did not.

The first tier tribunal found in favour of HMRC and the upper tribunal agreed.

The Court of Appeal has now unanimously rejected Schofield’s appeal.

The scheme, which has not been in use since 2005, was used by about 200 people who must now all pay the tax in full, plus interest, on top of significant fees for use of the scheme itself.

This case involved losses of about £11m but there are other users of the generic scheme on which this scheme was based, generating substantial “losses”.

A spokesperson for PwC said: “The case reported today relates to tax planning undertaken some years ago and planning of this nature would no longer be recommended to our clients.”


Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
ScottishPower take on EDF Energy on cheapest provider plan

ScottishPower sets its sights on being the cheapest energy provider as it competes against EDF Energy's price promise.