The First-Tier Tribunal (FTT) has recently published its decision in a long running case that focused on tax planning arrangements. This important decision represents a significant win for HMRC against a tax avoidance promoter in a case that has been before the FTT since June 2018. The firm in question launched and promoted an arrangement known as the Alchemy scheme. The FTT was clear that this scheme was inherently implausible from the outset.
The scheme involved selected employees (usually directors) entering a high-risk form of gambling, known as spread betting. The scheme’s intended result was a tax-free betting win for the individual employee, which was taken instead of taxable employment income, and a tax-deductible expense for the company.
HMRC has said that the decision by the FTT could lead to the recovery of £2.4 million in tax and National Insurance Contributions (NICs) in this specific case, with a further £110 million in related cases. The FTT also agreed with HMRC’s argument that Disguised Remuneration legislation would apply to the arrangements.
The decision in this case is likely to be appealed.