HMRC Wins Case Against PWC's Tax Avoidance Scheme
25 July 2012
HMRC has won its case against a multi-million pound tax avoidance scheme promoted by Price Waterhouse Cooper (PWC). The Court of Appeal heard how PwC advised Howard Schofield of a tax avoidance scheme where he might defer or avoid capital gains liability by the creation of an allowable capital loss. It involved ‘losses’ to the exchequer of around £11 million.
The scheme involved a series of interdependent and linked transactions, with a guaranteed outcome. Under the scheme, options were created merely to be destroyed - they were self-cancelling. Therefore, for capital gains purposes, there was no asset and no disposal. There was no real loss and certainly no loss to which the Taxation of Chargeable Gains Act 1992 applies.On 11 July 2012, the Court unanimously rejected the appeal against HMRC’s action and refused permission for any further appeal to the Supreme Court. HMRC said the scheme was used by around 200 people who now face having to pay the tax in full, plus interest, on top of significant fees for use of the scheme itself.