Court Passes Judgment in Favor of HMRC, Reject Schofield’s Appeal
A tax avoiding scheme worth million pounds, which was being promoted by PricewaterhouseCoopers has been rejected by a Court of Appeal hearing.
The case which was filed by HMRC was heard in the court on 11th July. The judges heard the manner in which PricewaterhouseCoopers had given advice to Howard Schofield regarding a scheme that could help him avoid tax. PricewaterhouseCoopers had informed Schofield that he could defer or get rid of capital gains liability through the scheme.
The Exchequer could have suffered losses to the tune of eleven million pounds had the court not passed a judgment in favor of HMRC.
The tax avoiding scheme consisted of a number of linked as well as interdependent transactions and assured people of great and guaranteed results. The scheme included options that were designed for the purpose of being destroyed later. Hence, for the purpose of capital gains, both disposal and asset did not exist. No actual loss was being registered and there was neither any type of loss where the Taxation of Chargeable Gains Act 1992 could have been applied.
Apart from rejecting Schofield’s appeal, the judges did not permit him to take his case further before the Supreme Court as well.
According to HMRC, the tax avoiding scheme had been utilized by as many as two hundred people and as a result they are left with no option but to make full tax payments aside to paying interest charges and charges for using the scheme as well. Even though HMRC kept the name of the company secret, sources have revealed that the company involved in the case is PricewaterhouseCoopers.
The tax avoiding scheme was better known as the ‘Digital Collar’ scheme and HMRC has labeled it as an artificial scheme created for not other purpose but for avoiding tax.
Schofield had sold shares in PL Schofield Ltd, his own company in the year 2002 and incurred a significant amount of profit. However, he would have to pay tax charges amounting to 10.7 million pound in 2002/2003. But after PricewaterhouseCoopers suggested him to avail the scheme, he resolved to enter it and create allowable losses.