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Bristol and West loses £30m tax avoidance case 24 April 2013

Bank of Ireland-owned Bristol and West has lost an attempt at a First Tier Tribunal to avoid paying around £30m in tax on a £91m gain.

The mortgage provider transferred a swap contract to another Bank of Ireland subsidiary to exploit what it believed was a loophole in the tax rules.

HM Revenue & Customs (HMRC) said the company had entered into a swap transaction for commercial hedging reasons, but decided to transfer the swap to another subsidiary of the Bank of Ireland to exploit a perceived weakness in rules on the taxation of swaps in the Finance Act 2002.

The bank’s theory was that the £30m tax would disappear on cancellation of the original contract and its replacement with a new one.

The tribunal in March upheld HMRC’s view that there is no tax loophole to exploit.

David Gauke, the exchequer secretary, said: “The vast majority of businesses and individuals pay the tax they owe. The additional resources that we have made available to HMRC are helping to ensure the minority cannot avoid their responsibilities.

HMRC will challenge avoidance schemes that risk denying the Exchequer vital tax revenues and will pursue to litigation when necessary.”

Bristol and West has 56 days to appeal the decision.

In the 2013 Budget, six corporate tax loopholes were closed as part of a crackdown on tax avoidance.

Since 2010, HMRC has won more than 50 tax avoidance cases.

 

 

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