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Avoidance scheme to shield bonuses from the taxman defeated 30 July 2013

A £22m tax avoidance scheme, designed so that directors could avoid paying PAYE and National Insurance contributions (NICs) on bonuses, has been closed.

The tax-dodge saw directors given shares in companies that were set up with the sole purpose of being liquidated.

The idea was to take advantage of the way relevant legislation makes no immediate charge to income tax or NICs for an award of ‘restricted securities’ and then realise the value in the shares in a way that fell outside any subsequent charging mechanism in the law.

In a test case HMRC challenged the scheme, used by Tower Radio Ltd and Total Property Support Services Ltd.

The Revenue says that an additional 104 companies will be affected by the ruling.

Exchequer secretary, David Gauke, said: “This scheme was designed specifically to avoid paying tax and National Insurance; the ruling is another important win for HMRC in its work to ensure the right amount of tax is paid by everyone.

“This is a clear result and should act as a warning to others who try to manipulate the system.”

The scheme was promoted by accountants Barnes Roffe and used between 2003 and 2005.

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