Unwanted end to decade-long HMRC dispute for Ladbrokes

Unwanted end to decade-long HMRC dispute for Ladbrokes

Monday, March 26, 2018 Posted by Luke Massey
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The UK Court of Appeal has rejected the operator's tax avoidance claim

The UK Court of Appeal has sided with Her Majesty’s Revenue and Customs (HMRC) with regards to Ladbrokes’ decade-long £71 million tax avoidance dispute.

Appeal judges upheld HMRC’s claim that legacy Ladbrokes operations had ‘knowingly exploited’ 2008’s UK tax policy relating to ‘loans between corporations and third-party properties’, in order to report itemised losses on its full-year report.

In defence of its tax scheme, Ladbrokes maintains that all tax provisions implemented by Deloitte, a financial auditing firm, were within the boundaries of UK business laws.

Having lost its two previous Tribunal hearings, Ladbrokes Coral elevated its dispute to the higher UK Court of Appeal in October 2017.

Reviewing the dispute, HMRC detailed that nine Deloitte partners that used the same scheme had conceded responsibility to tax avoidance and paid their owed taxes to the UK government.

The Court of Appeal judges agreed with previous tribunal decisions that Deloitte had created special purpose vehicles for clients to post corporate losses.

HMRC posted the following response to the decision: “We are pleased that the Court of Appeal supports HMRC’s view that Ladbrokes were attempting to avoid corporation tax. Avoidance schemes like this just don’t work and HMRC will always take firm action against them. HMRC wins nine out ten avoidance cases we take to court.”

Totally Gaming says: The ruling signals an unwanted end to a decade-long dispute for Ladbrokes. It all relates to a 2008 scheme implemented by Deloitte who advised a number of its international partners to ‘deliberately’ create ‘transacting subsidiaries’ in order to shift corporate tax charges under one single ‘loss-generating business unit’.

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