The contrived scheme saw bankers given their bonuses in the form of shares in specially created companies, rather than cash, in the hope that the initial award of the shares and their subsequent redemption would be exempt from PAYE and National Insurance Contributions (NICs).
HMRC challenged the arrangements on the basis that the shares were taxable as money’s worth and not exempt from PAYE or NICs.
The Supreme Court ruled in HMRC’s favour and HMRC will now pursue a further £30 million in tax from 27 other users of similar schemes.
Financial Secretary to the Treasury, David Gauke said:
“This is an important victory and confirmation from the UK’s highest court that tax avoidance is simply unacceptable.
“The UK is home to some of the world’s most successful banks and we have been clear we expect them and their employees to pay their fair share of tax.”
Jennie Granger, Director General for Enforcement and Compliance, HMRC, said:
“This is another important success for HMRC against an avoidance scheme with the top court in the country confirming our view this scheme did not work.
“This is the latest in a series of successful HMRC challenges to such schemes marketed at wealthy individuals to get out of paying tax. We will continue to challenge artificial arrangements such as these in the interests of the vast majority of businesses and people who choose to play by the rules.”