Ladbrokes used a tax avoidance scheme, promoted in 2008 by accountancy firm Deloitte, in an attempt to minimise its Corporation Tax bill by exploiting a legal loophole now long closed.
The scheme involved two companies in the Ladbrokes group (Ladbrokes International and Travel Document Service) entering into purposely-designed arrangements so that an artificially manufactured fall in the value of the shares in one of the companies generated a loss for the other company for tax purposes. The group suffered no real loss overall.
Ladbrokes conceded that the arrangements were intended to avoid tax but argued in court that anti-avoidance rules did not catch them out – HMRC disagreed.
HMRC’s Director General for Customer Compliance, Jennie Granger, said:
“Ladbrokes would have been better off just paying the tax but instead they pursued this lengthy legal dispute with HMRC. Avoidance schemes like this just don’t work and HMRC will always take firm action against them. The bookie gambled and lost when the odds of success could not have been lower.”
The decision is another win for HMRC, which this financial year alone has protected over £1.7 billion of public money through its enforcement of the tax rules.