Tax avoidance case hits Ladbrokes with £71m penalty
This weekend, business news sources reported that Ladbrokes has lost an appeal over a tax avoidance case. After judges ruled against the company, it has been hit with a £71m tax charge relating to an overturned UK Revenue & Customs (HMRC) “2008 tax avoidance “ scheme.
The UK Tax Tribunal stated that Ladbrokes Group and its auditor Deloitte knowingly exploited a 2008 tax loophole relating to loans between corporations and third parties to minimise Ladbrokes full-year tax bill.
The loophole was closed in the same year and the legislation strengthened in 2009.
The bookmakers created a scheme in which it appeared to lose money, allowing it to pay less tax. In doing so it artificially created a fall in the value of shares at one of its companies, Ladbrokes International and Travel Document Service.
The fall in the value of shares in one company would be used to create a loss in the other company for tax purposes.
Although Ladbrokes conceded that the scheme was intended to avoid tax, it argued that anti-avoidance rules did not catch the company out, however, HMRC disagreed.
Jennie Granger, Director General of Compliance at HMRC comments: “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.”
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