Ladbrokes loses £54m tax avoidance case

By Gareth Bracken
Operator Ladbrokes has lost a £54m tax avoidance court case.

The bookmaker has been stopped from reclaiming the corporation tax by a tribunal, which agreed with HM Revenue and Customs' assertion that the avoidance scheme used was barred by law.

The 2008 scheme saw two companies in the Ladbroke group (Ladbroke International and Travel Document Service) enter into specially-designed arrangements so that an artificially manufactured fall in the value of the shares in one company created a loss in the other for tax purposes.

The group suffered no real economic loss overall.

Avoidance just doesn’t pay – we win around 80% of cases taxpayers choose to litigate and many more concede before litigationJim Harra
“Avoidance just doesn’t pay – we win around 80% of cases taxpayers choose to litigate and many more concede before litigation," said HMRC director of business tax, Jim Harra.

"We will uncover the avoidance schemes and contrived structures designed to minimise tax and we will challenge them.”

A Ladbrokes spokesperson said: “We believed we had a strong argument in this case.

"We're now considering our options with regards to a possible appeal.”

HMRC reports that there were 11 users of this type of scheme, seven of which conceded before tribunal, paying the tax they owed.

The remaining three cases are worth £112m of tax.

HMRC states that the related loophole was closed in 2008, with the relevant legislation strengthened in 2009.
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