Tax Avoidance Defeated

HMRC has defeated a tax avoidance scheme used by a major brewery, protecting around £30m in tax. The avoidance scheme, marketed by Ernst & Young in 2003 to Greene King plc and other large groups, involved loans between group companies. The aim was for one company in a group to get tax relief on interest paid to another group company without that other company paying tax on the income it received. HMRC initially defeated the scheme in the First-tier Tribunal in 2011, and in 2014 the Upper Tribunal upheld this decision, meaning that HMRC will recover a total of £30m in due taxes from Greene King and others that have used the scheme.