ARTICLE · 26 NOVEMBER 2009

False Dawn For UK Tax Schemes

Strategic Tax Planning Partnership

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Many firms involved in marketing UK tax schemes were excited when the High Court judgment in the case of Mayes v HMRC was published several weeks ago.

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Daniel Feingold

Introduction

Many firms involved in marketing UK tax schemes were excited when the High Court judgment in the case of Mayes –v- HMRC was published several weeks ago.

This case was the first victory in the High Court for a marketed artificial tax avoidance scheme. The scheme in question was called "SHIPS 2". Basically the scheme tried to make use of a very special type of loss on an Offshore Life Bond. The Bond was acquired by a Jersey Resident, sold to a Luxembourg Company who then put large sums of money in the scheme and withdrew them all within the space of a month. The Bond was then sold to a UK Resident.

The objective was that the UK Resident would then surrender the Bond and claim Income Tax Relief on the artificial loss generated. There was also potential to use this Bond to generate a Capital Gains Tax loss.

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