Ladbrokes Takes $95M Tax Case to U.K.’s Second-Highest Court

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By Ben Stupples

Ladbrokes Coral Group Plc, one of the U.K.’s largest bookmakers, will take its three-year dispute on a tax case worth 71 million pounds ($94.6) to the country’s second-highest court next year.

A company spokesman told Bloomberg BNA by email that Ladbrokes is scheduled to appear at the Court of Appeal for a two-day hearing that starts Feb. 21. The “date could slip,” he added.

The date of the London-based company’s hearing will mark just over a year after its failed appeal on the tax avoidance dispute at the U.K.’s Upper Tribunal in January 2017. The tribunal ruling followed a First Tier Tribunal verdict, which began in 2014, when the judge dismissed the bookmaker’s claims.

Ladbrokes received permission to appeal the latest ruling “in March,” the spokesman said.

Artificial Tax Losses

Ladbrokes’s case centers on a tax avoidance scheme that accounting firm Deloitte promoted to the company in 2008. Under the scheme, two subsidiaries deliberately transacted with each other to generate a tax loss in one of them. Overall, however, Ladbrokes suffered no actual losses.

In court, Ladbrokes admitted it sought to avoid tax. Yet contrary to the view of the U.K.’s tax agency, the company argued that its arrangements fell outside the scope of anti-avoidance rules.

“Ladbrokes would have been better off just paying the tax but instead they pursued this lengthy legal dispute with HMRC,” Jennie Granger, the U.K. tax authority’s then-director general for customer compliance, said in a Feb. 25 news release after the Upper Tribunal result.

Avoidance Disclosure

On top of tackling tax avoidance through the U.K.’s courts, Her Majesty’s Revenue and Customs has taken further action to target schemes involving aggressive or abusive tax planning.

In 2004, the U.K. introduced its Disclosure of Tax Avoidance rules, requiring promoters of avoidance schemes to tell HMRC about any abusive arrangements that they design and sell.

Anyone who fails to disclose their schemes under the rules, which the government has strengthened in the past two years, faces tough penalties of as much as 5,000 pounds a day.

In an Oct. 14 news release, HMRC said it has won a case against the promoter of a “mass-marketed” tax avoidance scheme after they had failed to notify the tax authority about it.

The win over the scheme, which aimed to secure tax-free profits via stock market investments, could lead to HMRC recovering as much as 110 million pounds, the news release added.

To contact the reporter on this story: Ben Stupples in London at bstupples@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

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