HMRC wins tax avoidance case against Eclipse 35

Accountants may not be too keen to get involved with football clubs these days. Glasgow Rangers have found themselves in all sorts of difficulties ever since it was discovered the club’s owner Craig Whyte had not been forwarding employees PAYE contributions to HMRC.

Now a new scandal has reared its head involving some leading names in the sport.

HMRC recently won a victory in court to stop Eclipse 35, a film investment partnership, from claiming tax relief to the value of £117 million on interest from a Barclays loan. Members of the syndicate include former England manager, Sven-Goran Eriksson, and the current boss of Manchester United, Sir Alex Ferguson.

Eclipse 35 made a complicated deal with Disney that was worth £1 billion and then attempted to claim tax relief on the deal. If successful, this would have secured tax relief of around £400,000 for each member of the partnership, even though they had made a personal investment of just £173,000.

However, HMRC is keen to clamp down on the sort of aggressive tax avoidance scheme commonly used by wealthier members of our society.

A spokesman for the Revenue explained that the department was focusing on shutting down aggressive schemes that deprive the Treasury of vital funds.

Tax expert, Stephen Relf, said it looks like HMRC is cementing the coalition’s stance on anti-avoidance. This case involved well-known names and complex tax arrangements.

Another expert explained that artificial schemes are not an acceptable means of tax planning and they lead HMRC to view all claims with suspicion, which creates an unpleasant atmosphere for genuine taxpayers.

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