Abusive tax avoidence – HMRC have wide powers


Warren Buffett, the Oracle of Omaha, reflected, ‘It’s only when the tide goes out that you discover who’s been swimming naked.’ Curious about who got caught in the financial ebb?

Eclipse 35: The Cinematic Tax Tangle 🪢

Picture this: a dimly lit, plush office in the heart of London’s financial district. Expensive cigars float wisps of intrigue in the air, and on a grand mahogany desk lies a proposal for ‘Eclipse 35.’ Not a sci-fi blockbuster, mind you, but a scheme as audacious and elaborate as any Hollywood plot 🎞️

At its core, Eclipse 35 was crafted like the finest screenplay. A partnership aimed to exploit cross-border leasing arrangements. Its twist? Generating artificial losses big enough to have any investor’s jaw drop, and then offset those losses against other lucrative taxable incomes. For the high-net-worth individuals in the room, this was like having their popcorn and eating it too. Tax relief? Check. Big returns? Double check 😉

It didn’t stop there. This wasn’t a low-budget indie; it had some major star power. Think big investments involving film rights for major blockbusters, some even featuring A-list Hollywood actors. The glitz, the glamour, the tax benefits – it was a trifecta too tempting to resist 👈

But as with any suspense thriller, there was an antagonist lurking. Enter stage left: Her Majesty’s Revenue and Customs (HMRC), the Sherlock Holmes of the tax world. As whispers of Eclipse 35 reached their ears, they began to dissect its script. Their verdict? The scheme was light on substance and heavy on artificiality. In layman’s terms: it was all sizzle, no steak 😟

The climax? A courtroom drama rivalling any courtroom movie! High stakes, tense exchanges, and the future of Eclipse 35 hanging in the balance. And as the gavel struck, the ruling was clear: Eclipse 35 was more fiction than fact. The losses? Not so genuine. The tax relief? To be repaid 😟

In the end, Eclipse 35 serves as a gripping tale of caution. While the allure of tax benefits can be as enticing as a movie premiere’s red carpet, it’s vital to remember: not every story has a fairy-tale ending. And in the world of taxes, if a scheme feels more like a cinematic twist than a documentary, it might just be time to yell “cut!” and make a graceful exit. 🎬🍿

https://www.gov.uk/government/publications/tax-avoidance-general-anti-abuse-rules

Moral of the story if something appears to be true it usually is and HMRC have many powers to attach ‘abusive’ tax avoidance arrangements 😟

Disclaimer: Paul Stankiewicz is the owner and principal at Paul Marks & Co Chartered Accountants which is the trading name of Paul Marks Ltd a Limited Company registered in England and Wales (registered number 4487645).This article is designed for the information of readers only and is the opinion of the author only. Readers should not act on any of the information contained in this article without seeking professional advice. Nothing in this article constitutes advice, nor does the transmission, downloading or sending of any information or the Material create any contractual relationship. Links to third party websites are provided as a convenience to the reader, Paul Marks Ltd does not control and is not responsible for any of those websites or their content. Paul Stankiewicz and Paul Marks Ltd accepts no liability or responsibility whatsoever for any loss or damage suffered by any user of the information contained on or accessed through this article or the Material downloaded.