HM Revenue and Customs
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Second-hand car dealer tax scheme scrapped
A tribunal has found that a tax avoidance scheme which involved celebrities, fund managers and other high earners claiming that they were second-hand car dealers in their spare time did not work.
The decision, which will save the country £290 million, is the fourth consecutive win by HM Revenue and Customs (HMRC) against schemes promoted by NT Advisors. This firm is a well-known promoter of highly artificial tax avoidance schemes.
NT Advisors sold the ‘Working Wheels’ scheme to 450 fund managers, celebrities and other high earners between 2006 and 2008.
The First Tier Tribunal heard that Chris Moyles, Eoghan Flanagan and Alan Stennett tried to claim that they were in the second-hand car trade.
But the tribunal found for HMRC on all of the arguments and dismissed this highly artificial scheme outright. The tribunal said that a realistic view of the facts showed that the appellants’ aim was to make it appear, “as though by magic”, that they had incurred vast fees in order to borrow modest amounts of money they did not need in order to invest it in a “trade” they had no desire to pursue.
Exchequer Secretary David Gauke said:
This case is another example of why taxpayers should not fall for the promises of promoters selling schemes that are all too often too good to be true. Not only will the taxpayer waste money on the fees for these failed schemes, they will still have to pay all the tax, interest and penalties that are due.
This Government has provided HMRC with the resources to tackle these avoidance schemes and HMRC will now pursue the other users of the scheme to make sure all the taxes that are due are paid.
The judgment in Eoghan Flanagan, Christopher David Moyles, Allan Stennett v HM Revenue and Customs is available at http://www.financeandtaxtribunals.gov.uk/Aspx/view.aspx?id=7618. The 450 other users of the scheme will be contacted directly and asked to pay the tax they owe, or face accelerated litigation.
