Bank loses £27m court case

Bank loses £27m court case




HM Revenue and Customs (HMRC) has won a £27m tax avoidance case against the Bank of Ireland.

The case came about after the Bank of Ireland tried to exploit a loophole that did not exist.

The Bank of Ireland looked to avoid corporation tax through a subsidiary, former building society Bristol & West. 

The scheme sought to exploit the move from one piece of legislation to another and contracts were moved from the Bank of Ireland subsidiary under the old legislation, but were received by a second subsidiary under the new legislation. 

All parties agreed that the transfer of the contracts was done solely to avoid tax, but argued the scheme worked because the move from one piece of legislation to the other created a loophole.

The court of appeal ruled in favour of HMRC and another £5.9m is at stake in a follower case, while five other users of the scheme conceded before legal action was taken, paying £215m in tax.

"This was a cynical attempt to exploit a non-existent loophole to avoid paying tax. It has failed,” Jim Harra, HMRC’s Director General of Business Tax, stated. 

“We will continue to investigate and pursue those who try to avoid paying their fair share on behalf of the majority who play by the rules, and pay the tax they owe.”

In February last year, over 62,000 people demanded action to be taken against HSBC bosses regarding tax avoidance scheme allegations. 

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