It was reported that some £18m in revenues will be protected by HMRC as a result of the latest court decision, with similar arrangements consequently expected to fall too, helping to net an expected £325m. The numbers involved are substantial, with some amounts having been paid in tax refunds to the scheme users and others being blocked by HMRC while under investigation. HMRC has won 22 of the 26 such cases litigated in the past year.

The court’s finding is very important, if not monumental, because it publicly stated that the scheme was artificial, thereby it had no discernible commercial purpose. This differs significantly to the vanilla – often bespoke – type of tax planning most professionals are involved in. 

Note that those carefully analysing the arrangements have done so with regard to the many connected steps (purporting to achieve something legal and allowable for tax purposes), whereas when the steps are considered together, the overall intention becomes clear.

Amit Puri is a tax director and Paula Ruffell is a tax senior manager at Grant Thornton UK