The Upper Tribunal has decided in favour of HMRC in relation to the multi-million pound tax avoidance scheme promoted by Cyclops Electronics and Graceland Fixing and used by over a hundred other businesses. In summary the businesses involved in the scheme used loan notes to pay bonuses to company directors with a view to avoid paying tax and National Insurance. A number of companies were created to issue the loan notes with special condition and were designed to match the bonuses. The scheme was designed to make use of loopholes in the legislation but these have now been closed. This win by HMRC is expected to collect over £55 million in tax. This was another example of heavily marketed tax avoidance schemes (backed by counsel opinion) that has failed. We have written several times previously about how one should avoid entering into these artificial schemes that are only likely to fail in courts. If you were a victim to this scheme and would like professional help in resolving your position with HMRC, please contact us and we will be happy to help.
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