Ladbrokes Coral loses legacy tax dispute
Ladbrokes Coral has lost its decade-long dispute with UK Revenue & Customs (HMRC) after the UK Court of Appeal upheld earlier court rulings siding with HMRC.
The case began back in 2008, when a scheme employed in conjunction with accountancy firm Deloitte was implemented. The scheme, which Deloitte advised to a number of international customers, involved deliberately creating ‘transacting subsidiaries’, with the goal of moving corporate tax charges to a single entity operating at a loss.
This loophole was quickly closed and Ladbrokes taken to court over the unpaid tax.
The operator initially paid back the sum of £71m but has since then been locked in a court battle with HMRC as it attempted to recoup the money, with Ladbrokes defending itself on the premise that the measures taken did not fall foul of UK law.
HMRC maintained that Ladbrokes had consciously exploited a tax loophole, conducting loans between both corporations and third-party properties, which allowed it to pay the bare minimum on its yearly tax bill.
Hearings have been conducted over the last decade. In a damning turn of events for the operator, nine Deloitte partners who had advised on the scheme admitted responsibility that the tactics were unjust and had paid taxes owed. HMRC used this fact to its advantage throughout the hearings.
In October last year, Ladbrokes Coral took its case to the UK Courts of Appeal, after eventually losing a three-year long trial at the UK Tribunal Court.
However, last week judges at the UK Court of Appeal rejected the operators appeal to overturn the decision, agreeing with the findings of previous hearings that the scheme ultimately broke UK tax laws.
Speaking about the judgement, HMRC said in a statement:
We are pleased that the Court of Appeal supports HMRC’s view that Ladbrokes were attempting to avoid corporation tax. Avoidance schemes like this just don’t work and HMRC will always take firm action against them. HMRC wins nine out ten avoidance cases we take to court.– Statement, HMRC