The Court has dismissed the appeal from a taxpayer against an amendment from HMRC to his tax return that marked £195,400, which was obtained through a tax avoidance scheme, as taxable income
The Upper Tribunal (UT) agreed with the decision of the First-Tier Tribunal (FTT) ruling that £195,400, which was obtained by Mark Dunsby’s company Majordegree Ltd, through a tax avoidance scheme which was designed to allow shareholders of UK private companies to extract profits without paying income tax, was taxable income.
Dunsby was the sole director and shareholder of Majordegree and used the company to enter into a tax scheme that aimed to extract tax-free dividends from the company. The company allotted a share in a new share class to a non-resident individual, Fiona Gower and she transferred the share to ‘a trust’ but retained an interest.
The company paid a £200,000 dividend on the new class of shares and under the terms of the trust, a charity received £1,497, Gower £3,103, with the balance on trust for Dunsby in his lifetime then his family. Dunsby received £195,400.
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