A tax avoidance scheme which routed profits of a tax advisory business through employee benefit trusts has been closed by a tribunal.

HMRC challenged tax deductions of almost £9m which tax advisor John Dryburgh's companies, Scotts Atlantic Management Ltd and Scotts Film Management Ltd, paid into numerous employee benefit trusts (EBTs).

The payments were derived from profits earned by selling tax avoidance film schemes. The tribunal decision, which denied the claimed deduction, has protected £2.4m of tax.

The First Tier Tribunal said: 'There is no doubt that Dryburgh not only lied to the tribunal in a material way, but he appeared also to have fabricated evidence, forged documents and thrown away a memory stick in order to destroy evidence.'

The tax avoidance involved trying to extract profits from companies while at the same time securing corporation tax deductions. Employers paid money into an EBT and claimed corporation tax deductions. The EBT gave undervalued shares in a new company, causing a loss to the employer.

Although Dryburgh is in bankruptcy and Scotts Atlantic Management is in liquidation, HMRC believes that the cash can be recovered.

Exchequer Secretary to the Treasury, David Gauke, said: 'This scheme - like so many others - was not worth buying into. The government has made almost £1bn available to HMRC to tackle the issues of avoidance and evasion and to ensure that the minority who try to avoid their responsibilities pay the tax due.

'HMRC will always challenge this type of planning and the tribunal decision should send a clear message to anyone thinking they can get away with tax dodging - HMRC will pursue you and you will have to pay the tax due as well as interest, on top of the promoter's fees.'