The sale of over £6m of shares for only £592 lay at the heart of a tax avoidance scheme which would have left the UK taxpayer picking up the tab, a tax Tribunal has heard.

Promoter Matthew Jenner of NT Advisors, who pushed the plan to over 400 wealthy people in 2006, lost the case at the First-tier Tribunal (FTT) and is the third victory against the company for HMRC. The ruling has protected around £190m of tax.

NT Advisors' idea was to generate a massive loss on the sale of the shares, but a loss that would not have exposed the 'investors' to any genuine risk or economic down side. The 'loss' existed only on paper and was designed to avoid tax. Ruling against the scheme last month, the FTT described this sleight of hand as 'magic'.

Under the scheme NT Advisors put together a series of loans and share transactions involving SG Hambros bank in the Channel Islands. Shares in a British Virgin Island company, which had been set up for the purpose, were sold to investors for millions of pounds more than they were worth. The money for the shares put up by Hambros passed through the company and straight back to Hambros. The users of the scheme were left owing money to offshore trusts created for their own benefit, so that it did not matter that they never actually paid for the shares.

Treasury secretary, David Gauke, said: 'This was a highly complex avoidance scheme that was not worth buying into. HMRC will always challenge schemes like this so not only will investors have to pay the tax they owe, they will also have to pay interest; all this on top of the promoter's fees.

'The government has made almost £1bn available to HMRC to tackle the issues of avoidance, evasion and fraud and ensure that the minority who try to avoid their responsibilities pay the tax they owe.'