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HMRC wins court battle against £80m Matrix tax scheme

by Michelle Abrego on Jan 17, 2013 at 11:05

HMRC wins court battle against £80m Matrix tax scheme

A  tax avoidance scheme promoted by Matrix Securities has been successfully challenged by HM Revenue & Customs (HMRC) in court.

HMRC said the medical research-based tax avoidance scheme had created £77 million in tax relief.

Eighty three investors invested in a Jersey-registered limited partnership, which claimed to be trading in the UK, focused on creating and exploiting intellectual property from research into vaccines targeting diseases such as HIV, flu and hepatitis B.

The investors used £28 million of their own cash and £86 million in bank loans.

The partnership claimed a first-year trading loss of nearly £193 million, creating £77 million in tax relief. This would have given the investors an almost £50 million return on their personal investments.

However, only £14 million had been spent on medical research, HMRC said.

As a result, a tribunal agreed that individual partners were entitled to a tax relief of no more than £14 million and further, that the £7 million in fees that it paid to a subsidiary of the scheme promoters failed to qualify as tax relief.

The interest relief on the loans that had been used in the scheme was also restricted.

Exchequer Secretary David Gauke said: ‘The government is committed to tackling tax avoidance and will close down those schemes that are artificial and contrived ways of exploiting the rules.

‘Significant reinvestment has been made into HMRC to pursue and challenge the tax dodgers and they will take decisive action to close down schemes with the sole purpose of avoiding paying tax.’

6 comments so far. Why not have your say?

Smithling

Jan 17, 2013 at 13:25

Good good. Keep 'em coming HMRC.

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Usually found sitting on the fence

Jan 17, 2013 at 14:42

Quite Smithling. Quite simply put, for every £28 of their own money there was a tax relief of £77, now I am no accountant, but even I know that shouldn't add up!!

And for every £28 of their own money they paid fees of £7, or 25%... Seriously!!

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Bob Donaldson

Jan 17, 2013 at 14:57

Again some schemes are just too clever by half. If you walk on the edge of the cliff at some time you are going to fall off.

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Smithling

Jan 17, 2013 at 15:27

Ufsotf - I know right! In fact I'm pretty sure that's not tax evasion, that's just simply fraud.

Bob - you don't need to fall... there's plenty of people willing to push ;)

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Usually found sitting on the fence

Jan 17, 2013 at 16:00

Smithling - Agree it certainly seems fraud like! There was one other thing that jumped out at me, this was for 83 people!! and yet the £63 million (77 - 14, using a simple amount claimed less amount tribunal accepted) would pay child benefit for 59500+ first child a year, and yet 83 people were expecting this benefit :(

Will the 83 be able to reclaim their fees? Or will the £14 million (or 50% tax relief) be sufficient?

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Philip Vaughan

Jan 18, 2013 at 12:42

It's all rather academic guys as Matrix went bust a while back, the writing was on the wall a long time ago with this bunch. You know the old saying 'if its too good to be true'.....

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