18th May 2021
The Claimant (C) appeals, with permission from Michael Green QC, his order dated 5 May 2020 following his judgment of the same date.
The Judge heard 2 claims brought by C;
against Matthew Ralph (D1) and HMRC (D2) (the Ralph action) and
against Susan Stoneman (D1) and HMRC (D2) (the Stoneman action).
The Judge dismissed both the claims and made costs orders against C in respect of D2’s costs.
The Claimant entered into a tax avoidance scheme, promoted by Blackstar, which purported to avoid all corporation tax, income tax and NI contributions on monies paid by C to Ms Stoneman and Mr Ralph. HMRC’s claim, with interest, totals c 3.9 million.
By the two actions, the C sought the return of the monies paid (to Mr Ralph; Ms Stoneman repaid the monies) and to set aside all material transactions relating to the scheme on various company law grounds including that the payments were disguised distributions to shareholders rather than remuneration (the characterisation issue); and/or contravened the rules against discounts and commissions under s552 and s580 Companies Act 2006; and raised the doctrine of common mistake.
The FtT stayed various cases concerned with the scheme (including an appeal by C) pending the outcome of the High Court case considered to be a “test” case. Judicial review proceedings were also stayed.
Lower Court Judgment: