Andrew Chappell v HMRC

In Andrew Chappell v HMRC (FTC/48/2013 – 28 July 2014) the UT found that a tax avoidance scheme failed under the Ramsay doctrine.

In his self-assessment return Mr Chappell had claimed a deduction for overseas manufactured dividends (ICTA 1988 Sch 23A para 4(1)) as annual payments (ICTA 1988 s 349(1)). These payments had been made as part of a tax avoidance scheme designed to enable him to set off certain amounts against his taxable income. The scheme did not have any commercial purpose. It worked as follows; Mr Chappell borrowed loan notes on which he received interest. He then sold the loan notes and subsequently received two payments of interest which he forwarded to the lender of the loan notes. It is in respect of those payments of interest that Mr Chappell claimed a deduction. Mr Chappell later on purchased a different set of loan notes...