In Robert Rusling v HMRC (TC03813 – 18 July 2014) the FTT held that the taxpayer was liable to tax on interest accrued under a Ponzi scheme.
Mr Rusling ran a building company and owned a portfolio of properties. He was asked to lend funds to an acquaintance Mr Litt and made several advances. The loans (together with interest) were intended to be repaid with post-dated cheques. Any interest earned was re-invested and therefore rolled over. Mr Litt’s company went into liquidation in May 2008 and he was sentenced to prison for knowingly carrying on the business with the intent to defraud creditors. Monies loaned by unsuspecting investors like Mr Rusling had been used to repay creditors.
The FTT found (referring to BMBF [2004] STC 1) that Mr Rusling had received interest (as it arose in the relevant tax year) and...
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In Robert Rusling v HMRC (TC03813 – 18 July 2014) the FTT held that the taxpayer was liable to tax on interest accrued under a Ponzi scheme.
Mr Rusling ran a building company and owned a portfolio of properties. He was asked to lend funds to an acquaintance Mr Litt and made several advances. The loans (together with interest) were intended to be repaid with post-dated cheques. Any interest earned was re-invested and therefore rolled over. Mr Litt’s company went into liquidation in May 2008 and he was sentenced to prison for knowingly carrying on the business with the intent to defraud creditors. Monies loaned by unsuspecting investors like Mr Rusling had been used to repay creditors.
The FTT found (referring to BMBF [2004] STC 1) that Mr Rusling had received interest (as it arose in the relevant tax year) and...
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