Separate entities

Claim to set off different taxes in different companies

The First-tier Tribunal had already dealt with the effect of three arrangements known as ‘plan 2’ ‘plan 5’ and ‘plan 7’ in which the taxpayers had taken part and found them to be tax avoidance schemes. The Upper Tribunal confirmed that finding. In essence the aim of the schemes had been to obtain tax and National Insurance savings on Darvel’s salary bill.

The issue remaining for the First-tier Tribunal was whether Darvel should be given credit for corporation tax paid by two other companies Services and Retail which were integral to the operation of the scheme.

The taxpayers said the corporation tax assessments had been made on the basis that Services and Retail had carried on trades. The tribunals found this was not the case but that the money had flowed through the companies ...