HMRC claims billion pound week with win against Jersey firm

Added 22nd April 2016

The UK tax office has won a judgement against a limited partnership registered in Jersey, the Clavis Liberty Fund 1 LP scheme, which it claimed had tried to create artificial tax losses.

HMRC claims billion pound week with win against Jersey firm

HM Revenue and Customs (HMRC) said on Friday it had protected £365m ($524m, €465m) in tax after defeating the tax avoidance scheme that involved dividends paid on shares to a company based in the Cayman Islands.

“The First-tier Tribunal ruled that the Clavis Liberty Fund 1 LP scheme, created an artificial tax loss, (in a) judgment covering 99 partners and protecting tax at stake in other cases,” it said.

The victory follows last week’s decision by the Supreme Court to refuse permission for Eclipse Film Partners No. (35) LLP to appeal against a Court of Appeal ruling, which protected £635 million in tax, and HMRC’s win against Fidex, a subsidiary of BNP Paribas, at the Court of Appeal, which protected a further £18m in tax.

New tool

The latest judgment was also significant for HMRC as it is the first time that this particular anti-avoidance legislation (Section 730 of the Income and Corporation Taxes Act 1988) had been tested in court.

Jennie Granger, director general of enforcement and compliance for HMRC, said: “This is an important success for HMRC both in terms of the money that it will bring in, and the powerful signal it sends to anyone who might be tempted to use any form of offshore arrangement to avoid paying the tax that is due.

“It’s time for people to get out of these schemes – they don’t work and we will defeat them.”

Dividend loss

The Clavis Liberty Fund 1 LP scheme involved a limited partnership, registered in Jersey and claiming to carry out UK trade. Each of the 99 users of the scheme contributed a sum, which was used, together with a large bank loan, to acquire rights to dividends declared by a Cayman-registered company.

The partnership claimed a deduction for the cost of the dividend rights but sought to exclude the dividend payments paid from its trading profits, giving rise to a loss.

Kames Income Hub


Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

Lazard Emerging Markets
Lazard Emerging Markets

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

Richard Hubbard

Group Editor

Richard Hubbard is the group editor at Last Word. He is responsible for the editorial content of International Adviser, Portfolio Adviser, Expert Investor and Fund Selector Asia. Richard previously worked for Thomson Reuters and has covered the financial services industry and investment themes from its offices in London, Singapore, Hong Kong and New York. Richard started his career at the Australian Financial Review in Sydney.



Investment Strategy




PA Channel Island 2016
PA Channel Island 2016

8th November 2016
The Royal Yacht, Jersey


17th November 2016
The Andaz

PA Emerging Markets 2016
PA Emerging Markets 2016

1st December 2016
The Mayfair, London

Sponsored Content

Investment Strategy