Morgan Stanley scheme beaten
FTSE 100 company Land Securities has lost a court battle with HMRC over trying to cheat the UK out of £60 million.
The company sold shares in one of its group companies to a Cayman Island subsidiary of US investment bank Morgan Stanley, which then inflated the value of the shares by pumping money into the subsidiary. Land Securities bought back the shares at the inflated price, claiming a 'loss' of £200 million that could be used as a deduction against tax.
Land Securities claimed that disallowing the loss would not be fair as it would be out of pocket if it sold the shares in the future. The tribunal did not accept this reasoning.
The shut down of the tax avoidance scheme comes a week after George Osborne pledged in the 2013 Budget to crack down on aggressive tax avoidance, particularly by large corporations who could afford to pay their fair share. Six corporate loopholes were closed by moves made in the Budget, which will go some way to protecting over £1 billion in revenue and yielding over £500 million.