Ladbrokes hit by £54m tax avoidance ruling
Operator says it will now consider appeal after court rules firm broke anti-avoidance rules
Ladbrokes has been judged to have unfairly sought to avoid £54m in corporation tax following a first-tier tribunal brought by HM Revenue & Customs.
The case was launched after Ladbrokes was accused by the DCMS to have broken anti-avoidance rules through the use of a scheme used in 2008 which exploited a loophole closed that same year.
Under the scheme, two companies in the Ladbroke group, Ladbroke International and Travel Document Service, entered into specially-designed arrangements to avoid tax.
The HMRC argued Ladbrokes had artificially manufactured a fall in the value of the shares in one company to create a loss in the other company for tax purposes. The group suffered no real economic loss overall.
The tribunal agreed with HMRC that the rules prevented Ladbrokes from gaining the tax advantage they sought.
Ladbrokes admitted the arrangements were intended to avoid tax but argued that anti-avoidance rules did not catch them. The firm said it may launch an appeal.
“We believed we had a strong argument in this case,” a spokesperson for Ladbrokes told eGaming Review this afternoon. “We’re now considering our options with regards to a possible appeal.”
HMRC director general of business tax, Jim Harra, fired a warning to other firms who may seek to avoid tax.
“Avoidance just doesn’t pay – we win around 80% of cases taxpayers choose to litigate and many more concede before litigation,” Harra said.
“We will uncover the avoidance schemes and contrived structures designed to minimise tax and we will challenge them,” he added.