Brewing group Greene King has lost the latest round of an ongoing battle with HMRC.

The Bury St-Edmunds-based brewery, which claims to pay seven times more in tax than it does in dividends, revealed that they are considering an additional appeal against the ruling.

According to HMRC, Greene King participated in an elaborate tax avoidance scheme, created by accountants Ernst & Young in 2003, which involved internal loans between group companies and allowed tax relief to be claimed on interest paid to another company within the group without that other company paying any tax on the income they received.

But the Upper Tribunal for tax affairs has since upheld a lower tier decision meaning the scheme no longer works.

In turn, HMRC has stated that Greene King and a number of other companies who participated in the scheme will have to pay an additional £36 million in tax.

Exchequer Secretary to the Treasury, David Gauke added: “The vast majority of taxpayers play by the rules and the Government will continue to take tough action to tackle the minority who seek to avoid their responsibilities.

“HMRC wins 80% of the cases it takes to court and this win, in a very complex case, sends another clear message to tax avoiders. Anyone who gets involved in tax avoidance schemes is playing with fire. HMRC will pursue those involved through the courts, ensuring it collects the taxes that are due.”

However, Greene King said that the Upper Tribunal judge had agreed that the disagreement was about the correct treatment of a loan for tax purposes rather than tax avoidance.

 “Greene King has been paying its taxes for 214 years and has always taken these responsibilities very seriously,” the company said in a statement.

“We are a major contributor to the Treasury with a third of our turnover, or £375m, paid to HMRC in various forms of tax, in the last year alone. This is seven times what we pay to our shareholders in dividends.

“Over and above this, we occasionally take specific tax advice from experts, such as Ernst & Young in this case, about other areas of potential tax paid by Greene King.

“In this case, the Upper Tribunal court has disagreed with the advice we received and we are therefore currently considering whether to appeal this decision. The Upper Tribunal judge expressly said this was a question of correct accounting treatment of a loan, not tax avoidance.”

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