HMRC has won a landmark case against two members of the Santander Banking Group.
A tax avoidance scheme, in which the tax liability was £16m, used by Cater Allen International and Abbey National Treasury Services has been ruled against by a First Tier Tax Tribunal.
HMRC also stated that there were four other similar cases where they were waiting on a ruling, which could protect £86m in tax.
Abbey National Treasury Services argued that as the interest did not belong to the company, there was no corporation tax due. They stated the rights to the interest has been previously transferred to their offshore sister company, Santander.
However, HMRC successfully argued that the interest was liable to corporation tax, an argument which the First Tier Tax Tribunal agreed with.
David Gauke, Financial Secretary to the Treasury said, “This is welcome news for all those businesses and families who play by the rules.”
“HMRC has successfully tackled yet another complex avoidance scheme, protecting substantial amounts of tax at stake and is sending a very clear message to anyone tempted – you won’t get away with it,” added Gauke.