HM Revenue & Customs (HMRC) has won a tax avoidance case worth £35 million against global banking group BNP Paribas.
The win came after the bank tried to use a tax avoidance scheme to claim an exemption from tax by generating an artificial loss on the purchase and sale of dividends without disposing of the underlying shares – a process known as ‘dividend stripping’.
The Tribunal confirmed HMRC’s view that legislation stopped financial tradersclaiming artificial losses by buying and selling dividends on shares and then claiming the sale proceeds are tax exempt.
Penny Ciniewicz, HMRC’s Director General Customer Compliance, said:
“Tax avoidance doesn’t pay. This decision adds to the comprehensive run of wins by HMRC in which the courts have found against the small minority of taxpayers who seek to avoid tax.
“Increasingly, companies and individuals who have tried to avoid tax are throwing in the towel and paying the tax they owe.”
HMRC’s latest annual report showed the tax authority brought in an additional £29 billion by cracking down on individuals and businesses who try to avoid or evade paying the tax they owe.