The case, heard at the Upper Tribunal, shows that Jerome Anderson and eight others failed in their attempt to avoid “large amounts” of tax through investing in a football academy in South Africa.
Anderson is a former London-based sport agent, having represented more than 200 players, and introduced the likes of Dennis Bergkamp, Marc Overmars and Uwe Rosler to the English Premier League.
He also represented nine of Arsenal’s 1989 title-winning side.
Avoidance scheme
The scheme involved investments in the recruitment and training of young footballers at the Bafana Soccer Academy in South Africa.
Anderson attempted to use this investment to claim a £3m artificial trading loss to reduce his tax bill by “huge amounts of money”, according to HMRC.
The tribunal found that Anderson’s activities were more like those of an investor and did not show that he was trading.
This decision means he could not claim a trading loss and tax was due.
Paying a fair share
Penny Ciniewicz, HMRC’s Director General for Customer Compliance, said: “The court has made it clear that these schemes don’t work.”
“Our public services rely on everyone paying their taxes and it’s unfair for people not to pay their share.
“Anyone who’s caught up in tax avoidance and wants to put it behind them should come forward now and settle what they owe,” Ciniewicz said.
This latest victory means HMRC extends its record of winning nine out of 10 tax avoidance cases taken to court, with many more settling what they owe before reaching that stage.
Landmark decision
This tribunal decision was the first case to consider section 74B of the Income Tax Act 2007.
This is an anti-avoidance provision that denies an individual any sideways loss relief claimed where that individual carries on a trade in a ‘non-active’ capacity, and where that loss arises in connection with tax avoidance arrangements.
