Tax Rebates & Refunds

HMRC refuses to pay tax rebates to avoidance scheme investors

February 9, 2013
Posted in Other Tax, Tax Rebates — Written by Jennifer

HM Revenue & Customs (HMRC) is refusing to pay out tax rebates to investors who are part of a tax avoidance scheme and who are trying to claim tax relief on charitable donations.

The accounts for the Cup Trust, which is the name for the avoidance scheme, are understood to show that HMRC has received claims for a total of £46 million in Gift Aid tax relief from trust members.

However, these claims have not been paid out, and HMRC says it has warned schemes such as the Cup Trust repeatedly in the past that it will not pay out in the future on these kinds of tax rebate claims. In March 2010, a spokesperson for the department confirmed that HMRC will challenge schemes attempting to claim tax relief on charitable donations, saying:

“We do not accept that the charity is entitled to a repayment of tax or that Gift Aid relief is due to the individual,”

“In our view, a gift has not been made to the charity as it is no better off than before. We will challenge the reliefs claimed in any instances where this scheme has been used and will litigate.”

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