Bookmaker Ladbrokes Coral has lost a £71m tax avoidance court battle with the taxman after using a once-legal loophole to minimise its tax bill.
Ladbrokes drafted in Big Four beancounters Deloitte in 2008 to create a scheme that artificially manufactured a fall in the value of the shares of one of the group subsidiaries. This generated a loss in another group company which could be used to minimise the amount of corporate tax the firm needed to pay.
Today's announcement follows a number of earlier hearings that had also ruled in favour of HM Revenue & Customs (HMRC).
Although the FTSE 250 firm admitted in court that the scheme was intended to avoid tax, it argued anti-avoidance rules did not preclude it from using such a strategy – a contention HMRC refuted.
HMRC’s director general for customer compliance, Jennie Granger, said:
"Ladbrokes would have been better off just paying the tax but instead they pursued this lengthy legal dispute with HMRC. Avoidance schemes like this just don’t work and HMRC will always take firm action against them.
The bookie gambled and lost when the odds of success could not have been lower.
Ladbrokes Coral declined to comment on the ruling.