Ladbrokes fails to recoup £71m from HMRC as court rejects rebate claim in long-running tax spat

Alexandra Rogers
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Bookmakers Merger May Cause Shop Losses
The Court of Appeal unanimously rejected Ladbrokes' appeal for a rebate of £71m (Source: Getty)

Ladbrokes' long-running tax battle with HMRC has come to a halt after the Court of Appeal rejected the bookies' appeal to win a £71m rebate for the third time.

Ladbrokes' dispute with HMRC dates back to 2008, when it entered into a scheme promoted by Deloitte that was branded as tax avoidance by HMRC. The 2008 legal loophole exploited by this type of scheme was closed in the same year.

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Ladbrokes entered into the scheme to minimise its corporation tax bill when companies belonging to Ladbrokes Group - Ladbrokes International and Travel Document Service - consolidated its UK retail businesses into one subsidiary and merged its businesses into LBG.​

HMRC argued that Ladbrokes group had entered into a "purposely-designed arrangement" so that an artificially manufactured fall in the value of the shares in one of the companies generated a loss for the other company, for tax purposes. The group suffered no real loss overall.

While Ladbrokes admitted that the arrangement was designed to avoid tax, it argued that it was still within the limits of anti-avoidance rules.

The Court of Appeal unanimously rejected Ladbrokes' appeal to recoup the £71m, agreeing with two earlier tribunal decisions that found that HMRC's rules prevented Ladbrokes' attempt at a tax advantage.

​A spokesperson for Ladbrokes told City A.M: "We note the court ruling. This was a case regarding taxes already paid and accounted for, so while the case may have been given against us, it has no bearing on our numbers."

An HMRC spokesperson added: “We are pleased that the Court of Appeal supports HMRC’s view that Ladbrokes were attempting to avoid corporation tax. Avoidance schemes like this just don’t work and HMRC will always take firm action against them. HMRC wins nine out ten avoidance cases we take to court.”

Deloitte declined to comment.

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