If your company is at risk of being taken to court for involvement in tax avoidance schemes then there is a pretty good chance you will lose the case according to current statistics.
Between 2016-17 HMRC only lost 3 of the 26 tax avoidance cases it took to the courts with a 22 out of 26 success rate and one result described as mixed. While down slightly on the 2015-2016, this still demonstrates the almost impossible task defending these cases when they end up in court. The only cases lost by HMRC involved corporation tax and a case concerning inheritance tax.
The high success rate and often the ultimate futility of contesting them for most companies is due to the General Anti-Abuse Rule which offers HMRC a considerable advantage. The rule allows HMRC to litigate tax avoidance even if there appear to be loopholes in existing legislation.
Tax avoidance cases more often than not relate to complex financing transactions and income tax. The latter usually involves questions over whether an entity was trading.
Such cases often take several years to make it to court with some dating back to the 1990s.
HMRC’s efforts to crack down on tax avoidance and evasion have seen the number of dawn raids increase by 34% in the last five years