A former top football agent, who helped bring some of Africa’s brightest talent into the spotlight, has has lost his £1.2 million tax battle with UK’s HMRC.
The landmark case, heard at the Upper Tribunal, shows that Jerome Anderson and eight others failed in their attempt to avoid what the UK tax authorities described as “large amounts” of tax.
The scheme involved investments in the recruitment and training of young footballers at the Bafana Soccer Academy in South Africa, in which Anderson attempted to use this investment to claim a £3m as an artificial trading loss to reduce his tax bill.
The tribunal found that Anderson’s activities were more like those of an investor and this didn’t show that he was trading and decided that he could not claim a trading loss and therefore the tax was due.
This was the first case to consider s74B Income Tax Act 2007 which 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.
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.
Ciniewicz urged any individuals that are “caught up in tax avoidance and who wants to put it behind them” to come forward now and “settle what they owe”.
HMRC’s victory is their ninth out of ten tax avoidance cases taken to court, with many more settling what they owe before reaching that stage.