HMRC has won a £40m legal case against tax avoidance scheme promoter Hyrax Resourcing Ltd.

The tax authority says the victory will help it collect more than £40m in unpaid taxes.


The court win over Hyrax means the promoter now has to disclose the details of its tax avoidance scheme to HMRC, along with the names and addresses of 1,180 HNW individuals who used it.

If Hyrax fails to provide the required information to HMRC it could face a penalty of nearly £6m, as well as £5,000 per day for not fully disclosing the scheme.

The scheme, promoted by Hyrax was a disguised remuneration avoidance scheme, which worked by paying scheme users in loans so they could avoid paying Income Tax and National Insurance on their earnings.

Users were paid just enough to comply with the National Minimum Wage.

The rest of their income was made up in loans which were transferred to an offshore trust in Jersey.

The amounts received under loan agreements were not declared as income on the scheme users tax return, meaning they did not pay tax on all their earnings.

Mel Stride MP, Financial Secretary to the Treasury, said: “HMRC is cracking down on the unscrupulous promoters who sell these highly contrived tax avoidance loan schemes.

“Promoters need to take note of this decision and make sure they contact HMRC urgently about schemes they haven’t yet disclosed.”

The First-tier Tribunal agreed with HMRC that Hyrax Resourcing Ltd had not complied with the Disclosure of Tax Avoidance Schemes (DOTAS) rules, which requires promoters to tell HMRC about the schemes they sell.

The Hyrax scheme was a successor to the K2 arrangements which became widely known about in 2012.

New legislation has been introduced every year since 2014 to help HMRC take on promoters and enablers of tax avoidance schemes.

More than 100 promoters and others involved in tax avoidance have been investigated by HMRC in recent years.