Court Denial: Ladbrokes Fails to Retrieve £71 Million
Final decision in a 10-year tax dispute between Ladbrokes and HM Revenue and Customs (HMRC): the UK's highest court has dismissed Ladbrokes' objections, so the £71 million already paid will not be refunded.
In 2008, following advice from Deloitte's management consultants, Ladbrokes Group merged two sub-companies - Ladbrokes International and Travel Document Service - into a new subsidiary, which was then integrated into the Ladbrokes Group. This consolidation led to a decline in the value of the shares of the former independent companies' shares. The Ladbrokes Group recorded this decline as a loss on its balance sheet, reducing its tax burden. However, this procedure's legality is now being called into question:
We're delighted that the Court of Appeal has upheld the Inland Revenue's view that Ladbrokes was attempting to avoid corporation tax. Such schemes are ineffective, and HMRC will always crack down on them. We win nine out of ten legal cases. An HMRC spokesperson
Back in 2008, HMRC did not recognise the loss claim made by Ladbrokes and disregarded it in its tax assessment. They considered the "losses to be unreal" and part of a "deliberately constructed arrangement" designed to avoid tax. As a result, the Ladbrokes Group paid the entire tax amount, including the disputed £71 million, as a precautionary measure. But they also challenged this decision, beginning a decade-long legal battle to determine where the line between creative accounting and illegal tax avoidance lies.
Ladbrokes took advantage of a loophole in the system
The motivation for Ladbrokes' restructuring strategy was clear. The well-established bookmaker openly admitted that it had merged the companies for tax reasons. It wasn't just Ladbrokes doing this - other companies would have exploited the same option. A loophole in British tax law was used that was closed in 2008, encouraging tax authorities not to consider such transactions.
For Ladbrokes, the court verdict was not completely unexpected. Two lower courts had already affirmed the tax office's decision, with the Court of Appeal only making it legally binding and final.
We acknowledge the court's judgment. This case focused on taxes already paid and accounted for, which is why we have lost this case. But the decision does not impact our overall financial situation. Statement from Ladbrokes
There's little evidence that this ruling will impede Ladbrokes' planned sale to competitor GVC Holdings. The disputed amount has already been factored into the cost accounting and share valuation. It's unclear whether Ladbrokes will be able to compensate Deloitte for the expenses associated with the court case - the management consultancy declined to comment on the matter.
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Source: www.onlinecasinosdeutschland.com
