Stagecoach scheme was ‘clear tax avoidance’

A complex scheme used by Perth-based bus firm Stagecoach to reduce its tax bill by £11 million falls foul of tax avoidance legislation, the tax courts have ruled.

The scheme involved shifting money between companies within the Stagecoach group to create a large loss in one of them without a corresponding gain in any other.

Stagecoach paid £25.7m in tax for 2015 on profits of £165m. The failed tax avoidance scheme related to 2011.

Treasury minister David Gauke said: “This is a significant victory and should serve as a warning to those tempted by tax avoidance – it simply does not work.”

Jim Harra, director general of business tax at HM Revenue & Customs, said: “This was clear tax avoidance. It was an attempt to manufacture losses to deny the public purse the tax due.”

A spokesman for Stagecoach said: “We believe it is right that we pay our fair share of taxes. The case involved the interpretation of historical and technical issues which are no longer relevant under current legislation, and no additional tax is payable by Stagecoach as a result of the ruling.

“These historic(al) transactions involved Stagecoach investment in its subsidiaries, and the first-tier tribunal ruling did not challenge the commercial background behind those transactions.”