An IT worker in the UK has lost his case over a tax avoidance scheme based in the Isle of Man.
Robert Huitson faces a tax demand of £100,000 after Revenue & Customs in the UK changed the rules governing offshore trusts and backdated the claim.
In the High Court, Mr Huitson argued the scheme – set up by Douglas-based Montpelier Tax Consultants – was perfectly legal when he started using it in 2001.
Under the scheme he was given an annual fee of £15,000, as well as more cash as the owner of a life interest in the trust.
He said the UK tax authorities breached his human rights by taking retrospective action under new laws passed in 2008.
But Mr Justice Kenneth Parker said Mr Huitson didn’t live in the Isle of Man and ruled he’d avoided £84,980 in tax over seven years – which reduced his effective tax rate to just 3.5 per cent.
He dismissed an application for a judicial review, raising fears that others with similar arrangements will now face action.
In the UK, there’s thought to be 2,500 people and another £100 million at stake.
Earlier, the court had been told another 57 people who’d used the scheme couldn’t repay the money owed and many had faced mental health problems and marital breakdown over potential bankruptcy.
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