A significant judgment in the tax planning/tax avoidance sector has been announced. The long-awaited First Tier Tax Tribunal judgment has, after 18 months in the drafting been handed down. Her Honour Judge Morgan has provided a judgment that runs to over 90 pages.

The Tribunal has found in favour of HMRC. This means that tax payers who used Root2 Tax Limited’s Alchemy scheme are, subject potentially to an appeal, going to be liable for income tax (PAYE) and primary and secondary Class 1 NICs.  It is unclear how HMRC are going to treat the existing Follower Notices, but we would expect HMRC to use these to leverage charges (likely to be significant) against tax payers who participated in the appeals.

We understand that no decision has yet been made in relation to whether an appeal will be made, or indeed what aspects of the Judgment will be appealed. 

A more detailed breakdown of the judgment will be provided in due course, but for now, if you would like support in considering what options you may have to pursue a claim in professional negligence and/or breach of contract against Root2 or your other previous advisers for the losses you are suffering as a consequence of the Root2 scheme, do get in touch.

We have also helped a number of clients who used the Alchemy scheme to settle their tax affairs with HMRC. If on the back of this judgment you would like assistance with negotiating a settlement with HMRC, we are well placed to support with that as well.

For more information, check out our previous articles on Root2 and the Alchemy scheme, here and here, or get in touch with the Commercial Litigation team.

We are representing a number of clients against Root2 Tax Limited.  If you would like to know more about this and whether or not we can assist, please complete the form.  A member of our specialist Root2 team will then get in touch with you.

About the author

Matthew Goodwin Associate - Solicitor-Advocate

Matthew regularly acts for corporates and individuals, dealing with a variety of disputes relating to investments, negligent tax planning, tax avoidance schemes, pensions and HMRC enquiries and negotiations. In addition, Matthew advises financial institutions and FCA regulated firms on their regulatory obligations.