Lead Forencsices

Posted by Simon Griffiths on 04 Aug 2023

Tribunal Success – Magic Carpets Vs HMRC 2023

Tax Innovations have helped their client to successfully appeal to the First Tier Tribunal (FTT) to overturn PAYE determinations and penalties amounting to over £175k issued by HMRC.

In the case of Magic Carpets (Commercial) Limited v HMRC, Tax Innovations was engaged to assist with the appeal to the FTT, after HMRC imposed the PAYE determinations in respect of the company’s historic use of an EBT-based tax avoidance scheme in 2009/10 and 2010/11. The original advice on the use of the EBT had been given by a previous adviser.

HMRC took the view that the careless actions of the directors of the company in implementing the EBT loan scheme meant that the PAYE determinations could be issued to the company up to 6 years after the end of the tax year in question.

Tax Innovations replaced the company’s initial appeal with a detailed and persuasive argument that there was no causal link between any carelessness by our client and any loss of tax.

The FTT agreed that HMRC had not met their burden of proof with regards to section 36 TMA 1970. On this basis the PAYE determinations were found to be issued out of time and the appeal against the determinations was upheld.

Tax Innovations’ director, Simon Griffiths CTA, stated, 

I am delighted that another example of HMRC attempting to impose retrospective taxation upon historic EBT loan schemes has been overturned by this appeal to Tribunal.


Tax Adviser, Adrian Trace CTA, was equally pleased,

It is great that we were able to help our client defend against these significant tax charges imposed by HMRC outside the normal time limits.”


If you would like any advice regarding EBT loan schemes or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or customerservice@taxinnovations.com

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