EWHC 2721 (2008) R (on the application of Mercury Tax Group & Anor) v HMRC & Ors

HMRC raid. Raid order quashed - Taxpayer won.

Case Summary:

HMRC suspected fraud in connection with tax planning and raided the firm’s premises and the home of an individual. HMRC were concerned about the practice of clients signing draft documents and then when the final documents were created the signature page was taken out of the draft and inserted into the final documents. While the judge did not agree this was good practice he quashed the S20C TMA 1970 notice because HMRC had not made a full disclosure to the judge who first granted it.

He also commented that “…the essence of such schemes (assuming that they work in principle) is to get the paperwork formally right.”

This case illustrates how HMRC may react when they think the implementation of tax planning arrangements has not been done correctly.