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Tax tribunal exposes £14m avoidance trick by DP World

Judge describes attempts by the Dubai business to reduce its tax bill as ‘a scripted game of charades’

A complex and aggressive attempt to avoid UK tax on an international ports business controlled by the billionaire ruler of Dubai has been thrown out by a tax tribunal, which branded the scheme “an elaborate trick”. The scheme would have secured £14m in tax relief. It was devised in 2004 by P&O, the ports business that was then independent and listed on the London stock exchange.

The DP World tax avoidance plan – known as the “Dear Simon scheme” after a letter at the centre of the case – sought to exploit complex international treaty rules designed to facilitate global trade by making sure profits are not taxed twice in different jurisdictions.

A flurry of transactions P&O orchestrated among UK and Australian subsidiaries in October 2004 sought to create a UK tax credit for foreign tax payments artificially. Such avoidance structures are known as “rate booster” schemes in the tax avoidance industry.

More at the Guardian

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