HM Revenue and Customs has defeated a tax avoidance scheme used by the wealthy to reduce their tax bills.
The decision on the scheme, known as Clavis Liberty Fund 1 Limited Partnership, meansÂ Â£18m of taxÂ money will beÂ paid to HMRC, cash that ultimately goes to the government to be used on public services.
HMRC said the Upper Tribunalâ€™s decision will have wider implications for hundreds of other users of Liberty schemes, predicting that it would protect Â£325m in unpaid tax.
Penny Ciniewicz, HMRCâ€™s director general for customer compliance, said: â€œThis is a brilliant victory that will bring in millions of pounds.
â€œWe have repeatedly warned people about the financial consequences of using tax avoidance schemes.
â€œMore and more people are coming forward and settling what they owe because they know the game is up.
â€œOur message is clear â€“ steer clear of tax avoidance schemes or, like Libertyâ€™s users, youâ€™ll face a hefty consequence.â€
The scheme was promoted to high earners by Mercury Tax Group and sought to create artificial tax losses that were later claimed against scheme usersâ€™ other income to reduce their tax bills.
It involved a limited partnership that was registered in Jersey and was claiming to carry out trade in the UK.
Each of the users of the scheme contributed a sum which was used, with a large bank loan, to acquire rights to dividends declared by a company registered in the Cayman Islands.
The partnership claimed a deduction for the cost of purchasing the dividend rights but tried to exclude the dividends received from its trading results, creating a loss which was used to reduce usersâ€™ tax bills.
The Upper Tribunal upheld a decision by the First-tier Tribunalâ€™s that the dividend transaction was artificial and uncommercial.