A tax-avoidance scheme that was a precursor to the Cup Trust has been defeated in an appeal to the tax tribunal.
Some 60 participants in the scheme will not now receive a combined £21m of tax relief, after the tax tribunal rejected a claim by one participant, William Ferguson, for £200,000 of relief.
The Blue Box scheme was designed by NT Advisors, the firm headed by Matthew Jenner, who devised the Cup Trust tax-avoidance scheme.
The Cup Trust charity received more than £176m from donors over two years and attempted to claim £46m in Gift Aid, despite paying out only £55,000 to charitable causes. Donors might have been entitled to claim another £54m in tax relief.
Created in 2004, the Blue Box scheme involved high-net-worth individuals making purported gifts of £500,000 to a Northern Irish charity, the Somerton Charitable Trust, and the donation and reacquisition of gilts to and from the charity.
According to a statement from HM Revenue & Customs, there was "virtually no benefit to charity".
Ferguson earned more than £800,000 from employment during the tax year 2003/04, says the tribunal’s judgment, published today.
By taking part in the scheme, Ferguson sought to avoid paying any income tax on £500,000 of those earnings, it says.
A spokesman for HMRC said the tribunal’s findings would have precedent over the other claims linked to the Blue Box scheme,
Nicky Morgan, the Financial Secretary to the Treasury, said in a statement that the government would not tolerate the abuse of charitable tax reliefs for the purposes of tax avoidance.
"While the vast majority of people pay the taxes they owe, this victory shows HMRC’s determination and effectiveness in clamping down on those who seek to avoid their responsibilities," she said.
HMRC said the case represented its fifth victory against NT Advisors, bringing the total tax protected to more than £750m.