A tax avoidance scheme worth £7 million, involving a network of companies in the Isle of Man and Jersey, has fallen foul of the United Kingdom taxman.
Global investment company Aberdeen Asset Management paid bonuses to seven senior managers through the scheme, between 2000 and 2003.
But Her Majesty's Revenue & Customs challenged the discounted options scheme, and a judge in the UK has said it was effective in avoiding tax and national insurance
The tribunal was told 15 Isle of Man companies were used in the scheme, with names such as Bittium, Codium, Croyde, Fade, Flimwell, Dilsea and Heamatopus.
The judge said: 'Gone are the days, and rightly so, when a taxpayer could elide [escape] the literal application of a taxing statute by a complex series of pre-arranged transactions involving an almost impenetrable jungle of companies, trusts and shareholdings with each participant following a well scripted plan which produces a series of genuine documents and legal relationships all designed to defeat the Revenue's fiscal claims.'
Aberdeen Asset Management says it has been given leave to appeal to the upper tax tribunal.