The scheme was marketed by Ernst & Young in 2003 to the brewery, and other large organisations, and involved loans between the group of companies. HM Revenue & Customs said the aim was for one company in a group to get tax relief on interest paid to another group company, without that other company paying tax on the income it received.
HMRC said it will now receive £36m from users of the scheme after the Upper Tribunal ruled that it did not work. Greene King risks having to pay approximately twice the tax it tried to avoid after the tribunal left open precisely how the interest was taxable in a second group company.
Exchequer secretary David Gauke said: “The vast majority of taxpayers play by the rules and the government will continue to take touch action to tackle the minority who seek to avoid their responsibilities. HMRC wins 80% of the cases it takes to court and this win, in a very complex case, sends another clear message to tax avoiders.
“Anyone who gets involved in tax avoidance schemes is playing with fire. HMRC will pursue those involved through the courts, ensuring it collects the taxes that are due.”
