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Legal challenge launched against HMRC to close £600m tax loophole

LEGAL action against HM Revenue and Customs to close a £600 million loophole that allows private equity fund managers to pay half the tax they should was launched today.

The Good Law Project (GLP) and Ecotricity founder Dale Vince are taking the legal challenge to claim that a 1987 agreement letting the industry pay less tax is unlawful.

They sent a pre-action protocol letter, which is the first formal step in legal proceedings, to the HMRC.

GLP founder Jo Maugham said: “If you ran a small business, or received income support, or were pushed by an agency to take your pay as loans you wouldn’t get special treatment like this.

“This is, I feel sad to have to say, another example of our institutions being strong with the weak — but weak with the strong.”

Mr Vince said: “The rules exist to take more tax from private equity investors, but HMRC are not using them. I want to know why.

“Why should wealthy private equity investors be allowed to pay a lower rate of tax than a nurse or bus driver?

“I believe it is morally wrong and it needs to change.”

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