Qubic Tax Limited – HMRC Liabilities – Pension and Tax Mitigation Schemes

FS Legal’s specialist tax team has advised a large number of former clients of ‘niche’ and ‘innovative’ tax advisory firm Qubic Tax Limited (Qubic) on recovering their unexpected tax losses and liabilities to HMRC. Participants in such schemes are advised to take urgent legal action to ensure they can recover their tax losses.

FS Legal understands that people who used Qubic’s schemes are in the process of being identified by HMRC following the issuing of notices requiring disclosure of commissions paid by Qubic and associated companies to introducers between 2013 and 2017 (Qubic Tax Ltd and others v Revenue and Customs Commissioners [2020] UKFTT 215 (TC), [2020] SFTD 769).

Qubic are typically introduced through established advisers such as accountants who may themselves be members of referral networks such as ‘Probiz’ or ‘Added Value Network’ (AVN). In many cases that we have seen, the end client is completely unaware that their accountant has received an undisclosed commission or ‘kick back’ paid to them by Qubic for making that introduction or recommendation (e.g. Chancery Client Partners Ltd and others v MRC 957 Ltd and others [2016] EWHC 2142 (Ch)).

Our team has advised on a number of schemes operated by Qubic including Gold bullion/EFRBS (also known as “Incentives and Rewards – Providing Assets”), and a scheme involving payment of employment rewards by creation and sale of unfunded pension obligations. The Qubic “gold bullion” scheme concerned agreements with a Trust, entries in directors’ loan accounts and a company known as Asset Hound Limited which acquired gold bullion on behalf of the directors and shareholders of a company, the combined effect of which was to allow profit extraction without taxation.

In Wired Orthodontics Ltd and others v HMRC [2023] UKFTT 17 (TC) (6 January 2023), the First-tier Tribunal (FTT) found in HMRC’s favour held that the award of £300,000 worth of gold bullion by a company to its directors formed part of the directors’ taxable earnings – with devastating results for the scheme user. FSL understands that around a further 300 scheme users had appealed HMRC’s demands and were awaiting the outcome of this case.

Identical schemes to the Qubic pension schemes have also been considered by the General Anti-Abuse Rule (“GAAR”) Advisory Panel, which found that they were contrived and abnormal and as such fell foul of the GAAR legislation. This opens the way for HMRC to take enforcement action against the companies and individuals who used the schemes. The Panel’s decisions are here: GAAR Advisory Panel opinion of 18 July 2017: employee rewards using gold bullion – GOV.UK (www.gov.uk), and  GAAR Advisory Panel opinion of 11 February 2022: Rewards via creation and sale of pension obligation – GOV.UK (www.gov.uk).

We have also advised clients who have seen their companies collapse into liquidation and who have then been the subject of director disqualification proceedings as a result (e.g. Re Avacade Ltd, Secretary of State for Business, Energy and Industrial Strategy v Lummis and another [2021] EWHC 1501 (Ch), Secretary of State for Business, Innovation and Skills v Akbar and others [2017] EWHC 2856 (Ch)).

Time to act regarding Qubic is very limited. If you wish to discuss your own position with us, please contact us urgently. We operate on a fully contingent funding basis for the vast majority of our cases.

To discuss your specific circumstances regarding Qubic in more detail without charge or obligation please call Julia Norris (julia.norris@fsl.legal) or Kit Sorrell (kit.sorrell@fsl.legal) at our Manchester Office.

FS Legal Solicitors

FS Legal is one of the very few law firms in the country specialising in claims arising from tax avoidance and mitigation schemes. We have a leading team of expert lawyers who have been ranked by the independent legal directories Legal 500 and Chambers & Partners in this specified field.

Chambers & Partners wrote:

  • “The team is especially skilled acting on high-value tax-related disputes”
  • “[FS Legal] regularly handles matters for high net worth individuals and private businesses and is particularly skilled at acting on high-value tax-related disputes”

Legal 500 comment:

  • “FS Legal has a national reputation for high-profile, multi-million pound “big ticket” litigation, in particular tax negligence claims having recovered seven figure settlements”
  • “FS Legal is described by some as “the only pure financial services litigation firm outside London – its team is the envy of many of the top law firms it comes up against”
  • “Litigation boutique FS Legal is highly regarded as a claimant firm, particularly in tax negligence and professional services disputes”

Qubic Tax Advice

FS Legal works with a very select team of specialist tax advisers who assist our clients in extracting themselves from the scheme in question and also in ensuring any settlement with HMRC is achieved on the best possible terms.

Funding Qubic Claims

We understand that whether it is a personal or business matter, funding is a key concern. We have a variety of funding options available to seek to remove the risks and costs from our client. Unlike most firms, we are able to operate the vast majority of our cases on a contingent (“no-win, no-fee”) basis.
Because professional negligence cases are intricate and require specialist knowledge, we offer a free, no obligation, and confidential advice service to all our prospective new clients.