HMRC Orders Baxendale-Walker to Halt Tax Schemes
HMRC Takes Unprecedented Action Against Scheme Promoter
HM Revenue & Customs (HMRC) has issued legally binding Stop Notices to Paul Baxendale-Walker, one of the country’s most notorious tax avoidance scheme promoters. Baxendale-Walker, already infamous for his involvement in high-profile tax schemes such as the Rangers Football Club Employee Benefit Trust (EBT), now faces significant penalties or potential prosecution if he continues to promote either of two artificial tax arrangements subject to the notices.---
Details of the Stopped Schemes
- Stop Notice 49: Targets a remuneration trust arrangement.
- Stop Notice 50: Addresses an offshore trust scheme involving claimed deductible contributions for corporation or income tax, funds then returned to directors or sole traders through circuitous means, allegedly under fiduciary claims.
- Introduction of a universal Stop Notice and promoter action notice
- Expansion of criminal sanctions for failing to disclose schemes
- Unlimited fines and up to two years' imprisonment for non-compliant promoters
- Scrutinize all tax planning arrangements for compliance
- Seek independent legal advice if approached regarding aggressive tax schemes
- Monitor HMRC’s published list of named schemes and promoters
- Understand that financial and criminal consequences now accompany non-compliance
Both schemes are considered by HMRC to involve artificial structures designed to create the appearance of deductible expenses while ultimately returning funds to business owners, sidestepping legitimate tax liability.
HMRC described the offshore trust scheme as follows: "A scheme user makes a contribution to an offshore trust and claims the contribution as a deductible corporation tax or income tax expense. The money is then channeled back to a company director or self-employed person, typically through another company, with the recipient asserting they hold the funds in a fiduciary capacity."
---
A Notorious Track Record
Paul Baxendale-Walker’s history with tax avoidance is extensive and controversial. Once a solicitor—since struck off—he has been linked with a host of contentious tax schemes, many resulting in costly disputes and failed arrangements for clients.Notably, Baxendale-Walker was the architect of the Rangers EBT scheme, ultimately contributing to the financial collapse of Rangers Football Club. As tax commentator Ray McCann noted, “There are few who have left a larger trail of carnage than Baxendale-Walker, with clients often left to face severe consequences after HMRC intervention.”
His ongoing legal disputes with HMRC include a £14 million penalty related to non-compliance with information requests, which was ultimately struck out on procedural grounds. However, he continues to feature in first-tier tribunal cases, with schemes under his direction repeatedly called into question by courts and tax authorities.
Recent years have seen new schemes promoted by Baxendale-Walker come under fire. The Minerva remuneration trust arrangement, for example, offered significant incentives to advisors acting as scheme introducers. High-profile users such as jockey Frankie Dettori have also been publicly linked with failed schemes devised by Baxendale-Walker.
---
HMRC Signals a Tougher Approach
The Stop Notice against Baxendale-Walker sets a new precedent: it is the first time HMRC has directly targeted an individual with such notices, having previously focused on companies. According to Jonathan Smith, HMRC’s Director of Counter Avoidance, “The courts have already concluded that Mr Baxendale-Walker designed and sold multiple tax avoidance schemes that don't work as claimed, and now these Stop Notices send a clear message that we will use every tool at our disposal to protect public finances.”The action comes amid a broader clampdown on promoters of tax avoidance schemes. Measures discussed in HMRC’s ‘Closing in on promoters of marketed tax avoidance’ consultation include:
These efforts target the persistent issue of marketed tax avoidance, which, although down from its peak, still accounts for an estimated £500 million of the overall tax gap.
Importantly, legislation enacted in February 2024 has introduced a new criminal offense for scheme promoters who fail to comply with Stop Notices. Immediate cessation of specified schemes is now legally enforceable.
---
Protecting Against Tax Avoidance: What Comes Next?
HMRC’s move against Baxendale-Walker is poised to have significant ripple effects across the tax advisory sector. Advisors and clients are urged to:As government powers increase and enforcement intensifies, the risks of engaging in or facilitating aggressive tax planning rise correspondingly. Responsible advisors should stay vigilant and focus on transparent, lawful tax strategies.
---
Stay Updated
For regular updates on tax compliance, subscribe to our business newsletter for expert insights and ongoing developments from HMRC.---
