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Root 2 Tax: betting winnings or earnings?

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The recent FTT decision in Root 2 Tax Ltd v HMRC is the latest in a venerable line of cases in which employer company and employee have tried (generally unsuccessfully) to dress up highly taxed earnings as some other form of non-taxable payment. In this case, the arrangement involved spread bets on the growth in value of a basket of hedge fund broadly matched against call spread options. Although the commercial risk of the bets not producing the intended result was greater in this case than in previous similar cases, the FTT had no difficulty in finding that the reality of the arrangements was that of the employer company providing its directors with earnings. The case also makes some interesting findings on alternative arguments relating to benefits in kind and the disguised remuneration regime.
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