A self-employed IT consultant, Robert Huitson, had challenged the Revenue's right to levy taxes retrospectively. He had avoided £85,000 of income tax over seven years via a complicated tax arrangement based in the Isle of Man.
Mr Justice Parker upheld the 2008 Finance Act which let the Revenue plug the loophole retrospectively. He pointed out that the Revenue had warned the users of the tax avoidance scheme that it might be challenged, and he said the government was entitled to change tax law retrospectively to squash artificial arrangements.
The existence of the tax avoidance scheme has been well known in the accountancy industry and several other versions marketed by other firms are now thought to be under threat.
A website forum for users of the such an avoidance scheme, contains claims from one person who says she now faces paying £300,000 in back taxes.