Trading billionaire Alex Gerko has accused HMRC of gloating after it defeated him in a legal tax dispute.
Mr Gerko, who is one of Britain’s biggest taxpayers, lost a long-running battle in the Supreme Court on Wednesday over the tax treatment of profits from a currency-trading fund he operates.
HMRC said following the decision that it was “committed to pursuing those who avoid paying their fair share of tax”.
In response, Mr Gerko wrote on LinkedIn: “Pretty astonishing from HMRC to get 70pc effective tax rate and also gloat about it.”
The Supreme Court case concerned an investment fund called HFFX, which was set up by Mr Gerko while he was working at the trading firm GSA Capital. HFFX was established to pay a share of GSA Capital’s profits to a group of traders at the firm, including Mr Gerko.
The fund was structured to incur corporation tax at a rate of between 19pc and 25pc when it received capital from GSA. However, HMRC challenged that.
The Supreme Court ruled on Wednesday that the fund should have paid 45pc income tax, leaving traders who benefited from the scheme with a bill of £22.5m.
Mr Gerko has said that charging income tax on HFFX’s profits amounted to “massive double taxation” by HMRC after a court ruled he should pay the higher rate in 2024.
Funds were taxed at corporate tax rates when they were placed in HFFX, which then traded those funds while staff waited for their bonuses. Staff subsequently paid income tax on the bonuses they received when they were paid individually.
Mr Gerko challenged the decision, leading to it being heard in the Supreme Court.
A spokesman for HMRC said on Wednesday: “We welcome the decision, which confirms our position that the arrangements discussed in the ruling are ineffective. We are committed to pursuing those who avoid paying their fair share of tax.”
Mr Gerko started the electronic trading company XTX Markets in 2015, spinning it out of GSA Capital, where he led its foreign currency trading division.
XTX is now one of the biggest trading companies in the world. Mr Gerko continues to own roughly 75pc of it and has a net worth of more than $17bn (£13bn), according to the Bloomberg Billionaire Index.
Mr Gerko paid £331.4m in taxes last year, making him the UK’s second-biggest taxpayer behind the owners of the gambling giant Betfred, according to The Sunday Times.
Mr Gerko was born in Moscow, and completed a PhD in mathematics there before moving to the UK in 2006. He is married to Elena Gerko, a former economist at the Bank of England.
XTX Markets declined to comment.
