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The case related to a tax planning scheme used in 2008 to exploit what appeared to be a loophole in part of the tax code that dealt with the taxation of loans. The loophole was closed in the same year and the legislation strengthened in 2009.

The tax scheme was devised by Deloitte, professional services firm, and advised upon by Slaughter and May, the law firm.

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The tribunal judges agreed with HMRC, which argued that the rules prevented Ladbrokes from gaining the tax advantage it sought. Ladbrokes argued in court that anti-avoidance rules did not catch it out

Ladbrokes declined to comment on the decision.

Jennie Granger, director-general for customer compliance at HMRC said:"Ladbrokes would have been better off just paying the tax but instead they pursued this lengthy legal dispute with HMRC.

"Avoidance schemes like this just don't work and HMRC will always take firm action against them. The bookie gambled and lost when the odds of success could not have been lower."

HMRC said there had originally been 11 users of the type of scheme used by Ladbrokes. Nine had conceded before the Tribunal hearing and paid the tax owed.

It said it won over 80 per cent of the cases heard in court, adding that in the current financial year it had protected over £1.7bn of public money through its enforcement of the tax rules.

The scheme involved two companies in the Ladbrokes group, called Ladbrokes International and Travel Document Service. They entered into arrangements designed to ensure that an artificially manufactured fall in the value of the shares in one of the companies generated a loss for the other company for tax purposes. The group suffered no real loss overall.

The tribunal which first ruled on the case in 2015 said: "The essence of the scheme was to exploit a perceived loophole in the code for taxation of loan relationships." It was referring to a complex aspect of the corporate tax rules that deal with the taxation of loans between a company and another party.

The latest ruling by the upper tribunal of the tax and chancery chamber supported the 2015 findings of the tax tribunal. It dismissed all three arguments raised by Ladbrokes and said the loss could not be used for tax purposes.

This article is a reprint from Financial Times. To view the original story, click here.