Root2 Tax Limited (in Liquidation) – Alchemy Spread Betting Tax Avoidance Scheme
What Is Happening Now?
FS Litigation’s specialist tax litigation team is advising individuals affected by the Root2 Alchemy Scheme, following enforcement action by HMRC and adverse Tribunal findings.
We have been instructed in claims against both Root2 Tax Limited (in Liquidation) and the professional advisers—often accountants—who introduced the scheme. We also work with a team of external tax experts to help protect our clients’ positions when engaging with HMRC.
How the Scheme Worked
The Root2 Alchemy Scheme was designed to allow directors or senior employees to receive highly taxable remuneration disguised as tax-free gambling winnings.
The scheme involved two offsetting bets on financial indexes: one with a high chance of winning (retained by the employee), and one with a high chance of losing (borne by the employer).
The result was a value transfer from employer to employee without incurring PAYE or NICs.
HMRC’s Response
HMRC successfully challenged the scheme before the First-tier Tribunal, arguing that the value transferred constituted employment income.
Tribunal judges strongly criticised the evidence of Root2’s directors, calling it 'disingenuous', 'incomprehensible', and 'sophistry'.
Tax specialist George Rowell of Exchange Chambers commented:
“Although the Alchemy Scheme was dressed up as an ‘investment scheme’, in reality it involved no genuine investments and was a blatant attempt to avoid the income tax and NICs normally payable on a director’s remuneration. It was always entirely predictable that HMRC would assess users of the Scheme for the tax and NICs they had avoided and that such assessments would be upheld if challenged.”
Wider Legal Risks
Participants now face PAYE and NICs assessments, possible enforcement action, and reputational risk.
Legal claims may also arise against introducers who failed to warn of the scheme's risks.
FS Litigation’s Expertise
FS Litigation is one of the UK’s few law firms specialising in claims arising from failed tax schemes and negligent professional advice. We have successfully pursued claims against accountants and tax advisers who recommended the Alchemy Scheme without proper warnings or explanation of the risks.
We are ranked Band 1 by Chambers & Partners and recognised by The Legal 500 for our work in high-value tax-related litigation.
Chambers & Partners: “The team is especially skilled acting on high-value tax-related disputes.”
Legal 500: “FS Litigation has a national reputation for high-profile, multi-million pound ‘big ticket’ litigation... its team is the envy of many of the top law firms it comes up against.”
What Should You Do?
If you participated in the Alchemy scheme or suspect your adviser introduced it, early legal advice is essential. Strict time limits may apply.
We offer a free, confidential consultation and act under no-win, no-fee arrangements in most claims.
Funding Options
FS Litigation offers a range of funding solutions and acts on a contingent (‘no-win, no-fee’) basis in the majority of our professional negligence cases.
We also work with external tax advisers to assist clients in managing HMRC engagement and settlement.
Contact Us
To speak confidentially with a member of our team, please contact us or call us on 0161 714 4520