A medical research tax avoidance scheme, promoted by Matrix Securities, has been successfully challenged in court by HM Revenue & Customs (HMRC).
HMRC said the court action against the Jersey-registered limited partnership, which claimed to be trading in the UK, had protected £80m.
It said the partnership focused on creating and exploiting intellectual property from research into vaccines targeting diseases such as HIV, flu and hepatitis B.
HMRC said 83 investors in the partnership used £28m of their own cash and £86m in bank loans. The partnership claimed a first-year trading loss of nearly £193m, creating £77m in tax relief. This would have given them an almost £50m return on their personal investments.
However, HMRC specialist investigators discovered that only £14m had been spent on research and development into vaccines.
As a result, a tribunal agreed that individual partners were entitled to tax relief of no more than £14m of the losses. The tribunal further decided that £7m in fees that the partnership had paid to a subsidiary of the scheme promoters failed to qualify for tax relief. Interest relief on the loans that had been used in the scheme was also restricted.
Exchequer secretary David Gauke said: "The government is committed to tackling tax avoidance and will close down those schemes that are artificial and contrived ways of exploiting the rules, as Parliament intended. The vast majority of businesses and individuals pay what they owe but there are a minority who try to dodge their taxes.
"Significant reinvestment has been made into HMRC to pursue and challenge the tax dodgers and they will take decisive action to close down schemes with the sole purpose of avoiding paying tax."
Since the scheme was implemented, HMRC has introduced further targeted anti-avoidance legislation to prevent similar schemes being set up.
Jim Harra, HMRC director general for business tax, said: "This is another important victory for HMRC as we continue to challenge artificial tax avoidance schemes. This type of marketed avoidance scheme is unfair to the vast majority of businesses and people who play by the rules.
"Anyone tempted should be warned that these schemes carry a serious risk that you'll end up paying the tax and interest on top of a set-up charge, which can run into the hundreds of thousands of pounds.
"This was a complex case but it shows - once again - how HMRC has the resources and technical expertise to effectively challenge tax avoidance."
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