Three High Court judges invested in controversial tax avoidance schemes that were challenged by HM Revenue & Customs, including one judge who has ruled on tax avoidance cases, raising questions about the UK’s lax approach to disclosure of judicial interests.

The investments by Justices Joanna Smith, Simon Bryan and Martin Griffiths were first made about a decade ago, before their appointments to the High Court, but in the cases of Bryan and Griffiths after they began their judicial careers.

Each has retained their interests in the schemes after taking their positions as High Court judges, Companies House records show.

Two other sitting High Court judges made similar investments in tax schemes that have since closed, one of which was called “highly abusive” and “completely contrived” by a government minister.

The revelations raise questions about the judgment of some of the UK’s top legal minds, as well as the High Court appointment process and the absence of rules requiring UK judges to make formal disclosures about their financial affairs, either publicly or privately.

“Any sophisticated person could reasonably have been expected to know that these schemes were unacceptable to HMRC,” said Sir Edward Troup, formerly the most senior civil servant at the tax authority.

Troup added that he viewed investing in tax avoidance schemes as “unacceptable behaviour by a professional”.

Tax avoidance may be challenged by the tax authorities but is different to tax evasion, the criminal offence of deliberately failing to pay tax. Schemes often take advantage of tax credits intended for activities the government wants to encourage.

The Financial Times uncovered the tax avoidance scheme investments by searching Companies House for public information about the more than 100 judges of the High Court.

Unlike the US, where Supreme Court Justice Clarence Thomas has been embroiled in a scandal about his financial affairs, the UK does not require its judges to make systematic disclosures about their interests.

The UK Guide to Judicial Conduct written by the judiciary merely requires judges to make ad hoc disclosures to parties in particular cases if the judge views they have any conflict of interest or if they believe there is the risk of an appearance of a conflict of interest.

The guide gives individual judges broad discretion to decide for themselves “whether or not a particular activity or course of conduct is appropriate”.

Richard Moorhead, professor of law and professional ethics at the University of Exeter, said it was long overdue for the judiciary to institute a more formal and transparent process for registering judicial interests.

“They shouldn’t rely on individual judges recalling in individual cases whether they might have a conflict of interest or a perceived bias. It’s very common in any kind of professional role to have some proper governance around these kinds of issues.”

The Judicial Office, which supports the judiciary in England and Wales, told the Financial Times none of the judges wished to comment. “The judiciary does not comment on the financial affairs of individual judges,” a spokesperson added.

Lawyers applying to be High Court judges are required to make disclosures that are relevant to the question of whether they are of “good character”.

Guidance on the Judicial Appointments Commission website says this includes a requirement that prospective judges have “complied, in a straightforward and transparent way, with [their] obligations in relation to taxation”.

The various investments by the five judges were made between 2003 and 2012, when successive governments were clamping down on tax avoidance in response to growing public anger at schemes that helped the wealthy reduce their tax bills.

In 2004, the UK government introduced legislation requiring the promoters of tax avoidance schemes to notify HMRC about their plans.

Smith, who was appointed a High Court judge in 2021, in 2012 invested in a pair of property tax schemes involving tax credits for renovating unused business premises. One of the schemes, Curo Charlotte House LLP, centred on a Glasgow hotel.

The FT in December 2014 reported that investors in the Charlotte House LLP were set to receive repayment demands from HMRC after the tax authority notified the scheme’s promoter it was taking action.

Last year, Smith ruled on a pair of separate tax appeals that involved similar questions to those that could have been at issue in the Charlotte House matter, according to Dan Neidle, founder of think-tank Tax Policy Associates and a former top City tax solicitor.

One of the tax appeals concerned the circumstances where a taxpayer has a “reasonable excuse” for not paying tax that is due, while the other turned on the question of whether a scheme has a “main purpose” of avoiding tax.

Neidle told the FT he thought Smith should have recused herself from the cases as a result of her investment in the Charlotte House LLP, whether or not any dispute with HMRC was active at the time.

“If her dispute was over, then there was no direct conflict, but still potential for bias, given it would be hard for her to avoid [adjudicating] points that were relevant to her own scheme. So I feel she should have recused herself.”

Bryan and Griffiths, appointed to the High Court in 2017 and 2019, respectively, have since 2011 been investors in Cobalt Data Centre 2 LLP scheme, which involved enterprise zone tax credits and promised an immediate 67 per cent tax profit to investors.

In October, HMRC successfully challenged the scheme at the Court of Appeal, which found that the scheme’s investors were not due any tax credits on their investment. A lower court found the scheme had sought to obtain legitimate tax incentives, but the Court of Appeal found in favour of HMRC on a contractual issue. The decision may yet be overturned on appeal.

Neither Griffiths nor Bryan were judicially involved in the Cobalt litigation. Both were appointed recorders in 2009, a part-time judging role that is the first rung on the judicial ladder.

Two other High Court judges were similarly invested in tax schemes before their appointments. Julian Goose from 2009 to 2010 was a director of an entity called Romangate Limited, part of the Rushmore tax avoidance scheme.

The Rushmore scheme was blocked by the Labour government in 2009 and called “highly abusive” and “completely contrived” by then-Treasury secretary Stephen Timms. Goose was appointed a recorder in 1998.

Nicholas Mostyn in 2003, three years after his appointment as a deputy High Court judge, invested in a pair of film partnerships that are now dissolved. One was organised by Grosvenor Park, a film financing company known at the time for arranging tax schemes.

The Times in 2015 reported that the second scheme had been “challenged at an early stage by HMRC” but that the issue was resolved.