Alex Gerko Loses £22.5M Tax Dispute Over Quant Trader Payouts
Billionaire quant trader Alex Gerko lost a legal fight with British tax authorities over how a deferred payment plan should be taxed, according to Bloomberg. As a result, Gerko now faces a £22.5 million ($29.1 million) tax bill, which he says is unfair because it means he is being taxed twice.
Court Ruling
Appeal judges decided that Gerko and other traders at GSA Capital Partners, where he worked from 2010 to 2015, must pay income tax on their share of trading profits. The dispute centers on whether the profit from the deferred payment plan, which was assigned to an internal investment unit before being distributed, should be taxed as corporation tax or higher income tax.
Gerko’s Argument and HMRC’s Stance
Gerko previously argued that the plan caused double taxation. However, the court agreed with HM Revenue and Customs (HMRC) that the payouts should be treated as income tax. Finance Magnates contacted XTX Markets, a trading firm founded by Gerko in 2015, for a response, but we did not receive any comment.
Previous Similar Cases
This ruling is the second recent win for HMRC on similar issues. Earlier, Michael Platt’s BlueCrest Capital Partners lost a similar appeal about a partnership incentive plan. The judges decided that “special capital” given to traders should be taxed as income.
Gerko’s Response and Future Actions
Gerko’s deferred payment plan aimed to give traders at GSA Capital Partners up to 50% of profits over three years. The plan included a way to reclaim funds if regulatory fines were imposed. Gerko said the plan wasn’t designed for tax benefits. He wanted to keep talented employees and punish wrongdoing, pointing out a $100,000 fine taken from a trader’s bonus.
Gerko, whose net worth has reportedly risen to $11.7 billion since last year, is frustrated with the ruling. He criticized HMRC’s case as being based on complex and unclear tax laws that lead to unfair outcomes. He plans to challenge the judgment, believing it sets a bad example for the financial sector.
Philanthropic Efforts
Even with the ongoing legal battles, Gerko keeps up his charitable work. He has given millions to improve math education in English schools, supported the London Symphony Orchestra, and helped fund a UK nature reserve.
Also read: UK Court Sets Trial Dates for Alleged Forex Scheme Finfluencers