Billionaire quant trader Alex Gerko has lost a legal dispute with British tax authorities concerning the tax treatment of a deferred payment plan, Bloomberg reported. This decision leaves Gerko with a £22.5 million ($29.1 million) tax bill, which he claims results in double taxation.

Appeal judges ruled that Gerko and other traders at GSA Capital Partners, where he operated between 2010 and 2015, must pay income tax on their share of trading profits.

Tax Dispute and Deferred Payments

The dispute involves whether the profit of the deferred payment plan, allocated to an internal investment unit before distribution, should be subject to corporation tax and the higher-rated income tax.

Earlier, Gerko argued that the plan led to double taxation, but the court upheld the HM Revenue and Customs (HMRC) stance that the payouts should indeed be treated as income tax. Finance Magnates reached out to XTX Markets, a quantitative trading firm founded by Gerko in 2015, for a response but we did not get any comment on the matter.

This ruling marks HMRC's second recent victory on similar grounds. Previously, Michael Platt's BlueCrest Capital Partners reportedly lost a similar appeal over a partnership incentive plan, with the judges ruling that a"special capital" awarded to traders should be taxed as income.

Gerko's deferred payment plan aimed to ensure traders at GSA Capital Partners received up to a 50% share of profits over three years, with provisions to claw back funds if regulatory fines were imposed. According to Gerko, this plan was not structured for tax benefits. He emphasized the intention to retain talent and punish misconduct, citing a $100,000 fine that was clawed back from a trader's bonus.

Further Litigation

Gerko, whose net worth has reportedly surged to $11.7 billion since last year, expressed frustration with the ruling, labeling HMRC's case as based on complex and ambiguous tax laws that yield unreasonable results. He remains determined to challenge the judgment, which he believes sets a problematic precedent for the financial sector.

Despite the ongoing legal battles, Gerko continues his philanthropic efforts. He has donated millions to improve mathematics education in English schools, supported the London Symphony Orchestra, and contributed to a UK nature reserve.

Gerko, who started his career trading equities at Deutsche Bank AG before moving to foreign exchange, founded the quantitative trading fund XTX Markets and has since become a prominent figure in the UK's financial landscape.